Cloud and SMEs Represent Significant Opportunities for MES Vendors

42Q, a subsidiary of Sanmina, an electronics manufacturing service provider, announced late this May that its Digital Factory Starter Kit, a product that contains core elements of the company’s MES offering, is now available to Amazon Web Services (AWS) Marketplace customers. The company’s MES offering is designed to support a range of discrete manufacturing processes, such as medical devices, automotive, and aerospace and defense. 42Q’s MES is cloud native, not even offering on-premises or hybrid solutions, showing the company’s commitment and belief that the cloud is the future of the MES market. Delivering the product in the cloud allows access to a far wider range of companies, making it easier and less expensive for SMEs to deploy and use this software.

The solution includes 42Q’s Business Intelligence toolkit for real-time data visualization of manufacturing operations and can be configured to meet the specific requirements of advanced manufacturing operations in around 2 weeks. Furthermore, 42Q is offering its starter kit with a 90-day free trial to support SMEs that want to test the solution without needing to invest upfront. Centralized software stores, such as AWS Marketplace, give MES providers an easy way to access SMEs that is currently more or less uncontested. Currently, a search for “manufacturing execution system” on the AWS Marketplace only yields seven results.

MES systems collect production data in real time and allow manufacturers to optimize their operations at all stages of their production process. The software provides control and visibility into operations for both operators and decision makers, including:

• Real-time data visualization, production optimization, and order management
• Traceability and genealogy of products (essential for manufacturers needing to meet regulatory standards, e.g., the Food and Drug Administration (FDA))
• Instructions on product assembly for workers
• Paperless operations
• Quality control

Traditionally, MESs are software solutions that are installed and deployed on-premises, handled and supported by IT departments. Their deployment and maintenance require significant Capital Expenditure (CAPEX), and thus, have mostly been employed by large manufacturing operations. A cloud MES offers a way for SMEs to make use of these productivity enhancing solutions that would not have been available to them previously. Rather than being sold as a perpetual license and being highly customized by internal staff, Cloud MESs are regularly offered as Software-as-a-Service (SaaS), with hardware, infrastructure, and maintenance costs instead shouldered by public cloud providers, such as AWS and Microsoft Azure. These solutions are flexible in their cost and structure, alongside allowing smaller manufacturers to pick and choose the elements of the MES software that they require for their operations, rather than having to invest in the entire solution.

MES software is no longer a monolithic and hard to use product just for large manufacturing operations. The cloud is expanding the horizons of the addressable MES market, and technology suppliers must capitalize on meeting the needs of new customers, most notably SMEs.

Those looking to sell their MES product to SMEs will require that their offering meet different needs than those of large manufacturers. Solutions need to be quick and easy to deploy, being ready-made solutions, with little to no Information Technology (IT) support for utilization. Additionally, MES software must be flexible so that customers can use only the elements of the product that they require. Furthermore, while it is necessary for these solutions to be usable out of the box, they must still retain high levels of customizability, as each SME operation differs widely from another. Standardization is rare and customers need to be able to fit the MES solution to their potentially unique set-up.

For large vendors are looking to adapt their business model to sell to these SMEs and compete with smaller vendors, there are further elements to focus on to excel in selling to SMEs. The MES product must be affordable, with little or no upfront CAPEX. Using SaaS models is one of the more effective routes to take for meeting this market need. Additionally, large MES incumbents, such as Siemens, Rockwell Automation, and GE Digital, must adapt their frontend processes to be more effective at reaching SMEs. Traditionally, small enterprises tend to like working with other small companies. Large MES providers need to show and communicate that they are as agile and cost effective as smaller vendors. Using smaller partners and system integrators familiar with SMEs in the market is one way to build this market presence.

For those producing MES products, the SME market represents a sizable and untapped market to sell into. Currently, large incumbent MES vendors are unable to serve this market as efficiently as smaller and more agile companies. 42Q is a strong example of this and its cloud-based MES delivered through AWS Marketplace represents an excellent illustration of how vendors can reach these smaller manufacturers.