Getting the Most Value From Your MES Investment in the IoT Age

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Rick Franzosa

Research Director

February 24, 2016

@realtimerick

Getting Value From Your MES Investment in the IoT Age

3 © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Benefits not Realized

~60%


Visibility is a Challenge

~60%

56%


Data is Not Used

~60%

56%

>70%

Data sources: Gartner SC User Wants and Needs Study, Gartner/MESA Business Value of Manufacturing Systems Study, Primary Research conducted with Gartner clients


How Do You Break Free of the Pack?


4th Annual Business Value of MES Study

Goal: Business Value of MES

– What are the characteristics that are common to

organizations that are seeing real business value?

– What types of implementations that are most successful,

from a business perspective?

– What are the best practices that you can apply to your

MES implementations?

119 respondents


Key Issues

1. How are the implementation and governance of

MES maturing?

2. What are the key characteristics of a successful

mature MES program?

3. What does the future hold for MES in the age of

IoT?


Key Issues


MES maturing?


mature MES program?

3. What does the future hold for MES in the age of

IoT?


MES: Finally a Strategic Component of the IT Landscape

Formal application strategy is developed

based on the business strategy and a desired future state of business

capabilities28%

Formal application strategy is developed with the goal of improving the application

architecture while fulfilling the business requests

21%

IT projects are prioritized in a

portfolio management

process based on available

funding and ROI45%

IT attempts to fulfill business

unit requests as they arise

7%

Q03. Which of the following best describes your organization’s strategy for manufacturing applications?

n=119

Formal application strategy is developed based on the business strategy and a desired future state of business

capabilities29%

Formal application strategy is developed with the goal of improving

the application architecture while fulfilling the business requests

33%

IT projects are prioritized in a

portfolio management

process based on available

funding and ROI27%

IT attempts to fulfill business

unit requests as they arise

12%

n=1122015 2014


Benefits Expectations Of MES Are Changing

Increasing Product Quality

Reducing Operational Costs

Data Visibility

Table Stakes



3%

3%

2%

3%

5%

10%

10%

3%

11%

9%

11%

12%

18%

3%

3%

3%

3%

7%

10%

9%

8%

18%

19%

16%

1%

3%

6%

6%

9%

5%

3%

10%

4%

10%

12%

14%

13%

Increasing market share

Adhering to program budget

Decreasing time to implement changes

Improving factory flexibility

Adoption of MES application by user base

Responsiveness to demand

Increasing net operating profit

Achievement of performance standards

Stability, security, and maintainability of MES

Increasing employee productivity

Reducing operational costs (COPQ)

Increasing product quality

MES data for continuous improvement programs

Ranked 1 Ranked 2 Ranked 3

Which of the following Manufacturing Execution System success criteria does your organization use?

2015N=119

2013N=104

Change

47% 61% -14%

45% 54% -9%

41% 38% +3%

27% 20% +7%

24% 24% -

23% 22% +1%

20% 17% +3%

18% 21% -3%

17% 3% +14%

12% 15% -3%

11% 9% +2%

6% 7% -1%

4% 3% +1%

Ranked 1, 2 or 3



3%

3%

2%

3%

5%

10%

10%

3%

11%

9%

11%

12%

18%

3%

3%

3%

3%

7%

10%

9%

8%

18%

19%

16%

1%

3%

6%

6%

9%

5%

3%

10%

4%

10%

12%

14%

13%
















2015N=119

2013N=104

Change

47% 61% -14%

45% 54% -9%

41% 38% +3%

27% 20% +7%

24% 24% -

23% 22% +1%

20% 17% +3%

18% 21% -3%

17% 3% +14%

12% 15% -3%

11% 9% +2%

6% 7% -1%

4% 3% +1%

Ranked 1, 2 or 3


Key Issues


MES maturing?


mature MES program?

3. What does the future hold for MES?


Success Criteria

Enterprise Focus

MES is a “team sport” – manufacturing, IT and

business leads all need to own the business case

Choose success criteria carefully

Institutionalize the deployment and life cycle

support of the MES via the creation of an MES

Center of Excellence …. and don’t expect an out-

of-the-box miracle


Success Criteria

Enterprise Focus







of-the-box miracle


Lines Between Traditional IT And Manufacturing IT Are Blurring

Silo organization

Proprietary systems

Culture differences

Common governance

Standard systems

Cultures leveraged

The Evolving Global Manufacturing Environment

Standard

Scale

Maintain

Repeat


MES Business Criteria

Base: All respondents, N=119. 1=Not at all important, 7=Extremely important

Q07. How important were each of the following business criteria in your organization’s justification to invest in Manufacturing Execution Systems?

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0

Customer retention/growth

Increasing asset utilization

Reducing cycle times/lead times

Increasing visibility across the manufacturingnetwork

Improving employee decision making andcompetency

Reducing reporting latency

Enforcing standard processes/best practicesacross the manufacturing network

Enterpriseapplication-----------

Pointsolution----------


MES Timescale – Single Pt vs Enterprise

Base: All respondents, N=112. Data collected July-August 2014

Typically, over what time scale have each of the following benefits been realized by your organization following investment in Manufacturing Execution Systems?

2.2

2.3

5.8

7.9

11.6

5.5

5.9

10.3

7.5

13.5

11.6

15.9

22.5

2.9

4.7

4.8

5.2

5.3

5.8

7.3

7.5

8.0

9.4

10.3

11.3

18.5

21.5

22.4

0 6 12 18 24

Reducing reporting latency

Increasing visibility across the manufacturing network

Improving quality

Improving employee decision making and competency

Regulatory compliance

Modernizing IT

Reducing cycle times/lead times

Enforcing standard process/best practice across the…

Increasing asset utilization

Reducing direct labor costs

Improving inventory and cash flow

Improving unit margin

Customer retention/growth

Expanding markets/segments

Improving market share

Months (estimated median)

Single Point

Enterprise Solution

Not at all

Not at all


Value from MES

Base: All respondents, N=112. Data collected July-August 20141=Strongly disagree, 7=Strongly agree

To what extent do you agree or disagree with each of the following statements about your organization's Manufacturing Execution Systems?

3.71

4.40

4.60

4.69

4.63

4.70

4.63

4.52

5.25

5.08

1.00 2.00 3.00 4.00 5.00 6.00 7.00

My organization has been able to reduce thecost of deploying the MES at each phase of

the project

My organization is getting its money's worthfrom MES

My organization is satisfied with the short termbenefits from MES deployment

My organization is satisfied with the longerterm benefits from MES deployment

Beyond the initial deployment our organizationhas continued the investment for its MES

project

As an enterprise application As a point solution


MES is a Team Sport


Governance, Not Technology, Is What Drives Measurable Value from MES

PEOPLE PROCESS

TECHNOLOGY



PEOPLE PROCESS

TECHNOLOGY

TRIBAL

KNOWLEDGE

CAPTURE



PEOPLE PROCESS

TECHNOLOGY

TRIBAL

KNOWLEDGE

CAPTURE

FUNCTIONALITY SUPPORTING PROCESSES



PEOPLE PROCESS

TECHNOLOGY

USER ACCEPTANCE

TESTING

TRIBAL

KNOWLEDGE

CAPTURE




PEOPLE PROCESS

TECHNOLOGY

USER ACCEPTANCE

TESTING

TRIBAL

KNOWLEDGE

CAPTURE


GOVERNANCE


Business Case Ownership

1.00 2.00 3.00 4.00 5.00 6.00 7.00

Reduce the cost of deploying the MES at each phase

Getting our money's worth from MES

Satisfied with the short term benefits

Satisfied with the longer term benefits

Organization has continued the investment for its MES project

Success Based on Business Case Ownership

It was developed jointly between plants, corporate/business unit leadership, and IT

It was developed and defined by corporate/business unit leadership

IT developed the business case

It was developed and defined locally within plants


Success Criteria

Enterprise Focus







of-the-box miracle


61%

71%

74%

84%

Improving employee decisionmaking and competency*

Improving quality

Increasing visibility across themanufacturing network *

Enforcing standard processes/bestpractices across the

manufacturing network *

75%+ of Business Goals Met (n=31)

Q15. Thinking back to your organization’s original business case for Manufacturing Execution Systems, what proportion of the intended business results have been achieved? Excluding DK Q07. How important were each of the following business criteria in your organization’s justification to invest in Manufacturing Execution Systems?

n=119

Achievement of Results (75%+) by Business Criteria

Orgs with 75%+ original MES

business results met were statistically

more likely to have these business

priorities than those with lower % met

Top MES Business Priorities (Rated 6 or 7 on a 7-point scale)

*Statistically significant difference.

Note: Small sample size.

Only 60% or higher agreement of priorities shown in graph.


Success Criteria

Enterprise Focus







of-the-box miracle


CoE: Governance for the Enterprise

Individual plant

support teams11%

IT COE50%

MES COE39%

AS AN ENTERPRISE APPLICATION

Individual plant

support teams46%

IT CoE43%

MES CoE11%

AS A POINT SOLUTION


Q19. Which of these best describes the organization that installs and supports the Manufacturing Execution Systems in your organization? Q20. How many employees are assigned to your MES Center of Excellence full-time?

Center of Excellence, Employees

Formal Mfg CoE12%

Operational CoE7% IT

CoE7%

MES CoE41%

No CoE28%

n=48; Base: Organizations with MES CoE

8%

23%

46%

23%

26-50

11-25

5-10

1-4

n=116; Excluding 'Don't know'

MES CoE Employees

Majority have 5 or

more

Avg. 12employees


Key Issues


MES maturing?


mature MES program?

3. What does the future hold for MES?


14A/B. Which of the following best describes the primary model your organization uses to deploy MES applications today? Which ofthe following best describes the primary model you expect your organization to use for MES applications by year-end 2018?

n=119

Deployment Model for MES

On premise for each site53%

On premise, centralized deployment

38%

Hybrid cloud, 5%

Public cloud3%

Don’t know2%

Today Year-end 2018

On premise for each site23%

On premise, centralized deployment

47%

Hybrid cloud23%

Public cloud3%

Don’t know4%

37 © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.37 © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

The Internet of Everything Will Be a Part of Becoming a Digital Business

Internet ofEverything

Systems Things

Places People

+

VIRTUAL REAL

38 © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.38 © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Internet ofEverything

Systems Things

Places People

+

VIRTUAL REAL

The Internet of Everything Will Be a Part of Becoming a Digital Business


Conclusions

All the technology in the world will not overcome people and

process issues.

Companies implementing enterprise MES tend to be more successful.

Centers of excellence can accelerate additional deployments and

reduce cost and dependence on vendor services.

The Internet of Everything will make MES implementations

more challenging.


Take an enterprise view when implementing MES. The goal is value

creation, not plant optimization.

Employ a "stand-alone" center of excellence for implementation

support and governance.

Don't go it alone; buy-in from all stakeholders is critical.

Define metrics and KPIs with business impact.

Recommendations


Recommended Gartner Research

Changing Technology Models Are Pressuring the Survivability of Today's MES MarketRick Franzosa (G00277706)

Market Guide for Manufacturing Execution System SoftwareRick Franzosa (G00269444)

Survey Analysis: Enterprise MES Approaches Drive Greater Life Cycle ValueRick Franzosa, Simon F Jacobson and Michael Dornan (G00268757)

Toolkit: Defining the Functional Requirements for Manufacturing System SelectionRick Franzosa and Simon F Jacobson (G00269590)

For more information, stop by Gartner Research Zone.

http://www.gartner.com/document/3103132?ref=QuickSearch&sthkw=G00277706&refval=155006350&qid=c1e99bc895274711b9076dfb92fbd537

http://www.gartner.com/document/3043518?ref=QuickSearch&sthkw=G00269444&refval=155006483&qid=d7f3d8d2da8196cdb2879a55c37ff3da

http://www.gartner.com/document/2983421?ref=QuickSearch

http://www.gartner.com/document/2866519?ref=QuickSearch


Rick Franzosa

Research Director

[email protected]

@RealTimeRick

Thank You

44

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Getting the Most Value From Your MES Investment in the IoT Age

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