The latest of our regular expert blogs from industry technology analyst firm Cambashi explores enterprise applications as support for sustained product differentiation
Only if there is investment in a stream of innovative products, can there be sustainable product differentiation.
Apple is a well known demonstrator of this. Apple’s stream of innovative products is complemented by innovative business models such as iTunes. There is industrial design excellence. Competitors have equivalent functionality in many products but the combination of brand values and style allow Apple to obtain premium prices. Apple does not manufacture its products; this operation is outsourced to manufacturing specialists. Apple focuses its effort on innovation, design and marketing.
The key skill in innovation, one that Steve Jobs brought to all his businesses, is the ability to understand the customer’s wants and needs. Apple created an R&D culture that generated products that met these aspirations.
The technology pushes the development cycle with ever increasing precision of components providing better price performance is only part of innovation.
Creating and managing requirements, and understanding the downstream implications require information and co-operation in an industry network as much as in the R&D department.
Manufacturers should look at the whole customer need to first product delivery cycle, sometimes called “idea to delivery” or I2D. That means looking at the business in a different way. Not only must the manufacturer break down organisational barriers internally but also they must create an industry network that can respond.
Enterprise applications software today still focuses internally on ‘the enterprise’, often within a department. Product Lifecycle Management helps research and development take requirements and implement them in various technologies to create a product. Enterprise Resource Planning manages volume production and distribution of each instance of the product. Manufacturing Execution Systems manage and monitor work-in-process on the factory floor.
Next step – think bigger
The next generation of enterprise applications software will have to enable the industry network rather than the enterprise. Many providers already realize this.
SAP has been running a marketing campaign called Idea to Delivery (I2D). They recognize that the whole product lifecycle, from managing ideas, through research to production and marketing has to be integrated. It promotes the SAP PLM solution as an enabler of that change. In a recent SAPinsider interview, SAP’s Thomas Ohnemus and Richard Howells spoke about taking a holistic view of the value chain and thinking about R&D as part of the supply chain.
Ohnemus spoke about a value chain that extends outside the enterprise. Both recognised that product differentiation and including customer input will become key success factors. Howells said that SAP is researching how technology would assist companies to separate out useful information for product innovation from the noise of internet chatter.
Paul Boris, SAP’s global vice president, advanced manufacturing solutions emphasised the need, in order not to constrain customer focused strategies, for all software applications to continuously communicate:
“Apple is a great example, but generally delivers earth-shaking ideas twice a year as they roll out product changes. This is how auto companies have typically done model changes – once per year. This allows for systems to be run in a much more disconnected fashion as large chunks of data are moved thru the I2D process. Many (maybe most) companies need to deliver these changes with much greater frequency, which becomes problematic when the systems are not designed to talk, and when hundreds of data sets hamper real analytics. MES is not a differentiator, unless it is seamlessly tied to the value chain. New ideas are transmitted across the value chain, formalised in PLM and launched in MES with the loop being closed in real-time. This means that non-value-added systems and the latency associated with shuttling the data is eliminated, resulting in faster (seamless) innovation cycles.”
Dassault Systèmes too are enhancing their portfolio. That includes functionality for the initial part of the cycle where prospective customers’ wants and needs are researched and turned into a requirements specification. Dassault Systèmes president, Bernard Charles, remarked at last June’s Innovation Summit that there are “special moments” in life. He defined part of Dassault Systèmes mission to be to “provide business and people with 3D lifelike universes to imagine sustainable innovations capable of harmonizing products, nature, and life”. Clearly, Dassault Systèmes expect using their advanced visualization will give their customers the edge when collecting useful customer ideas.
The concrete examples of functionality to support these initiatives are still quite sparse. We think that suppliers will have to go further with these ideas. Some holy cows may have to be sacrificed. SAP still talks about providing “A single view of the truth”.
Until a manufacturer decides the exact form in which to manufacture a product to meets customer requirements there are often many possible versions of the truth. Dassault may have to reposition itself from being a PLM supplier to an Enterprise Applications supplier, despite their proud claim that, in 1999, Dassault Systèmes “invented PLM”.
Most Manufacturers do understand their competitive edge. Their challenge is to invest in planning a portfolio of future products that will meet customers’ future needs and wants. It won’t be simply updating today’s product portfolio of models, year by year. It will be a stream of products that represent innovation within the scope of the manufacturer’s core values. Customer input will have to be enabled by enterprise applications.
If this stream of products can all be perceived as part of a family, as in the cases of Apple and Dyson, then the manufacturer will build a brand that will enable them to enhance other, perhaps less innovative products, to stretch their brand and generate additional revenues with premium prices.