When I joined Gartner in 1995, I was part of the AAS (for Administrative Application Systems) service which largely covered accounting, financial planning and hcm applications. We gradually expanded the AAS scope to also cover procurement, order management and other transactional applications. However, we were surrounded by analysts who covered what Gartner called CIM, ILS, PDM services - manufacturing, logistics, product engineering and a variety of other operational areas. We had catchall terms like ERP and CRM but we would evaluate vendors at their detailed, operational competence.
25 years later, I should be pleased that ERP and CRM vendors mostly emphasize the AAS side of their capabilities. Yet, here I am yelling at them to talk more operational, vertical capabilities. Not just for the fun of it. Operational areas have seen massive innovation. The modern shop floor is dotted with wearables, 3D printers and robots, supply chains and logistics are being redefined with modern distribution centers and last mile delivery options. Similar innovation is happening in operations in utilities, healthcare, financial services and so many other sectors.
Instead, we have idle talk about how manufacturing is dead and supply chains were optimized long ago. The ignorance about manufacturing is particularly noticeable. The US is still the second largest manufacturer in the world, and with recent trade winds, more is being made right here. The principle of "make closer to demand" has led to many plants being located closer to emerging middle classes around the world. And for many of these new plants, businesses mostly need shop floor level capabilities, not complete ERP and CRM functionality
However, it has been tough for operationally, plant focused vendors like Plex Systems to stand out. Over the last several years you can see on the blog countless customer plant visits Plex has facilitated, the IoT and other shop floor innovations they have showcased. In contrast, I cannot remember the last time larger ERP vendors have made the shop floor the focus of their presentations, forget taking us on customer plant visits. So, I have been encouraging Plex to not compete on the terms of the competition but instead launch a pure-play MES (Manufacturing Execution System) solution and am pleased they have recently done so.
With this background, I was glad to spend some time with Ben Stewart, VP of Product Strategy at Plex about the Plex Manufacturing Execution Suite. I have known Ben for several years - I profiled him in a book when he worked at Inteva Products, a large Tier 1 global automotive interiors supplier, and have kept up with him at stints as CIO at Stant and as a consultant at Plante Moran. He bleeds manufacturing blue.
Here are some of the notes from our conversation:
How the pure-play MES product crystallized
We talked about the MES launch inside Plex a lot last year. It's been an interesting discussion because, well, it's something we've been doing for 25 years and it's the value that we've sold to our customers all this time. In fact, the screens and the things that users interact with are the same as what's in the Plex ERP product. What's different in this new, flexible offering is that we have built new RESTful, modern APIs that allow us to isolate the shop floor functionality and integrate it more easily with third-party ERP solutions.
We've run into customers with an ERP system that just doesn't do well on the shop floor but they've invested tens of millions into those systems and they're not interested in replacing those. It could either be career suicide or they don't want to take on the risk. In those situations, we tell them "We can sell you the chief differentiator of our product that, even as a (full ERP solution), has been the shop floor MES. We've made it easier to connect in order to optimize your shop floor."
Then we started to talk about the boundaries for the MES offering. We found some customers whose interpretation of MES was transactional, monitoring machines for real-time OEE. We had other customers who saw MES as the way to control and orchestrate their entire manufacturing operations. They want the integrated quality. They want preventative maintenance, tooling and control. There is a continuum of customers and we want to be able to satisfy the whole continuum because we certainly have the product to do it. Since we wanted to define this offering as different from ERP, we decided to stop at shipping and receiving which are very typically ERP functions. In a pure MES offering, this includes the control panel, reporting production, OEE, tracking inventory (especially work-in-progress inventory), integrated quality, tooling and preventative maintenance.
But if you want to start including shipping and receiving, now you're bringing a lot of baggage. If you want to receive, you've got purchase orders. You've got supplier master data. If you're shipping, you've got sales orders, shipping notifications and order fulfillment. By the time we start adding all that stuff, we're looking a lot like ERP, so we kept them out of our MES offering.
With that in mind, we have segmented the offering into core and advanced MES packages. The core piece is production and inventory, kind of the basics for a plant to get going. Then for the customer who wants more of a MOM (Manufacturing Operations Management) type of definition and they want to do more of the orchestration, the quality, the maintenance, then that's our MES Advanced package.
Who's shown interest in pure-play MES
We see, certainly, companies struggling with using the large ERP vendors, such as SAP or Oracle, on the shop floor because their functionality and capabilities are not focused there. We get a lot of interest in the midmarket space as well, companies that either didn't have any kind of shop floor control and maybe they were just running old stuff. They're running old Infor, old AS/400, spreadsheets. Companies that just didn't have a modern shop floor control process and said, "Hey, we could buy just this. We don't really need a full ERP, but we have a need here."
Others are already running the Plex full-stack ERP in the U.S. but they haven't deployed it in Europe or China. Maybe they had a joint venture, a partial interest. Maybe they had a different division and they're saying, "Here's a focused solution that, while still a cross-functional decision, doesn't require as broad of agreement throughout the corporation."
We've also got more interest from forward-thinking customers who are focused on industry 4.0 and digitization efforts. Usually, these manufacturers have a specific use case. A lot of times it's customer-driven requirements where they're getting pressed by their customer to have better controls and systems. We've seen higher cloud adoption in the last five, ten years where we offer this zero-footprint browser-based solution. That is new and innovative on the shop floor and puts customers on the forefront instead of as a laggard.
How the competition is changing
We are also beginning to see industrial automation vendors that we haven't competed against before, like Rockwell, Siemens and others, and are now offering MES. You've got a lot of IoT companies that also have MES offerings so you get a lot of blurring of the lines with some similar functionality. Most of those large companies are generally chasing big accounts. They're looking for multimillion-dollar sales from billion-dollar corporations. We perceive an opportunity for us that we can go after both the midmarket and some larger enterprises where our MES-focused solution best meets their needs. We think there's a market need there, especially for those who want to take advantage of our cloud technology.
One of the key places that we see us adding value where we don't see our competitors is not only the combination of the MES and quality offering, but also in the Industrial IoT offering and where we show machine performance data in the context of MES.
Let me give you an example. I’m a plant manager and I find a quality issue from some parts that were made a few days ago on third shift. In Plex, I probably have quality check sheets and from those, I know the operator who produced it, the time it was made, the lot and all the parts that went into it. I've got all that contextual information from the Plex MES offering.
If I've also deployed our IoT product – Plex Industrial IoT – I've also got the sensor feeds from the machine that produced those parts and maybe several other machines that are in that assembly cell. In looking at those data streams, maybe I didn't set off any alarms at the time or alerts from a temperature that wasn't hit or a speed of a conveyor line but within the context, I can look back and say, "When were those parts produced?" and then go back and look at the machine data from the sensors and say, "Oh look, the third shift guy turned up the speed of the machine by 30% and the temperatures never reached optimal temps." With the correlation of the data, I get a whole bunch of insights that I wasn't able to see before. We think that that is a unique offering and a way that we can bring that information together to offer value to customers
How it is changing Plex's go-to-market
We did have to educate the salesforce on how we were defining MES but they were already familiar with our product and had been selling the value of Plex on the shop floor all this time. Our first sales out of the gate were actually from veteran salespeople here who hadn't been on some of the core launch teams for the MES product, but they know the product backward and forwards. We have brought in additional MES talent and we are updating our sales approaches so we can sell directly to a plant manager instead of the CEO and CFO, which is the typical ERP buyer.
With this new offering, the nuance is in the middleware piece – this solution requires more and different integration points. The product is the same and our existing partners have implemented these integrations. We also have existing machine extensions like Kors Engineering’s Mach 2 integration platform. We’ve produced APIs that work with middleware to connect to other ERP systems. We've worked with providers like Dell Boomi on middleware and we've certainly been on the lookout for new partner opportunities that either specialize in controls, middleware, etc.
With the IIoT instrumentation, we benefited from the talent when we acquired DATTUS a couple of years ago and have learned from the people that built up the IoT product. We've also collaborated with our existing partners who do automation and augment our technical resources. Of course, we’re always looking for additional partners with shop floor, technical, and controls expertise to support our customers’ needs.
Our verticals have also expanded over the years. For a while, the majority of our revenues were from automotive and I think it’s more evenly distributed at this point. We've expanded to other discrete industries and in process manufacturing, we cover food and beverage, metals, rubber and plastics.
In terms of this MES offering, it does open some adjacent verticals to us. We're still exploring that in terms of how wide a net we cast. In the past, we took ourselves out of deals where prospects had business requirements outside of our core vertical wheelhouse. However, with our MES solution purely focused on the shop floor,we can meet their needs now. We're doing a detailed analysis of the verticals that are now available to us as a result of our product strategy.
