Manufacturers across the U.S. appear to be ready to spend more money this year on plant floor to enterprise integration projects, even as they continue to grapple with often daunting organizational and technological issues in linking the systems in their companies.
At the same time, manufacturers are signaling that the tactic of delaying projects as a reaction to organizational and jurisdictional issues, employed widely last year, will be used much less this year as they press ahead with the important work of integrating their operational and strategic systems.
These are just some of the most significant findings of the latest Managing Automation reader poll on plant floor to enterprise business system integration, the magazine's fifth such study since 2001. The survey examines the pace, scope, and business and technology issues surrounding the integration in U.S. manufacturing companies of factory floor devices with higher-level systems, including business computer systems and applications such as enterprise resource planning software. More than 330 MA readers weighed in this year on the state of integration in their companies as well as their business and technology goals and the barriers they face in accomplishing the work.
Last year, poll respondents not only reported that their integration work was moving at a slow pace, a perennial finding in the poll since its inception, but that people issues — responsibility for the integration work scattered among various functional groups and a perceived lack of effective collaboration among these groups — were resulting in integration project delays on a significant scale.
In this year's poll, which was fielded in late February, the number of respondents indicating that they are delaying projects due to organizational as well as complexity issues dropped 8 points from last year's survey, although the tactic remains significant. This year, nearly 44% of survey respondents said they would have to delay integration projects, compared with over 52% last year (Chart 8).
While the directional fate of that new number remains to be seen as the months of 2007 unfold, some encouragement can be taken from the related numbers on integration spending. This year, of those that have found the integration work more challenging than expected, 36% indicated they would increase funding for integration projects in 2007, compared with only 27% who said so last year, and 44% said they would improve training, up a modest four points from the 2006 survey.
Nevertheless, the arduous work of enterprise integration continues to be just that — slow moving, increasingly complicated, and often painful. Tracking its pace is akin to watching the movement of a glacier; the long view must be taken based on the understanding that progress will be slow.
When asked, for example, to characterize their progress in interconnecting plant floor devices to higher-level systems, respondents painted a picture not unlike that of prior years. This year, 47% said they had begun the integration work but had substantial work remaining, compared with 44% who said so last year (Chart 1). Sixty-three percent said they anticipated that the integration work would be completed within a three-year timeframe, up from 60% last year (Chart 2). Manufacturers are, evidently, an optimistic bunch.
Likewise, when asked what percentage of their factory floor devices are now connected to other systems, about one-quarter of MA readers, equal to last year's survey, said that more than 30% have been stitched together (Chart 3). And, consistently, there are a couple of scenarios for what happens to the data generated from sensors, programmable logic controllers, and distributed control systems. This year, 30% of respondents said that data would first pass through a manufacturing execution system and then on to an ERP system, compared with 34% who said so last year, about flat, statistically speaking. In what will be good news to the MES vendor community, only 19% of survey respondents this year said that the data transfer would not include an MES, compared with 30% who said so last year (Chart 4).
But the trend that this magazine has been watching perhaps even more closely than the percentage of interconnected devices and the resulting data paths has to do with expectations and how companies organize and manage the integration work.
This year, a solid majority of respondents, 56%, say the integration work is more challenging than they had expected it to be. Forty-nine percent checked off the "more" box last year (Chart 7). More important, however, are the reasons why expectations are not being well set or met. Issues surrounding the roles of people and functional groups, including automation and IT personnel, continue to cause the greatest concern among respondents, and by a wide margin.
A strong majority, 58%, of respondents say that people and organizational issues are a "high" concern in the integration work. Budget issues, which are easing this year, and other business priorities, both at 39%, are the two other most prominent concerns (Chart 9). When the people and organizational issue is probed, however, it becomes clear what the real issue is: a lack of effective collaboration.
The poll shows that, again this year, responsibility for the integration work among functional teams may be too diffuse in many companies. Only about 31% of respondents in this year's poll, for example, indicate that a combined IT and automation team has been charged with responsibility for the integration work, about the same as last year's finding. About 27% place that responsibility solely on a team from the IT department, while about 14% put it in the hands of an automation team (Chart 10).
Moreover, when asked about the degree of influence different people have in the integration work, an equally diverse, and diffuse, picture comes into view. A majority of respondents, 53%, indicate that their VP of operations has a "high" degree of influence in their companies. Forty percent say so-called "C" level executives, including presidents and chief executive officers, have a high level of influence, while the IT department gets 44%. Factory floor personnel capture a paltry 22% (Chart 11).
Interestingly, the sources of integration funding fit a similar pattern. About one-quarter of the respondent base identify their company's capital equipment budget as the source of integration dollars, while only 13% say that the money comes from the IT budget. About 28% indicate that funds come from a combination of sources (Chart 12).
On the technology front, the complexity and difficulty of the integration work, while much less intense than the organizational issues, shouldn't be overlooked. Nearly one-third of respondents, about the same as last year, indicate a "high" level of challenge with the technology aspects of integration, and another 56%, equal to last year, report that it is of significant concern (Chart 9). A sentiment to watch going forward is attitudes about service-oriented software architectures, often touted as an integration aid, and such standards as the ISA S-95 specification. Only 16% of respondents at this point say that SOAs are "very important" to their integration efforts, while only 12% say so about S-95. Evidently, the tech vendor community needs to offer more education on these subjects (Chart 13).
Given the issues, is it any wonder that the pace of plant floor to enterprise systems integration is glacial? Perhaps not, but manufacturers don't seem to be deterred. In fact, history has shown that they have never wavered from their goals. Year after year, the MA poll shows that integrating and sharing information throughout their companies, improving customer satisfaction, reducing downtime and inventories, speeding product development, and moving to a build-to-order model remain uppermost on their business agendas.
No one ever accused manufacturers of trying to do easy things.