Following recent moves by both SAP AG and Microsoft Corp. to acquire lean execution software vendors, experts are predicting more consolidation among technology and services suppliers that support lean enterprise initiatives.

Driving consolidation, says Colin Masson, a research director at AMR Research, is the increasing popularity of lean principles among manufacturers seeking to reduce waste, as well as the realization that, in order to successfully scale lean initiatives and sustain their impact, manufacturers will need to invest in software that supports lean.

"We see a huge interest in lean, but, in practice, most companies haven't extended lean beyond an initial pilot or single line," Masson says. "If you want to scale, you've got to automate the process. You can't have one person on each line armed with a spreadsheet, recalculating kanban sizes and takt times. It just doesn't work."

Also driving lean software vendor consolidation will be the need to integrate lean planning and execution with order/demand processes, Masson predicts. In many enterprises, he notes, lean production and demand visibility are disjointed.

ERP vendors have the clearest opportunity to provide that sort of integration, Masson says. In fact, the opportunity to integrate lean capabilities more directly into their ERP platforms was the key driver behind both SAP's and Microsoft's moves to acquire lean software vendors. SAP, in December 2006, announced its acquisition of Factory Logic. Sudipta Bhattacharya, SAP's senior vice president for supply chain, product lifecycle management, and manufacturing, at the time said the company bought Factory Logic to capitalize on a groundswell of interest in lean.

More recently, in early March, Microsoft announced plans to buy the software assets of eBECS Ltd., a vendor of lean production tools and a Microsoft partner. Microsoft officials at the time said the eBECS software would be used to beef up the lean capabilities of Microsoft's Dynamics AX ERP platform.

But it's not just ERP vendors that are driving consolidation among lean vendors. Last month, lean planning and execution software vendor Pelion Systems announced plans to merge with JCIT International, a provider of lean education and consulting services. That merger, says Kevin Fallon, president and CEO of Pelion, is intended to support manufacturers as they attempt to mature and scale their lean initiatives. Too often, he says, organizations that attempt to sustain the benefits of lean without both training and tools have failed. Pelion and JCIT will focus on letting manufacturers implement and scale lean initiatives to support the entire order-to-cash business process.

Fallon will act as the merged company's CEO, with JCIT CEO Tony Gorski serving as president.

Fallon adds his voice to predictions that consolidation among lean software vendors will continue. It will be driven by manufacturers' needs to drive lean principles throughout the enterprise. "Many manufacturers are looking at lead times moving from six weeks to six hours," Fallon says. "How you communicate demand and production capacity is very different in a six-hour world compared to a six-week world."

This article originally appeared in the May 2007 issue of Managing Automation.