Datamonitor outlook: Spending on MES to grow as regulation compounds cost pressures

Global manufacturers are looking to improve production agility, enhance reporting capabilities, and reduce overall costs from their operations through increased manufacturing execution systems (MES) spend.

12/18/2007


Global manufacturers are looking to improve production agility, enhance reporting capabilities, and reduce overall costs from their operations through increased execution systems spend.
Despite the historical disconnect between plant-floor and enterprise systems, it's only in the last few years that manufacturers have truly started to face the issue. In a new report, Linking plant-floor and enterprise systems for greater manufacturing agility , independent market analyst Datamonitor examines the priorities manufacturers are placing on linking various plant-floor and enterprise systems.
Of 150 companies surveyed in North America and Western Europe, 61 percent are planning on linking the two disparate environments, or actively investing in it today.
"The disconnect between plant-floor and enterprise systems is something that's developed over the last 30 years, however, there's a renewed push to close the gap," says Adam Jura, manufacturing technology analyst and author of the study. "A focus on production metrics and manufacturing agility means manufacturers need better communication between the two system environments. As a result, we're seeing significant expenditure on both traditional manufacturing execution systems [MES], as well as newer manufacturing intelligence solutions. In so doing, companies hope to improve their scheduling, supply chain interactions, and performance-monitoring capabilities."
Traditional MES seeks to close the gap between plant-floor and enterprise systems with a bidirectional flow of data and information. For many manufacturers, MES is the essential link that provides key information from the plant floor for line-of-business staff, while at the same time pushes work orders down to employees on the ground.
Datamonitor estimates that by 2012, the worldwide market for traditional MES software and services will reach $2.5 billion in the manufacturing industry. This represents strong growth on 2006 revenues of $950 million, but does exclude newer manufacturing intelligence solutions that focus on solely pulling data up from the plant floor.
Large enterprises will form the bulk of the investment in traditional MES solutions as they seek to drive better information across multiple facilities and lower total costs. The Datamonitor MES forecast model also assesses the investment in MES within 16 manufacturing industries. Currently, the pharmaceutical, food & beverage, and chemical markets are leading the way, although discrete industries are expected to see an upward swing in 2009.
"Traditional MES technology is evolving to include greater manufacturing intelligence functionality, so for many manufacturing companies, the justification to invest is being established more easily," says Jura. "As this functionality improves, traditional MES solutions will better support a wider range of business processes and drive more efficient and agile production across an extended enterprise. For this reason, we're seeing increased adoption of MES technology."
The traditional MES market is fragmented with no clear leader. According to Datamonitor, the MES technology market is still highly fragmented with a number of smaller vendors. The closely linked nature of MES technology to specific industry processes means it's been hard to build an overarching product. At the same time, the amount of services work required for MES implementations and maintenance has created a higher demand for local solution providers.
Datamonitor believes mergers and acquisitions will continue in the space as MES technology vendors muscle for industry functionality, services capabilities, and greater overall scale. Those MES vendors focusing on industries facing increasing regulation will prove to be the most attractive targets for larger companies as end users—i.e., manufacturing companies—are forced to invest.
"The traditional MES market is one of the more interesting markets to look at in terms of how it is unfolding," explains Jura. "On one hand, a large number of smaller vendors are active in this space; while on the other hand, the emerging threat of manufacturing intelligence-only solutions is forcing vendors to develop additional functionality. Winners in this market over the next few years will be heavily influenced by acquisition strategy, functionality, development, and services capabilities."





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