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5.1 Sourcing ICT capability

The interviews indicated that manufacturing businesses sourced ICT enabled machinery and equipment in a number of ways. The following approaches were identified:

  • Engage other businesses normally considered to be part of the ICT sector to design and manufacture computer hardware and software which is then installed and linked to production equipment.
  • Purchase production machinery and equipment with computer control hardware embedded. Software is then developed in-house, or more commonly outsourced to a software developer and services provider.
  • Specify to machinery and equipment suppliers the functionality required and allow them the opportunity to innovate. Machinery and equipment providers are not generally regarded as ICT manufacturers.
  • Design and development of ICT enabled and embedded machinery and equipment undertaken in house, while ICT components are sourced ,and manufacturing undertaken by, specialist companies.

Proteome Systems

Proteome Systems is, in effect, a re-seller of IBM equipment – as part of bundled/integrated service offerings. This includes sales of medium to large p-series computers to anywhere in the world. These laboratory machines use IBM “middleware” – databases, storage products. This fits well with the IBM strategy not to sell applications and compete with individual software vendors – the enabling technologies that make products successful.

The study found that for large manufacturing equipment installations, businesses, plant designers, equipment suppliers, software vendors, programmable logic control (PLC) programmers, engineering consultants, etc, often work in a collaborative arrangement. At Arnott’s Biscuits for example, the equipment was purpose built for a new plant.

Such large capital investments are not regarded internally or externally as an ICT purchase, even if it was possible to separately identify the ICT component. As indicated above, they are regarded as capital investments, and subject to appraisal on the basis of expected contribution to the bottom line over the longer term. They also have to compete with other investment proposals and are considered in a corporate capital expenditure decision making and resource allocation process. That is a decision is made on the project as a whole, not its technology component parts. 

The interviews suggest that most companies acquire their ICT software capability from external service providers. With the exception of high technology industries, such as medical equipment, ICT adaptation and application to specific business uses is undertaken by software service providers and consultants. The global hardware and software suppliers are increasingly incorporating services into their own business strategies.

The study suggests that very few manufacturing companies maintain and develop software in-house – except where this is core business or has significant security ramifications relating to matters such as access to intellectual property protected through confidentiality and secrecy. Further, the suppliers of manufacturing machinery and equipment are becoming major players in the manufacturing software and services market.

 

 

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  • Document ID: 29127 |
  • Last modified: 5 February 2008, 10:31am