Software: beware, the ‘silos’ are emptying fast
25 July 2011
Cambashi’s Mike Evans believes marketeers are used to thinking about solutions for target markets in categories, software being an exemplar of this thinking, with lots of three-letter acronyms like EDA, PLM, ERP and others defining the solution sold, and even the developer supplying the solution. But thinking in ‘silos’ like this is quite dangerous, he says, likening them to tectonic plates beneath the surface of the earth: essentially they change; fast compared with the geologic analogy, but slow compared with company planning cycles.
But as happens within the earth’s crust, at the edge of silos (the tectonic plates in Mr Evans’ analogy), where they collide, there are earthquakes and volcanic eruptions. In the world of software, these could spell disaster for those with rigid structures, but opportunities for the more nimble. Many of today's giant companies have emerged from just such changes.
Today, there are many software silos: Customer Relationship Management (CRM); Enterprise Resources Management (ERP); Product Lifecycle Management (PLM); Supply Chain Management (SCM), to name just the obvious ‘four pillars’ of the enterprise. The experts at Cambashi think these silos are emptying fast and it will be important for marketeers to reposition themselves or newer, more nimble companies will supplant them.
To develop this theme, Mr Evans offers one example: the arrival of smart products as the new norm. Just as change in design techniques within electronic engineering departments has triggered Electronic Design Automation (EDA) changes, today, smart product design is triggering a change in the whole product design and introduction process through to managing the lifecycle of those products.
Smart devices are products and equipment that combine mechanical, electrical, software and semiconductor elements. The design process to develop smart devices cannot simply break the smart product into independent parallel designs by engineers in each discipline for each element. The elements interact. Indeed, at different volumes it may make sense to replace functionality meeting a customer requirement with a physical implementation in a different discipline. It is even possible to download new software to a product in the field to create a whole new product with new functionality and thus generate additional revenues.
A whole new level of complexity means that existing silos of design will no longer do. While early smart products often involved outsourcing software development to third party firms there is now a trend for design in-house with multi-skilled engineers working in multi-disciplinary teams. There is much more simulation of the virtual product design. Another change factor is that software developed for smart devices is influenced by the mechanical engineering design approach of using bought-in components rather than writing code to develop functions.
The silos most affected by this example of change are Product Lifecycle Management and Application Development Tools.
At the recent Dassault Systèmes Application Innovation Summit in Paris a systems engineering approach was one of the key themes. The company has embraced Modelica as a language to assist its customers to implement the Requirements, Functions, Logic, Physical, and RFLP design steps. This will particularly assist development with components.
Of the EDA vendors, Mentor is proving the most nimble, quietly providing more and more tools to assist their users to design products that are a combination of silicon and software elements. The company also provide tools to design the mechanical packaging for electronics, through its acquisition of Flomerics in 2009. Recently, Mentor announced Sourcery Codebench, based on the acquisition late last year of CodeSourcery. This provides a unified embedded software platform from pre-silicon to final product and integrates with hardware emulation and verification tools.
Ansys, too, is getting in on the act. Its acquisition of Ansoft and more recently, Apache, positions the company with a portfolio of tools to help design the mechanical packaging of smart devices, taking the electrical and electronics aspects into account.
The biggest player in embedded software development tools is IBM's Rational unit. It has about 13% of a $2.2bn market. Ironically, it recently exited the mechanical part of the PLM market, selling its distribution arm for Dassault Systèmes mechanical PLM solutions to Dassault itself.
This can be seen to underline IBM’s commitment to collaborative design through the OSLC (Open Services for Lifecycle Collaboration) initiative to provide a protocol for integration of a range of development tools. By 'returning' their PLM application to Dassault, it opens the way for IBM clients to mix and match best-in-breed applications - including PLM - as best suits project needs. IBM’s Jazz platform is a key player in OSLC, which currently has a small but growing membership, largely led by IBM.
At IBM Rational's recent Innovate 2011 summit a host of presentations illustrated how this supports smart product design. A key panel discussion covered the integration of Application Lifecycle Management (ALM) and Product Lifecycle Management (PLM), crucial for smart product design. OSLC offers a way to integrate and blur the boundaries between these previously dominant silos.
Cambashi's opinion is that recent developments only indicate the leading edge of a major realignment of the software silos. It expects that EDA, long isolated from the rest of product design, will again be regarded as a niche within the general PLM market. As simulation and verification moves towards the whole product design rather than a particular discipline's element of the design, EDA will shrink. Embedded software development will change the nature of the PLM silo. Engineering manager's budget allocations will change away from mechanical and electrical CAD towards embedded software design tools.
A more rigorous and language oriented design process will shake up all the existing suppliers. The largest PLM vendors have made steps to recognise this trend and have even made acquisitions but this is not yet a general, wholehearted change of direction.
In the world of CADCAM, there have been discontinuities every ten years or so since the discipline emerged 50 years ago. Camabashi thinks we are about to see a big one. This smart product example of a silo emptying is just one example; the advent of smart products will affect the construction, distribution and manufacturing industry networks so that the other pillars of the enterprise software will also empty into new unmapped opportunities.
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Get your slice of the R&D funding cake
At a conference staged by Pera tomorrow, former UK Trade & Investment minister, Lord Digby Jones of Birmingham, will warn that the UK SME sector is missing out on millions of pounds of EU cash. Lord Jones will remind his audience at Pera's Melton Mowbray headquarters that we are only going to get ourselves out of this economic malaise if we trade our way out of it by making innovative, branded, quality, value-added goods and selling them around the world. But in order to achieve this, the way in which SMEs can be helped to win funds to maximise their commercial and financial value must be simplified and made both easier and cheaper. Lord Jones wants a government that "walks the path with business" and doesn’t ignore the value of small companies.
Since the start of the recession money spent on research and development by businesses has reduced by over a quarter to just £25bn in 2009 - much of it due to small businesses cutting back. The UK currently spends 1.79% of GDP on R&D, which is somewhat less than the OECD average. Even before the banking crisis in 2007, UK firms spent €37bn on research and development, less than either Germany (€62bn) or France (€39bn). The UK R&D tax-credit system works well but Lord Jones says much more needs to be done with small, innovative businesses receiving special fiscal help. Europe recognises the value of SMEs, which was why it has a €1.4bn fund to help small companies innovate and develop new products and processes.
The fund for SMEs is part of the Commission’s Seventh Framework Programme for Research and Development (FP7), which is designed to drive growth, innovation and collaboration across Europe. Pera has worked hard helping hundreds of SMEs drive the development of new products, markets and customers using FP7, but the fact remains that with greater awareness, more firms can win funding. Companies are missing out on millions of pounds of FP7 funding and are consequently investing less in R&D. Lord Jones calls on the coalition government to do more to support small firms:
“If they and the EU were to do one thing to help SMEs it should be to cut regulation and the paperwork and make doing business easier. SMEs make up a large part of the economy, representing 99 per cent of all enterprises in Europe. In the EU, SMEs employ 75 million people in the private sector and are an essential source of growth and innovation. It is vital that the government and banks do more to unlock the potential through research and technological innovation, and this means cutting red tape and offering support where needed. The government is rightly focused on deficit reduction but has so far failed to do enough to encourage growth.”
Find out more about Pera’s work here.
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