A fight to the finish: Oracle battles SAP to link the top floor with the shop floor

Manufacturers constantly struggle to link sales and planning information with the data collected on the shop floor. There is often a gap between the Enterprise Resource Planning (ERP) systems that collect orders and generate build plans, and the Manufacturing Execution Systems (MES) that orchestrate shop floor operations. SAP’s aggressive movement to address this gap has recently been met by a variety of Oracle announcements. The differences between the vendors’ strategies indicate where the entire market is heading.

ORACLE ADOPTS A HUB STRATEGY
Oracle is pushing directly into traditional MES territory. Oracle E-Business Suite 12, for example, introduced integrated MES functionality that supports shop floor kiosks for both workers and managers. Oracle also recently released new offerings to fulfill its vision of “information-driven value chains.”

The core of its strategy is Oracle Manufacturing Operations Center, which competes with SAP’s Manufacturing Integration and Intelligence (MII). It was first described at Open World in November 2007 when it was referred to as a manufacturing hub. It acts as a repository for data from shop floor systems such as data historians and PLCs. The underlying data model is based on the ISA-95 standard, and the product integrates with Oracle’s Fusion Middleware, making the data available to reporting and event management systems. In practice, the system is bidirectional and delivers ERP data such as costs, work orders and requirements to plant floor systems. It will also gather data from MES, quality management, PLC and SCADA through OPC adapters.

SAP MOVES FIRST TO CROSS THE MANUFACTURING CHASM
SAP is bridging the ERP/MES gap by aggressively building relationships. Existing MES vendors can use MII to build links between their offerings and SAP. MII came from SAP’s 2005 acquisition of Lighthammer, a vendor that specialized in software tools for monitoring shop floor information and integrating it with planning systems. SAP’s strategy was bolstered by the introduction of the SAP Lean Planning and Operations (LPO) module, acquired from Factory Logic in 2006. Visiprise, Invensys, Pavilion Technologies and GE Fanuc Automation are all currently working with SAP.

KEY TAKEAWAYS
Industry solutions are back in vogue. Four years ago, the leading enterprise vendors trumpeted their acquisitions. Two years ago, they discussed how they would integrate these acquisitions. This year they are finally back to addressing real industry needs. Fortunately, the acquisitions and integration technologies have become a fundamental part of their industry strategies. Expect additional industry-specific templates and implementation plans.

The partner strategies differ. SAP has been very aggressive developing partnerships for linking ERP and MES data. For SAP, these partners are crucial for developing technology to facilitate data linkages. Oracle’s approach is very different. Its introduction of MES into core offerings is threatening to many potential partners. Instead, Oracle is using its partner network for domain experience in deep verticals such as life sciences and government contracting where compliance issues are particularly onerous.

The road maps are still incomplete. Both vendors have made a great deal of progress in bridging the data gap, but their roadmaps still leave out a great deal of functionality. It is still unclear, for example, how MII or the Oracle Manufacturing Operations Center will integrate with modules for logistics management or customer service. Similarly, there are practical issues such as documentation management, electronic signatures or data archiving that remain unaddressed. Both vendors have technology that can address these issues and have identified them as concerns, but have not yet built appropriate templates or roadmaps.

The competition is coming. Oracle and SAP aren’t the only ERP vendors in the game. Other vendors with large manufacturing interests, such as Infor and IFS, are taking note and rolling out their own strategies. It remains to be seen which strategy they will fast-follow, Oracle’s or SAP’s.

SAP and Oracle have both rolled out strategies to cross the data chasm between the executive floor and the manufacturing floor. The differences in their strategies reveal the developing market trends.

George R. Goodall is a senior research analyst at Info-Tech Research Group in Toronto. You can reach him at ggoodall@infotech.com.