Is The Future Of MES SaaS?

In the last five years, MES have begun to experiment with the Software-as-a-Service model.

This is a welcome development and one that’s gaining interest from manufacturers struggling with complex, multi-site MES projects. It’s become especially relevant in the last few months, as manufacturers increasingly prioritize fast time value, and when appetites for risk are lower than ever.

In this post, we’ll look at what it means for MES to adopt a SaaS model.

Ultimately, this post will work towards a bigger, underlying question:

What role do MES have to play in the Everything-as-a-Service Era?

Put simply, a SaaS MES is a manufacturing execution system licensed and delivered on an as-a-Service model.

In order to understand exactly what SaaS means for MES, it helps to start by defining our terms.

What are MES?

For the purposes of this post, we understand MES as a class of solutions rather than any particular instance of an MES in production.

According to Gartner, MES are:

“A specialist class of production-oriented software that manages, monitors, and synchronizes the execution of real-time, physical processes involved in transforming raw materials into intermediate and/or finished goods.”

MES are typically the layer of software between production processes and information systems.

Very broadly, MES are responsible for managing resources, scheduling production, coordinating execution, and collecting production data, among many other applications.

What is SaaS?

SaaS, or software as a service, is a software model where vendors host and distribute their products over the internet.

There are many variations of SaaS, but it’s often understood as a means of licensing software on a subscription basis (though perpetual licenses still exist) built on a multi-tenant cloud architecture.

What it means

Ultimately, a SaaS MES should be a manufacturing system made simpler through the simplified distribution and architectural benefits of SaaS.

To dig a little deeper here, let’s look at two of the big features behind SaaS MES. 1.) Moving MES to the cloud, 2.) Adopting an as-a-service model.

In 2021, manufacturers are increasingly comfortable with cloud-based services, including MES.

In a recent AWS and IDC study, as many as 60% of MES users said they prefer cloud over on-prem. This confidence is matched by manufacturers’ efforts to actually move to the cloud. While only 12% of survey respondents have already migrated to a SaaS-based cloud MES, another 52% reported having plans to “lift and shift” in the coming years.

There are good reasons this shift is happening now.

For one, cloud security has improved over the last decade such that cloud systems can be safer than on-prem. (Gartner reports that multi-tenant cloud solutions are often as secure as the best on-prem setups, with the vast majority of cloud vulnerabilities resulting from user error, not system design). Further, cloud systems can be easier to update, and leading cloud vendors like AWS and Microsoft Azure offer impressive metrics for availability and reliability.

When it comes to security, availability, reliability, and connectivity, there are compelling reasons to move to the cloud.

So what does it mean for MES to be a service?

With MES-as-a-Service, manufacturers license an MES or MES-like functionality.

Like other complex, cloud-based systems–ERPs come to mind–MES vendors are moving toward new models of selling services to customers. MES vendors are currently developing SaaS licenses priced and distributed based on user, usage, modules, or term.

So ideally, a SaaS model should allow MES customers to purchase only the functionality they need. This would prevent MES from growing into the monolithic, sprawling systems they tend to become.

It stands to note what a radical departure this is from legacy MES systems.

To date, many manufacturers have considered their MES “forever” systems. Indeed, one of the ways manufacturers justified the expenditure necessary for an MES was the fact that it would produce value over a decade-long life or more.

This fragmentation in pricing and the move toward an as-a-service model are a clear signal that the era of colossal, custom, perpetual systems is nearing an end.

In short, it’s a sign that manufacturers still need systems to coordinate, track, execute, and record production, but they’re dissatisfied with the cost and complexity that comes with owning an MES.

They want their MES, simply put, as a service.

Here’s a shortlist of reasons why to summarize:

• Cloud is secure
• SaaS allows for simplified systems updates
• SaaS frees up internal IT resources
• Better integration with ERP and shop floor IoT
• Shift expenses from capex to opex
• Easier to scale

So far we’ve defined SaaS MES and looked at what, ideally, these systems should offer manufacturers. We’ve seen that moving MES to SaaS is a means of delivering necessary MES functionality without the drawbacks–complexity, rigidity, cost–associated with traditional MES.

By delivering and hosting MES in the cloud and offering more flexibility to the customer over what they purchase, we should be entering a new era of ease.

The question is, are SaaS MES delivering?

If the last 3 years have seen increasing confidence in SaaS MES as a solution, many of the same problems remain. In a recent report, Gartner found that MES customers still had the same complaints.

Cost

Between licenses, integrations, professional services, and maintenance, MES users found that costs ballooned, whether SaaS or not. Further, Gartner found that MES vendors are struggling to modularize and price their products “on a pure SaaS model.”

Speed

The average roll-out time for and MES is still 15-16 months. In theory, SaaS is a means of reducing deploy times. However, custom MES delivered as SaaS are still deployed on a waterfall model, and often have long implementation times. With time-to-value, an increasingly important metric, the slow speed of MES is an enduring concern.

Complexity

SaaS has the potential to dramatically reduce MES complexity, especially across multi-site roll-outs. The SaaS model mitigates some of MES complexity, but not entirely. SaaS MES are largely still back-end heavy projects. This leads to long development cycles, costly consultant fees, and ongoing vendor support.

None of these complaints are new, and the MES market has hinged on addressing them.

There is, however, a way to get the advantages of SaaS without the difficulties of traditional MES systems.

Gartner writes of the next half-decade in MES:

“By 2024, 50% of MES solutions will include IIoT platforms synchronized with microservices-based manufacturing operations management (MOM) apps, providing near-real-time transaction management, control, data collection, and analytics.

Monolithic approaches to MES are now being challenged by microservices architectures that break MES functions into small, self-contained business functions with clear interfaces/APIs.

We believe that successful development and deployment of MES using this technology could create the innovation and disruption that MES practitioners have been waiting for.”

The solution, according to analysts, is a platform that expands MES usability for shop floor workers, is built on a microservices architecture, and makes data immediately available.

Platforms have emerged as a viable method of supplementing and extending an MES. Platforms are designed for agility and built on cloud and IIoT-native architectures. Crucially, platforms provide the same functionality as MES without the cumbersome back-end characteristic of MES.

The big difference is that platforms achieve this functionality through collections of distinct applications rather than a unitary system.

For manufacturers looking to reduce the cost, complexity, and time-to-value of MES projects, platforms offer a solution.

From Gartner’s appraisal, I read that moving MES to a SaaS model is a step in the right direction, but it’s not addressing the root cause of the MES problems.

SaaS models might create an infrastructure for addressing MES’ enduring issues, but they don’t solve them in and of themselves.

Manufacturers need more flexibility and usability, and they need these systems now.

So MES will stay the solution of choice in 2020 and beyond to the extent that they can integrate platform-like capability.