Feature article: Cambashi Seminar April 2002

Out of this nettle, danger, we pluck this flower, safety'

Where you won before, you can win again. That's Cambashi Senior Partner Mike Evans's message for manufacturing IT sales and marketing execs faced with some of the toughest selling conditions in recent memory.

Evans told attendees at Cambashi's Annual Seminar at Gaydon, Warwickshire, that sales wins are out there. But only, says Evans, "if you put yourself in the shoes of the people running these businesses." They will do anything to maintain positive cash flow: "That's the key to many of the decisions about where to deploy the sales force."

Consumers are still shopping, "So apply common sense to what you see. Ask yourself what are they buying, who sells it, who makes it and what goes into it."

Even in industry sectors with highly publicised problems, such as mobile phones, "people are still selling a hell of a lot of mobile phones." Other strong sectors are health care, digital televisions, ("more like computers than the analogue TVs they replace") and even cars: "People are continuing to buy the premier brands, so the industry is shifting in that direction."

All sectors will cut out inessentials - fewer prototypes; less parts duplication and fewer engineering change orders; less scrap, rework and unnecessary inventory. "And what achieves those things," Evans argues, "are computer solutions."

Many manufacturers will concentrate management effort on cost reduction and outsource necessary distractions - like IT provision. Every enterprise wants to work the assets it is prepared to spend money on - people, machines or computing power - harder than this time last year or last week.
And they want to make winning products: "Manufacturers need consistency about how they get ideas to market and get them there fast. But some ideas fail, some succeed and they don't know why. If more people could look at designs, they'd have a better idea of what would succeed or fail."
Any application that supports these aims will get a fair hearing. But Evans warns that it's line of business managers (LOBs), who will spend 60 per cent of the IT budget next year. "You've got to knock on a lot of doors," says Evans. "You've got to influence a lot more people than you had to influence in the past, and you have to talk success metrics and cash flows."

Corporations are reining in maverick purchasing so, when you've sold your application to the LOB, "you'll still have to sell the deal to procurement. And you can't use the same arguments".

Now, more than ever, the secret of successful applications selling is to make sure prospects understand the need to keep moving, to keep investing in solutions which can help them improve performance.

If your proposition is attractive enough, then progress and sales are still possible, but your proposition has got to be more attractive than it's been in the past.

Where you've done it before, you can do it again - but only if you analyse carefully what it was that helped you succeed.

'Modest doubt is call'd, the beacon of the wise'

Manufacturing is changing, not evaporating. And a "productivity explosion" could be about to confound IT's critics.

Cambashi Partner Peter Thorne delivered this assessment at the Cambashi 2002 Seminar on April 23: "It's an upbeat message," he says, and warns UK manufacturing IT suppliers against measuring the health of the engineering sector to predict their own fortunes.

True, the traditionally defined 'manufacturing' sector is in recession. But, "The market for manufacturing solutions extends beyond manufacturing and engineering," he asserts, pointing to the IT and telecommunications manufacturing sector. Equipment manufacture grew from £9bn to £13bn between 1992 and 1999. But value added in the whole sector almost doubled, from £30bn to £55bn, over the same period.
The difference was in the services supplied on top of the equipment: "Business issues, companies, and IT solutions can span the boundary," Thorne told the seminar. "The channels to market are capable of speaking to both equipment and services."

Thorne acknowledges 1980s economist Robert Solow's observation that, "You can see the computer age everywhere but in the productivity statistics." But he counters the widespread skepticism about the benefits of IT: "These productivity explosions are yet to come. We are right on the edge of them."
He cites the work of Paul David, of Stanford and All Souls, and more recent analysis by Nicholas Crafts at the London School of Economics. "Despite use of electricity doubling between 1899 and 1904, the impact on productivity was small. It wasn't until 15 years later, when electricity accounted for half of all industrial power, that productivity surged."

Turning to technologies, Thorne picked out learning points from the experiences of ASP and public exchange providers before looking at web services and the issue of single sign-on. With regard to software product development, Thorne identified the natural evolution of software applications to incorporate higher-level data models to capture more semantics and provide more automation. Coupling this with user demand for step-by-step enhancements allowed Thorne to speculate on the medium-term way forward for software applications - "Some technologists see autonomous software components as the only way to build truly robust systems in the face of the spectacular complexities of an intimately connected supply chain. On the user side, it's certain that companies prefer to avoid 'big-bang', 'bet-the-company' projects. Software components will model higher-level information and provide the type of automation needed to reliably support extended enterprise design and manufacturing functions and interaction".

These components will be deployed on the desktop, in the data centre, or accessed as a utility "according to the user view of where the data should be" asserts Thorne.
"We're possibly at the dawn of a new age," Thorne concludes. "All we need is a latter-day Henry Ford or Alfred Sloan to drive the changes that make the applications do twice what we thought they could."

John Dwyer
Freelance Writer
email: jhndwyer@aol.com

John's summary of all the presentations given at the seminar is also available online.

Also in this issue:

Hot Topic: Making IT disappear
Peter Thorne discusses the pending arrival of a time when technologists will know they've succeeded since the fruits of their labours are so simple, reliable, available and predictable that we all just take them for granted…

Book Review: Exploring Online Magazines
Webworks:e-zines Exploring Online Magazines, Martha Gill, Rockport Publishers,
Mike Evans reviews this book and ends up disappointed in Cyberspace…

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