So far, throughout the first four parts of
this blog series about the principal reasons why your legacy statistical process control (
SPC) system needs an overhaul, we have focused mainly on how the limited functionality and capabilities of legacy SPC systems, as well as how they are currently used, are working
against the drive for increased manufacturing performance. In other words, they can inhibit performance and quality improvement rather than support it.
In this last article,
The Big Easy, I want to switch gears and talk more about the “ownership” aspects of legacy SPC systems, because the term “legacy” also includes how systems are procured, implemented, deployed, and managed (or “owned”). Here we go…
Lower Total Cost of Ownership with SaaS SPC Software
While we are all too familiar with the term “ownership” in the context of Total Cost of Ownership (
TCO), it does not really apply in the modern world of Software-as-a-Service (SaaS) or cloud computing, because you don’t buy (and therefore own) a particular technology.
Hence, trying to perform a like-for-like comparison on TCO often does not yield accurate, or even meaningful, results because it fails to account for many of the additional (and valuable) “soft” benefits that are not comparable on either side. The TCO model for software ownership goes back to the days when we typically purchased perpetual licenses that granted the right of use for the “software” in return. A legacy that still exists today.
In those early days, software licenses where often relatively expensive and required all the associated hardware, infrastructure, and maintenance as well. So, it made sense to calculate a TCO (i.e., the total cost to the business over the product’s expected useful lifetime). We applied the same accounting methodology we would use if we were spending six or seven figures on a 5-axis milling machine or a high-speed multi-head filling machine. And that made sense…at the time. But not anymore.
Just a Utility
Before Software-as-a-Service or Cloud computing were even invented as terms, the early incarnations were known as “utility computing.” The rationale behind that term was that you would not buy or own software; you would instead pay for it as you consumed it, just as you would for electricity, gas, or water—hence the term “utility.” In fact, the concept goes back almost to the birth of computing, when huge, expensive mainframes were typically used by paying for timeshare, but that’s another story….
Utility computing soon morphed into “on-demand” computing…before settling on today’s nomenclature of “Software-as-a-Service.” It made little sense then to try and do a TCO calculation on a utility like electricity in the same way we would a capital equipment purchase. Neither does it make sense today in the context of SaaS.
While I
am not attempting to totally dismiss the notion of TCO calculations for SaaS, I
am advocating that we need to take a completely
different tack from the traditional approach to TCO calculations and comparisons, because they are significantly different concepts of software ownership models. So, let’s talk about SaaS.
About SaaS…and the Landscape of Change
No one can deny that SaaS is completely transforming the way that technology is being delivered and consumed. And of course, the transformation goes far beyond SaaS, with technologies such as Infrastructure-, Platforms-, Database-, and Communications-as-a-Service. Even beyond the worlds of software and technology, think Mobility-as-a-Service or even Manufacturing-as-a-Service.
Hence the term “Everything-as-a-Service” (XaaS), where we are introduced to the concept of “Servitization”—and the
upending of entire industries. I believe that there are two fundamental reasons behind that transformation, the first being that owning something (whether a piece of software or a new car) is
not what delivers value. Rather, all the trappings of ownership just get in the way or add cost and complexity to extracting value from it. Ownership becomes simply “overhead.”
Technology in and of itself is value-less (sharp intake of breath, much hand wringing, as he speaks with full knowledge and appreciation that he is part of a technology company!). What adds value to technology is the
capability it provides, or what it allows you to do with it that you could not do without it.
And the second reason behind that transformation is that
the more you consume, the more you pay for, and vice-versa. And this consumption is directly linked to some economic “value added” such as increased efficiency, productivity, output, quality, agility, innovation, growth, or whatever.
It becomes an
operational expense that is directly linked to operational performance, and not capital expenditure, which often is
not directly linked to operational performance. It is this second point that often leads companies to continue to use outdated legacy systems when they are no longer providing the much-needed capabilities most of us now find to be critical to our business well-being.
SaaS Makes a Big Difference
With traditional software purchases, the upfront capital investments can be significant and are irreversible. Once the purchase has been made, companies are obliged to use the new system to extract every ounce of value from that initial upfront commitment. Or worse, write the investment off.
Likewise, once those initial purchases are made, there is
no obligation or ongoing commitment from the technology provider to continue to drive innovation in the product, other than perhaps to provide maintenance upgrades and security fixes.
The link between that capital investment and operational performance becomes disconnected and we continue to use the systems, often for the wrong reasons, regardless of their impact on operational performance. The case with SaaS, however, is fundamentally different.
SaaS as Part of Your Operations
Instead of requiring a significant upfront capital purchase, SaaS products are delivered through a subscription-based model, typically on a pay-as-you-go basis. A great example is
Enact® from InfinityQS, our Quality Intelligence cloud offering, which starts with just a
5-license minimum; and the number of licenses can be increased or decreased on a month-by-month basis as required (the customer is in
full control).
Therefore, the subscription cost scales in direct correlation to use, and the system’s business value scales in direct correlation to the capabilities that it provides. This also creates another critically important dynamic:
with no long-term contracts or agreements, the power shifts from the vendor to the customer.
As with all SaaS vendors, InfinityQS must continually ensure that our customers are deriving the maximum value from our solutions to ensure their continued use and expansion. It’s simply the only way to ensure the ongoing success of our solutions. That means continued innovation and improvements, as well as high levels of performance and availability.
Start Small and Grow Quickly
The flexibility provided by SaaS enables a more phased, iterative, and even low-risk approach to deployment. Since little or no additional infrastructure is required in the form of servers and other hardware, an organization can start small and quickly—perhaps a proof-of-concept on a particular process, production cell, or work area—
without any significant upfront investment. Once the value that the capability delivers is ascertained, then expansion can continue as fast (or as slow) as the organization feels comfortable with. The subscription costs increase in direct correlation to that expansion pace.
What we often find with our customers is that the value returned is significant and that a more “widespread” adoption becomes a matter of
priority and urgency to gain as much of that value as quickly as possible across the wider (often
entire) manufacturing operations.
This enables them to switch gears on their digital transformation approach. Rather than planning a wide-scale, high-risk, and potentially disruptive strategic enterprise-wide digital transformation agenda, organizations can focus instead on
tactical digital transformation and pinpoint the areas that have the most need or opportunity for improvement. (For more on tactical digital transformation, please see my detailed
blog from earlier this year.)
But also, and just as importantly, manufacturers do not need to worry about scaling any infrastructure to support their expansion plans. All of that is taken care of by the technology vendor and their cloud computing partners. Scaling takes place
invisibly in the background, as if by magic. And that’s the beauty of modern-day “elastic” cloud computing models provided by cloud services providers such as
Microsoft Azure.
And that means that a customer can go from five licenses to 1,000+ practically overnight
without any infrastructure concerns. Breathe out slowly with me: “Aaaaaaahhhh.”
With SaaS, Security Matters
No discussion on SaaS or cloud computing would be complete without talking about security. It is often touted as one of the major concerns (albeit a rapidly diminishing one).
Security is, of course, a major concern and it should be one of your top priorities. The data that we store is often highly confidential and/or sensitive and it must be kept secure. If we accept that as a given, then a SaaS/cloud option is
absolutely the more secure option.
Cloud service providers, such as Microsoft Azure, are multi-billion-dollar businesses and invest and dedicate a large proportion of their expenses to security. It is their business after all, and a serious security breach would have far-reaching consequences to their bottom line. They most probably spend more (sorry, they don’t publish the numbers) on security alone than the total revenue of most medium-to-large manufacturers.
In other words, they invest far more resources in security than any other kind of business and deploy the most advanced physical and virtual security technology available today.
Beyond Software
Finally, I would like to touch on another important aspect that goes beyond software. Implementing any new solution, especially one that is mission-critical and sits at the center of a manufacturer’s operations, often comes with the additional need for supporting services. This may range from providing advice and guidance on implementation approaches and best practices, to integration with automated data sources such as PLCs, OPCs, SCADAs and gauges, or advanced training, for example.
While InfinityQS is indeed a software company, at our core, we see ourselves more as a company that is at the heart of
manufacturing and
quality. Many of my colleagues are not just “software people,” but are mechanical and industrial engineers, qualified quality experts, SPC experts, and even several degree-level industry statisticians and Six Sigma Green and Black Belts.
At InfinityQS, we have an entire Professional Services Group that is dedicated to helping our customers achieve higher levels of manufacturing excellence with our solutions. We also have an extensive global network of highly skilled partners who specialize in fields such as manufacturing and quality consultancy, industrial IT services, and automation and control solutions.
Going back to my earlier premise that overhauling your SPC solution is about more than buying technology—it is about acquiring a valuable capability. And that goes beyond working with just a “seller” of technology—to working with a technology
partner who can support you on the entire journey. This is not something that is synonymous with legacy SPC systems vendors.
We’ve got your back.
Next-Generation SPC Systems Offer Performance Advantages
In summary, modern next-generation SPC systems, especially those deployed as a SaaS/cloud-based solution,
decouple the technology infrastructure and ownership challenges from the capabilities they provide. This enables manufacturers like you to focus entirely on extracting significant operational performance advantages from the capabilities your system provides, without having to be concerned with the deployment, delivery, management, and maintenance of the solution.
This makes modern, cloud-based SPC solutions much easier to “own” than legacy SPC systems, hence the title of this article,
The Big Easy (and I don’t intend to win any comedy awards for an attempt at a witty title, I admit).
This blog series is a culmination of many years of experience working with clients on their journeys from legacy SPC systems to modern, next-generation SPC solutions and sums up many of their motivations, frustrations, and challenges—and the process of enlightenment that takes place along those journeys.
I hope this series provoked thought and inspiration on how your legacy SPC system might be holding your organization back. Take advantage of the technology at your fingertips today: contact one of our account managers (1.800.772.7978 or
via our website) for more information.
Read the other articles in this series: