The Uptime Blog
The end of the year is a perfect time to look back on some of the blog posts written in the past few years. These posts were some of the most popular and we hope you find them timeless and relevant. From all of us at Enigma, Happy New Year!
The Value of SaaS-Based Service Information: IDC Speaks
A recent blog post by IDC Analyst Sheila Brennan (“Service Information Delivered as a Service Improves Quality”) validates what we’ve been saying: there’s great value in offering parts and service information via The Cloud, or in a SaaS-based offering. It’s good to see that others recognize the value of software-as-a-service (SaaS) offerings in this space. There are not many to choose in this category: Enigma’s SaaS EPC solution is one of just a couple of them out there. The benefits of a SaaS offering appeal especially to the SMB market because it improves customer and dealer support with minimal impact on back-office IT resources and budgets, and reduces server hardware and maintenance costs. Brennan predicts that more companies will embrace Cloud-based content as the market and technology matures.
Forbes Says Online Documentation Is "A Critical Business Tool”
An article on Forbes.com indirectly speaks to why online parts catalogs are so critical to manufacturers and owner-operators of complex machinery. We couldn’t agree more. The author Aaron Fulkerson writes, “Indeed, online product and services documentation has now proved to be an immensely effective way to increase new customer acquisition and to shorten sales cycles. It is now a critical business tool.” We couldn’t agree more.
Report from Aviation MRO Show: OEM Content Policies Create Problems
Our November 2010 blog wrap-up of the Aircraft Commerce Airline & Aerospace MRO & Operations IT Conference in Singapore struck a chord with many. The strong message that came out of this conference—that “content is king” when it comes to successfully implementing MRO IT systems—will prompt the airlines and MROs to adopt a more independent approach vis-à-vis the OEMs and take control of the content that shapes and determines the efficiency of their maintenance operations.
What’s the state of the automotive parts market these days? In a recent blog post Carlisle and Company, a leading consulting company for automotive and heavy equipment, says that the aftermarket is on the upswing: “North American Auto Parts Sales Seem to Be in Solid Recovery.”
According to the author, “The service parts market is in recovery, the IAM [independent aftermarket] has not launched a secret market share stealing weapon, and, due to 2009 cutbacks and capacity tightening, the OEMs are all under-realizing the potential of these market conditions. That is the unintended consequence of conservative forecasting. Hundreds of millions of dollars have been left on the table.”
He goes on to write, “Overall US parts and accessory sales are still gaining momentum. For some OEMs it will be in the double digits – growth in the same ballpark as year-over-year vehicles sales.”
The Carlisle and Company blog post presents several reasons for the uptick in parts sales, but a key factor is this: after delaying service during leaner times, consumers are finally bringing their cars in for maintenance and repair. Carlisle says there are “solid gains” in maintenance and light repair and that it seems to be a sustainable trend, rather than being “reflective of a common wave of consumer fix-it-up behaviors.” The author seems to be saying that car owners are bringing their cars back into dealer service bays and that OEMs have the opportunity to capitalize on the opportunity by selling more parts. The industry data presented in the Carlisle blog supports this conclusion. However, it’s hard to miss the point that even with the aftermarket rebound, OEMs are still leaving “hundreds of millions of dollars” on the table. Clearly Carlisle believes that OEMs could, and should, do more to capture that parts revenue.
At Enigma, we’ve been anticipating an upturn in the aftermarket (see a blog post we wrote 18 months ago on Where to Invest). During the recession, most OEMs tightened their belts, and delayed investments in IT systems that support their aftermarket operations. It was our opinion that such a strategy was a mistake; that by doing so, the OEMs would lose out on an opportunity to quickly capitalize during the inevitable turnaround. Some OEMs however, did make IT investments during the downturn, some are doing it now, and some are still thinking about it. There are many companies currently pursuing profit strategies that are tied to improving aftermarket IT. From our perspective, since Enigma introduced a full-function, hosted EPC solution about six months ago, we have noticed a dramatic rise in OEM discussions regarding how to improve their service parts business. Whether that's a function of the new SaaS EPC product or a general rebound in OEM aftermarket initiatives remains unclear. (For a list of key functionality that should be part of any aftermarket-based profit strategy, download our sample EPC RFP here)
The interest in aftermarket optimization goes beyond automotive OEMs, including construction/agricultural, energy, medical, semiconductor and oil/gas equipment. For many of these OEMs, spare parts generate less than 10% of revenue, but more than 25% of profits. Therefore as sales of new products begin to rebound, OEMs shouldn’t overlook the opportunity to improve aftermarket operations and lock-in this recurring revenue stream. Using the proper technology, OEMs can decrease the cost of aftermarket operations and increase their market share for parts and accessories at the same time. Enigma’s OEM customers report increased part sales, improved customer/dealer satisfaction and greater accuracy for parts and service orders (read some Enigma case studies on automakers).
Yesterday would have been an ideal time for OEMs to invest in their aftermarket operations; but if they were bound by fiscal limitations in the past, then today is the time to act.
In Part 1 of this blog topic we described the bi-directional relationship between aftermarket service information and other business processes (one impacts the other). We also described the central role that service and parts information plays in helping equipment OEMs and owner/operators to realize revenue and profit targets—OEMs need parts revenue and owners need uptime. Finally, we pointed out the importance for making information serve the enterprise (the whole enterprise), not the other way around.
In Part 2, we highlight ways that companies can capitalize on aftermarket trends and propose a direction for the future, including advice for reducing costs and delays.
Service and parts information affects almost every corporate department. As a result, implementing an IT system that serves the needs of the aftermarket and integrates with the rest of the enterprise can be daunting (each department may have multiple systems). Without proper foresight, the complexities of such initiatives carry a high risk-reward ratio—with many organizations focusing only the risks and not the rewards (which are substantial). However, based on our experience there are ways to avoid some of the most common problems, which are:
- High cost
- Long implementation time
- (Process) change management
The service and parts information is itself one of the most complicated pieces of such a solution (discussed in a previous blog series). However, to properly support equipment in the field there are a number of basic requirements which must be considered:
- Handle huge volumes of data (in multiple formats)
- Support thousands of users (often speaking multiple languages, across continents and oceans)
- Configure to specific business processes (equipment OEMs and owner/operators)
- Capture best practices and record emerging problems/trends
- Automated updates of service and parts information
- Support multiple, simultaneous delivery channels (Web, DVD, print)
A complete list of functional considerations is included in this sample RFP for electronic parts catalogs.
A major concern for most equipment OEMs and owner/operators is that software R&D and business process automation is not one of their core competencies. In fact, while most of the companies we talk with want to automate aftermarket processes, they also want to minimize IT overhead. As outsourcing of IT and various aspects of customer support becomes more commonplace, sooner or later companies will consider software-as-a-service (SaaS) to handle aftermarket parts and service information. Given the costs of publishing and maintaining parts catalogs, service manuals and other technical content it is inevitable that these solutions will turn to “The Cloud.”
Equipment OEMs and owner/operators should be exploring SaaS models for distributing and managing service and parts information. This approach will allow companies to focus on their real core competencies: building and operating complex equipment.
The SaaS EPC model is not a cure-all for the technical challenges of aftermarket service and support. In fact, some companies will decide there are still too many questions about SaaS to trust their service and parts information in the Cloud. Under such circumstances, it’s imperative that these companies choose an EPC vendor that can support multiple operating models—internally hosted, externally hosted and SaaS. This will allow companies to implement an aftermarket support strategy that adapts to future IT initiatives and helps limit costs.
Implementing business automation for service and parts carries risks and rewards. However, the technology exists today to limit the risk and maximize the reward. Because the cost and performance of data centers, data storage, processing time, and bandwidth have all improved tremendously over the past 3 years, equipment OEMs and owner/operators must consider SaaS models as they investigate the implications and opportunities of putting their aftermarket information online.
Tags: aftermarket, Electronic parts catalogs, parts and service, service technicians, Goodrich, SaaS, OEM content, automotive, service information, parts ordering, heavy equipment, Volvo, Ford, dealer support
OEMs that make complex machinery (whether it’s heavy equipment, automobiles, oil rigs, or other discrete manufacturing products) need to support their dealers and distributors. This can be a challenge because dealers and distributors tend to run as stand-alone operations (often they are independent franchises) that have their own business issues, separate but related to the business issues of the OEM. One of the ways OEMs help these business partners is via an electronic parts catalog, to provide accurate parts and service information, streamline parts purchases and simplify customer support/service.
But creating an up-to-date parts catalog is no small task; many forms of data (schematics, manuals, service bulletins, inventory, etc.) must be pulled from multiple database sources, and formatted into an application that is accessible to many users. That’s where Enigma comes in, providing Electronic Part Catalog (EPC) technology that: 1) makes it faster and less expensive to create and publish aftermarket support applications; 2) makes it easier to buy service parts from the OEM and distributors; 3) improves customer support/service.
Some OEMs are motivated by saving money on the front end; i.e., saving money on the cost of producing their catalog. Goodrich Aerostructures, for example, saves $1-1.5M per year in production costs. Others, like Ford, primarily want to help sell the right parts fast, without increasing customer support costs. Others are keenly interested in improving their end-users’ customer service experience, like Volvo, which embeds the Enigma EPC into Volvo VIDA, its dealer support system. (Relative to its former system, Volvo service techs now make repairs faster and service more cars per day.)
The advantage of Enigma’s InService EPC software solution is that it can be tied into the OEM’s order management, inventory, ERP and CRM systems to automate the entire customer support workflow. It also allows dealers and distributors to integrate the EPC to their dealer management (or ERP) systems to automate workflow and part procurement for the dealer.
However, some companies require a faster rollout and lower costs (in dollars and IT resources), and consider fully-integrated parts logistics to be a future objective. The solution in these cases is a software-as-a-service (SaaS) solution. As more companies embrace a SaaS approach to IT, Enigma has responded by offering a SaaS version of our tried and true EPC technology. Enigma SaaS EPC is a powerful product that helps OEMs put parts and service information online very quickly, allowing the OEM to support dealers and customers with unlimited updates of service and parts data.
One advantage of Enigma SaaS EPC is that it reduces the time and cost of launching a Web-based service and parts storefront. It can be rolled out in 90 days, with little or no upfront IT investment. Furthermore, because the application is hosted “in the cloud,” it reduces hardware server and maintenance costs. The SaaS EPC solution is particularly compelling for two business profiles: 1) small-medium businesses (SMBs) that wish to keep infrastructure requirements low; 2) larger companies that want to start small as they move their customer support (and EPC) to the Web.
There are good reasons for both solutions; OEMs need to determine their immediate requirements, as well as their future goals, and choose an EPC solution that supports both.
Get your company's parts and service information on the Web in 90-days, and update it as often as you want. That's one of the many benefits of Enigma SaaS EPC.
Faster setup and faster revisions, these are the hallmarks of Enigma's new offering and they result in more accurate information and better support for customers, dealers and distributors. These are also the features most requested by current and future customers.
Why do I bring that up? Because with the release of SaaS EPC, Enigma continues its record of providing superior customer performance and value. Once again, Enigma has recognized the deep-seated concerns and challenges that face our customers, and have provided a solution. No longer do companies need to outsource the creation of parts and service catalogs to a 3rd party, and then incur additional costs and delays when changes are required. Now companies of all sizes can afford to have a dynamic and effective web presence for aftermarket sales and support.
We took the industry-leading Enigma 3C catalog technology—currently serving some of the world's largest and most sophisticated manufacturing companies—and crafted a solution that is deployed quickly and keeps the OEM in control of their aftermarket business and customer support. By making ease-of-use a priority and focusing on the needs of OEMs and customers, Enigma SaaS EPC changes the game for companies that rely on aftermarket revenues.
Enigma SaaS EPC is truly an out-of-the-box solution that runs in "The Cloud" and lowers the cost for companies to publish and maintain their parts catalogs and service information. This EPC creates new revenue opportunities for OEMs, and helps dealers/distributors provide faster, more accurate service and support. Because it uses a SaaS model, Enigma SaaS EPC dramatically reduces IT support costs. It complements existing enterprise and e-commerce offerings and improves parts visibility and field responsiveness. Perhaps most importantly, Enigma SaaS EPC improves aftermarket part sales, increases equipment uptime and improves brand loyalty.
There are more benefits that companies will realize by implementing Enigma SaaS EPC but the best way to determine if there's a fit is to have a conversation. We look forward to talking with you about the opportunities and benefits associated with our newest product offering—Enigma SaaS EPC.
by Jonathan Yaron
In the manufacturing world, electronic parts catalogs (EPC) are a critical business system because they hold the key to aftermarket revenues and profits. The strategic function of an EPC is to manage the parts and service relationship between manufacturers (OEMs), dealers and customers. A modern EPC includes complete parts information (BOM), drawings, and different types of maintenance and troubleshooting manuals. The EPC also contains a pick list that will populate a shopping center/order management system. This means that the EPC essentially connects the point-of-service to the supply of spare parts, which are maintained by an ERP system like Oracle or SAP. (Spare parts can be either mechanical or software components.) This blog post is the first in a series that will discuss the pros and the cons of deploying your EPC using a SaaS (Software as a Service) model or as an in-house enterprise software application.
When you compare a SaaS EPC to an enterprise EPC, the major considerations are: cost, time-to-market, return-on-investment (ROI), integration to OEM systems (ERP), integration to dealer management systems, IT involvement and software customization, protecting intellectual property, initial data migration and ongoing revisions/updates, and ongoing customer support to the dealers. The final topic in the series will be my recommendations for deploying an EPC strategy.
Cost, time-to-market and ROI are directly tied to the OEM business model. As a result, this is the first topic to be discussed. SaaS and enterprise applications are at opposite ends of the implementation spectrum; one is an outsource model, the other keeps things in-house. For a division-level EPC, SaaS allows a very fast deployment (a few months) and a relatively small initial investment. On the other hand, an enterprise EPC will be a significant investment and will take a longer period of time (minimum of 12 months). SaaS costs can be covered by the operational budget while an enterprise approach typically requires a CAPEX investment (with a long and tedious budget process). Over time, SaaS will cost more (5-10 years horizon) however, even in the short term the enterprise approach can have a lower total-cost-of-ownership (TCO). (It is important to compare apples-to-apples with regard to EPC functionality, integration, and recurring data update and transaction costs.)
In most cases, a SaaS EPC will only need approval from the business manager, and will not require significant IT involvement. (However, it comes at the expense of back-office integration and automation.) The SaaS approach may not require an RFP or a bidding process and can be implemented as a pilot project that grows into a larger rollout. Because there is very little IT involvement, there is no internal budget of any significance. The only involvement of IT may be the initial data migration effort and help setting the upload of ongoing data updates. (In many cases this process is controlled by the business as well).
An enterprise EPC will typically require a RFP, or at least a bidding process, with a well-defined requirement document. The enterprise approach will require a complete budget process including external budget (for outside vendors) and internal budget for project management, IT integration and hosting (including hardware and software related to enterprise apps i.e. web servers, web services, database etc).
Both SaaS and enterprise EPCs have advantages and disadvantages. Beyond cost and time-to-market, a critical aspect of success is achieving business goals for ROI and TCO.
In my next blog, I will discuss integration of the EPC pick list to OEM back office systems (including single sign-on), integration to local dealer management systems, and IT involvement and software customization.
The other day, an editor for an aviation industry magazine asked me if Enigma could be deployed in a “Software as a Service” (SaaS) environment. The answer is, “Yes.” He then asked if any of our airline customers had SaaS deployments. The answer is, “No.” The next question was easy to anticipate, “Why not?”
I bring this up because SaaS is a popular IT topic everywhere, including the aviation community. What’s interesting is that our experience shows a disconnect between a vendor’s ability to support SaaS and a customer’s decision to use it. Over the past several years, every Enigma customer has asked about our ability to deploy in a SaaS environment. Yet even though we’re ready, time after time they’ve decided they’re not.
What holds companies back from SaaS? For most, there are operational challenges and business challenges. (This blog post will focus on operational challenges.) For airlines, the opportunity of SaaS is offset by a combination of fear, uncertainty and doubt (FUD). Airline operations are highly regulated and demonstrate a passionate concern for safety. Because the cost of maintenance mistakes can be so high, the airlines’ tolerance for risk is quite low. Therefore, when it comes to accessing maintenance information, ensuring accuracy and an audit trail is critical. Airlines need to track and control each piece of information used in the maintenance process. They must be able to name the source of all information, those with access to it, those who approved it, and those who used it. And they must guarantee that technicians can get to the data 24/7/365—with 99.99% availability (even when the network is down). Currently, most airlines believe a SaaS environment for service information puts a critical function outside their control, and it’s a risk they’d rather not take.
It’s not that aviation regulations prohibit SaaS deployments but that a SaaS environment is different from the norm. Because the regulations—and the regulators who enforce them—don’t anticipate SaaS, airlines that pursue such a strategy are faced with higher costs and longer delays in getting their maintenance IT systems approved.
It’s important to remember that airlines are responsible for all aspects of aircraft maintenance. Therefore, regulators don’t review and approve general software solutions they approve specific software implementations, on a per airline basis. From an operational standpoint, this approach ensures proper oversight. From a business standpoint, it increases costs and slows new technology.
So what does this mean for the future of SaaS implementations in highly regulated industries (like airlines)? It means that SaaS will probably be used in general business areas, like inventory and supply chain planning and analysis, long before it gets rolled out for maintenance operations, where safety trumps all other concerns.
Certainly a robust aircraft maintenance information delivery system can be implemented in a SaaS environment, but so far most airlines have been reluctant to be the first.
Recently, I was drawn into a debate regarding the future of offline applications. (For my purpose, an offline application is one that continues to operate properly even when disconnected from the network.) The person I was debating took the position that offline applications will vanish within two years as Web-based and SaaS applications grow in popularity. Furthermore, they contended that current/real-time data is the only data of any real import to business. As a result, this person claimed that offline capabilities for software applications were truly unnecessary. I disagree and firmly believe that offline applications will actually flourish in the future. Using the maintenance environment as a background, I will explain why:
1. Connectivity is not pervasive. No matter how much the wireless and cable companies want us to believe that the world will be fully-connected in the not-too-distant future, a large portion of the world will remain disconnected. Whether the connection is wireless or wired, access to the network is dependent on the number of customers that will pay for it. (Anyone that has driven through a rural/remote area can tell you how unreliable the cell-phone connection can be.) Furthermore, when it comes to fixing equipment, mechanics must often work in poor conditions where network cables are unavailable and wireless is slow and/or nonexistent. (Think about weather-related outages; isn’t it funny how often networks fail at the worst time possible?) Failover is critical to customer support and so having a disconnected-mode is key to delivering services in the real world.
2. Offline processing, online storage. In all things, performance is critical and offline processing leverages the power of the workstation, providing faster results. (This is especially true when problems and solutions are unclear, requiring multiple iterations to properly identify and resolve.) Once complete, results can be uploaded/synchronized to online repositories for use by other users.
3. Backup and archiving. In any regulated industry, companies often choose to save older versions of maintenance information, which provides a snapshot to a point in time. In the case of a recall or investigation, the ability to restore or view maintenance history is invaluable.
4. Intellectual property. Offline applications allow local storage of proprietary information that must always be at hand. This is critical for collecting maintenance notes and best-practices, where user-generated content can only be understood within the context of the specific equipment configuration and service procedures that were being performed. This is also important for field engineers that service multiple clients and must guard proprietary data from exposure.
5. Connectivity costs. Unless information changes daily (hourly?) it doesn’t make sense to make online access exclusive. Given the volume of data required to service complex equipment, local/offline applications make perfect sense.
Enigma is not the only company to recognize the importance of offline applications. I see a trend of classic web applications developing frameworks that enable them to work in offline mode and combine desktop and internet functionality:
1. Google Gears
2. Adobe Air
3. Ebay (Perhaps the biggest web application ever, Ebay developed a desktop/offline application for power users.)
4. Wikipedia offers DVD and offline downloading.
The issue can be further highlighted using this simple metaphor; in a world that has reliable public transportation systems, people still use cars. A sense of security and predictability are what influence companies to retain control over maintenance data through the use of offline applications. The pendulum has shifted many times from the days of mainframe computing to desktop applications, to client (fat) and server applications, and back to the web and back again. Offline and online applications have survived the test of time, each for different reasons. It appears there will always be room for both.
In response to our recent blog post titled, “The Future of Airline MRO Technology”, we received an interesting comment, which I’d like to address here. The assertions that were made in that comment have been underlined. (Please note, these are only the major points on which we disagree. Perhaps in a future blog we will address the additional disagreements as well.)
Do all OEMs make it difficult to use their data? No. The original blog post focused on Boeing and Airbus because they claim to be helping airlines by offering restricted/proprietary software solutions for a very low cost (sometimes free). Boeing and Airbus try to convince airlines that the best way to receive regular maintenance updates is to use these proprietary solutions. We disagree with this assertion. However, unless an airline is big enough to pressure Boeing and Airbus to give them usable MRO content (SGML), the only way to get it is to pay extra. Many small to medium-sized airlines have little purchasing power over Boeing and Airbus and so are forced to give away a key MRO advantage because they can’t afford the additional charges. The engine OEMs typically author their content in SGML and then publish it in PDF format. Airlines can often get the engine PDF content for free but again, they have to buy the SGML. The reason aircraft and engine OEMs obstruct access to usable MRO content is to protect their aftermarket parts and services revenue. (Airlines tell us it’s more about protecting parts revenue than service revenue but either way we’re all getting stuck with a higher bill.)
Isn’t MRO really the airline’s problem? It’s true that airlines have legal responsibility for the quality of maintenance on their aircraft but there are many examples throughout history where the responsibility and ability to comply with a law don’t go hand in hand. In this case, since the airlines have a hard time getting usable MRO content it makes compliance more difficult and drives up maintenance costs and delays. The fact is, aircraft data is so complex and so inconsistent that huge IT efforts are needed to operate an airplane safely and most of the problem is created by the OEMs trying to guard their profits against third party suppliers.
Why isn’t software-as-a-service (SaaS) the answer? If there’s an empty buzzword in aviation MRO it’s “software as a service.” Suggesting that SaaS is a superior option to fully integrated enterprise software is interesting but incorrect. Various outsourcing initiatives have been attempted over the last 20 years with the result that technicians must often rely on data that is 3-9 months old which, in some cases, results in maintenance errors, dangerous situations and costly (FAA) fines. Our customers tell us that for aviation MRO, the SaaS model has resulted in inefficiency, inconsistency and higher costs.
Many airlines modify the MRO content because they know better than the OEM how to operate and maintain their aircraft. (That’s why they’re certificated by the FAA.) The SaaS model of sending this customized information to a third party vendor, who then provides an electronic application that sits outside their network and doesn’t integrate well with all the other in-house systems is basically saying “let’s stick with the status quo.” (i.e., the stand-alone business processes used in MRO for the last 20 years should work for the next 20 years.) Airlines are trying to become more efficient and more profitable; therefore, they must integrate maintenance operations with other enterprise systems. How else can planners dynamically generate job cards? How else can inspectors use digital sign-offs? How else can engineers automatically update aircraft status and configuration? How else can technicians issue non-routine job cards (from the flight line)? Should the airlines continue doing business the way they have for the last 20 years until they go out of business?
To make a long story short, airlines are smarter than this. They understand total cost of ownership and they understand that the benefits of integrating the MRO content (manuals, IPC, job cards, COC and SB) with configuration, inventory, scheduling, etc. will create significant efficiencies in personnel, parts and uptime. The key to greater maintenance efficiency, consistency, quality, safety and compliance is access to usable MRO content. This is what is essential for the airlines’ survival.