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5.2 Software developers and service providers
The development of software for the manufacturing environment involves a very large number of businesses occupying niche positions in various aspects of the production system. Much of this software is developed by consultants and service providers as they imitate and adapt software to suit specific manufacturing process elements.
Many newly established and specialised software companies have very short lives, as they fail to become profitable or are taken over by larger companies: many are set up to be ‘harvested’ (Howard 2004c).
Australian manufacturing companies rely on local software developers and service providers to develop and apply applications that meet the specific needs of the Australian and global markets in which industry currently operates and sees opportunities. With free trade, the regulatory environment is becoming more rules driven requiring greater levels of accountability and traceability. In the food industry, which accounts for over 20 percent of Australia’s exports, there are growing demands for quality, safety, traceability and documentation.
There are indications that the software sector is rationalising as manufacturing companies look for greater integration and inter-operability of systems within the production environment and between production and corporate systems. Large software vendors are also looking for greater levels of integration between their corporate and smaller scale production systems (Malone, Laubacher, et al. 2003). But, as the study indicates, many of these larger and integrated systems are too expensive for Australia’s predominantly SME manufacturing sector to afford.
The study indicates that Australia’s manufacturing sector needs a manufacturing software capability that is suited to its needs. A number of research organisations, such as the CSIRO, CRCs and rural R&D corporations are working in this area, but the company studies covered in this study, and in a parallel study being undertaken (Howard 2004c) do not indicate that the SME base is adequately representing its needs and requirements.
According to data provided by the Australian Computer Society which are based on analysis of ABS unpublished data, there were 340,700 ICT jobs in Australia in November 2000 (Houghton 2001). A significant proportion of these, 27,400 or 8.0 percent, were in manufacturing. However, these people represent only around 2.5 percent of all manufacturing employees. This can be compared to the ICT manufacturing industry where only 16 percent of employees are designated as ICT people (ABS Cat No. 8162.0).
This lower level of direct ICT employment in manufacturing is consistent with our findings from discussions and consultations with manufacturing companies that they rely on the ICT knowledge, skills and experience of people whose primary job classification and qualification is something else – particularly engineering in relation to production systems and management accounting in relation to corporate systems.
Moreover, as companies do not see ICT as core business, they source capability externally and rely on hardware and software service providers, consultants and contractors to meet their ICT needs and requirements. Indeed, an analysis undertaken of ICT enterprises indicates that a substantial number of ICT firms are essentially contractors and service providers (Howard 2004c).
Some of the ICT service providers engaged by the case study companies in servicing manufacturing companies are quite small and specialised, but there are a number of substantial service businesses, operating as systems integrators and as contractors providing a full range of ICT services to manufacturing companies. Some of the case study companies have outsourced their entire ICT functions to global service providers such as EDS, CSC and IBM [9] .
The following table provides an illustration of the number of developers in various functional areas.
Table 1: Australian Manufacturing Software Developers
|
Functionality |
Number |
|---|---|
|
CAD & visualisation |
77 |
|
Control & automation software |
58 |
|
Electronic procurement |
31 |
|
ERP / supply chain software |
125 |
|
Graphical programming |
16 |
|
Maintenance – software & systems |
77 |
|
Production software |
66 |
|
Software development |
71 |
|
Warehousing software |
60 |
The sheer number of providers makes it difficult for manufacturing companies, particularly small to medium businesses, to satisfy themselves that they are acquiring software and services with the appropriate levels of functionality, quality and integrity. To this end, it is important that manufacturing companies seek to develop effective business relationships with developers and providers with whom they can trust and have confidence. As with other professions, industry certification, standards and accreditation assist in developing these relationships.
Corporate and production software used in manufacturing is developed and marketed by global software companies as well as by small innovative businesses catering for niche markets and specific industry requirements and characteristics. This diversity is important for Australian manufacturing where businesses and business units are relatively small in comparison with North American, European and Asian corporations.
Australian companies need to be able to access software developed for a global market and adapt it to local conditions, as well as being able to access locally developed solutions to meet specific and unique needs. Few Australian manufacturing companies are of sufficient size to support the cost of large ICT implementation and management teams. The interviews undertaken for this study point to very small in-house ICT capability in manufacturing businesses – with a preference for acquiring capability through consulting and contracting.
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