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The Battle for BOM Control and its Impact on Mergers and Acquisitions in Manufacturing Automation

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For years the big PLM and their ERP counterparts have been battling it out for control of the company master Bill of Material (BOM). ERP vendors have traditionally owned the Manufacturing BOM; PLM the Engineering BOM; leaving the end user to determine who owns the master.

In our recent white paper that initiated coverage of manufacturing automation, we made an observation about how this BOM issue is likely to be a significant wild card in the future manufacturing automation mergers and acquisitions race.  Gartner notes in a November 2013 report, “clients have been dissatisfied with current offerings from PLM and ERP vendors for BOM lifecycle support.”  To this end we looked a bit deeper and found more than a few companies taking up residence in the niche between ERP and PLM specifically addressing the master BOM issue.  Companies such as Active Sensing (PDXpert), Ciiva, ROBO, Silicon Expert, and Omnify all have dedicated BOM offerings independent of the big PLM and ERP players.

 

These companies all focus on making the Bill of Material experience more usable and more specific to a given sub-segment of the market.  Their mere existence in the days of large oligopoly PLM and ERP companies is proof of the demand, and clearly makes them targets for acquisitions in the near to medium term by companies wishing to control the master BOM.

The big question is who will step up and make the investment necessary to proliferate this?  Will it be the ERP or the PLM vendors?  We believe neither.  We predict that System Integrators have a unique opportunity and from our recent experience, the desire to bridge the gap and add value during integration with the BOM as a key point of integration.  In doing so they open the market for process consulting and integration services surrounding the master model concept.  Further, customizable BOM software providing platform as a service (PaaS) opportunities are well suited to complement the system integration project model.  PaaS models allow SIs to develop long sought after, valuable recurring revenue positions, adding a measure of consistency and reliability to their revenue streams.

What will this mean to mergers and acquisitions in manufacturing automation?

  • PLM, ERP and major SI vendors will battle for BOM control
  • Niche BOM suppliers with customizable PaaS-style applications will find themselves in the midst of this tug-o-war and will have a once in a lifetime opportunity to cash in and subsequently lead the next BOM revolution.

You may also find more information in our recent report on Mergers and Acquisitions in Manufacturing Automation Software . Also thanks to Oleg Shilovitsky for the use of his image in this article.  For additional insight on this topic check out Oleg’s Blog on BOM and CAD-PDM-PLM-ERP Integration Challenges.