magic quadrant for manufacturing execution systems · 2018-04-27 · management (plm). mes...

Magic Quadrant for Manufacturing ExecutionSystemsPublished: 28 November 2017 ID: G00325177

Analyst(s): Rick Franzosa

The MES market originally focused on plant operations and manufacturingoptimization. Now MES has become a key to digital business formanufacturers. Supply chain leaders should use this research to help themin selecting the most appropriate vendor and solution.

Strategic Planning AssumptionBy 2022, 90% of MES implementations will be hosted remotely, by either cloud service providers orprivate data centers.

Market Definition/DescriptionGartner's definition:

"MES is a specialist class of production-oriented software thatmanages, monitors and synchronizes the execution of real-time,physical processes involved in transforming raw materials intointermediate and/or finished goods. These systems coordinatethis execution of work orders with production scheduling andenterprise-level systems like ERP and product life cyclemanagement (PLM). MES applications also provide feedbackon process performance, and support component and material-level traceability, genealogy and integration with processhistory, where required."

These capabilities extend from product design release (PLM) and work order release (ERP) throughcompletion of the manufacturing process. Manufacturing execution system (MES) revenue to size/

scope of the market is not inclusive of production automation software (e.g., technologies such assupervisory control and data acquisition [SCADA], distributed control systems [DCSs] orprogrammable logic controllers [PLCs]).

Gartner describes the MES vendor landscape as consisting of four types of vendors providing MEScapabilities. There are vendors in each of these four categories in this Magic Quadrant:

■ ERP vendors: These vendors offer broad portfolios of applications across most applicationcategories (for example, back-office financials, human capital management, customerrelationship management, PLM and supply chain management [SCM]). Oracle and SAP arepositioned as ERP vendors in this Magic Quadrant.

■ PLM vendors: These vendors offer broad portfolios of applications across the product life cycle(for example, engineering product/process design, engineering product/process simulation,product quality, specification management and, increasingly, SCM). Dassault Systèmes andSiemens PLM are positioned as PLM vendors with MES offerings in this Magic Quadrant.

■ Automation vendors: These vendors offer automation/operational technology (OT) and sellMES software in addition to SCADA/DCS applications. Some also offer data historians. In manycases, the MES solutions are intellectual property (IP) from prior acquisitions of pure-playvendors. Emerson, GE Digital, Honeywell Connected Plant, Rockwell Automation and SchneiderElectric are positioned as automation vendors with MES offerings. While it is true that Siemensalso is an automation vendor, its MES offerings are currently developed and marketed by theSiemens PLM organization.

■ Pure-play MES vendors: These vendors have a specific focus on MES technology. MPDV andWerum IT Solutions provide focused MES. In each case, these vendors have a single MESfocus, unlike the ERP, PLM, automation and industry platform vendors, who offer technologyoutside of the MES space.

Core MES functionality — There are core functions that must exist in a solution for it to beconsidered an MES system.

■ Dispatching — The ability to dispatch work based on global instructions from ERP, adapted tomeet resource availability, schedule requirements and capacity.

■ Production management, execution and in-process quality monitoring — Managing theproduction process from order release to finished goods.

■ Manufacturing-related quality management processes — For regulated environments, wherecorrective and preventive action (CAPA) and nonconformance workflows are required to beinextricably linked to the production process.

■ Procedural enforcement — Ensuring that all manufacturing process steps are performed in thecorrect order, at the right time, by the correct resource and in conformance with qualityrequirements.

■ Track and trace and genealogy — The ability to track where each item is in the productionprocess, and, as required per industry, the source and unique identification of the parts andmaterials that make up the item being tracked.

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■ Data collection — To meet the requirements above, the MES system must have the capabilityof collecting data manually from end users, automatically from equipment, at regular intervalsfrom a data storage source (e.g., data historian) or a combination of the three.

■ Operational data store — Anything from a simple relational database for transaction-basedoperational data or integration capabilities to an embedded historian for time-series andtransactional data.

■ Integrated reporting and plant key performance indicators (KPIs) — Tools and techniquesfor generating KPI results, performing advanced analytics, and providing dashboard displaysand datasets for performance monitoring and reporting.

Extended MES functionality — Extended MES functionality, often referred to as manufacturingoperations management (MOM) functionality, includes:

■ Resource management — This can include management of all resources required formanufacture, including:

■ Equipment (e.g., enterprise asset management/asset performance management)

■ Labor (e.g., labor management, certification/training management)

■ Materials (e.g., inventory management, warehouse management)

■ Manufacturing process management/model-based manufacturing:

■ Bill of material (BOM)/recipe management

■ Process planning/work instructions

■ Model-based manufacturing, product/process "digital twin"

■ Operations intelligence:

■ A suite of development and runtime software tools that monitors, alerts and supportsinteractive decision making by providing data and analytics about current conditions.

■ Planning/Scheduling:

■ Production scheduling

■ Supply chain scheduling (e.g., suppliers, contract manufacturers, remanufacturers)

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Magic QuadrantFigure 1. Magic Quadrant for Manufacturing Execution Systems

Source: Gartner (November 2017)

Vendor Strengths and Cautions

AspenTech

AspenTech (AT) is broadly known in the petroleum and chemical industries, which account forroughly three-quarters of its clients. It also has clients in other traditional process industries,


including mill products, metals, pharmaceuticals and consumer packaged goods. The foundation ofAT's MES solution is a real-time process database integrated with a relational production database.

The combination of engineering, supply chain, MES, asset monitoring and, most recently, assetperformance management, assisted by the acquisition of Aspen Mtell, Aspen Fidelis Reliability andAspen ProMV, covers a wide variety of disciplines for its clients. Focusing on design, operations andmaintenance simultaneously, aspenONE MES leverages the intersection of models, data andanalytics to optimize the asset life cycle, including with procedural automation and schedulingoptimization.

Gartner estimates that AspenTech has more than 400 companies using its MES solution. Itscustomers span geographies, with European and North American companies making up more than70% of its base. Gartner estimates that 30% of implementations are supported by implementationpartners/system integrators.

Since 2008, AspenTech has been by subscription only, providing a token-based pricing model thatprovides great flexibility in charging only for actual product use. Each module has a token price, andcustomers are able to monitor usage via the AspenTech license server.

Strengths

■ For oil and gas, and specialty chemical companies, AspenTech offers solutions fromengineering, R&D, formulation, supply chain and MES, purpose-built for these and otherprocess industries.

■ Nineteen of the top 20 largest petroleum companies and 19 of the top 20 largest chemicalcompanies are AspenTech clients, with many of them deploying aspenONE MES.

■ Packaged solutions are designed to address the majority of process industry needs. They canbe deployed quickly, and then customized and extended if necessary to fit the needs of thebusiness.

■ Clients report that the historian foundation of the AspenTech MES system is very flexible,including integration with supply chain management, optimization and analytics solutions.

Cautions

■ Because the token-based pricing system is a subscription, end-user companies need to bemindful of possible end-of-contract issues. The AspenTech license model helps customersachieve optimal utilization, but can be time-consuming and expensive to replace, should youdecide to change.

■ As is common with suite solutions, not every AspenTech module will be the best available in themarket. Weigh the advantages of the breadth of the suite offering versus a best-in-classapproach of building a solution of multiple components.


■ Some client references report a lower-than-average level of customer satisfaction, particularly insupport issues; however, AspenTech is continually adding to its execution network ofconsultants and partners.

Dassault Systèmes

Dassault Systèmes was historically known as a computer-aided design/computer-aidedmanufacturer (CAD/CAM) and PLM vendor. It entered the MES market with the acquisition ofaerospace and defense MES partner Intercim in 2011 and discrete manufacturing MES/MOMprovider Apriso in 2013. The Apriso FlexNet offering, now known as Delmia Apriso, has become thestandard offering for MES/MOM from Dassault Systèmes. The Apriso product is focused on sevencore verticals, with recent expansion into three additional verticals. Those core verticals areaerospace and defense, transportation and mobility, industrial equipment, high tech, consumerpackaged goods, consumer retail goods, and medical devices. Newer verticals include energy,process and natural resources.

The Apriso solution is one of the more configurable MES packages on the market, creating bothgreat opportunity and governance challenges for clients adopting the solution. Gartner estimatesthat Dassault Systèmes has nearly 600 companies using the Delmia Apriso solution, more than halflocated in Europe, and only 10% to 15% outside of Europe and North America. Delmia MES/MOMsoftware implementations follow an internal project management and execution methodology withinits center of excellence (COE) deployment model, which was developed by Dassault Systèmes afterbenchmarking best-of-breed enterprise software implementation methodologies. Gartner estimatesthat 70% to 80% of Delmia Apriso implementations are supported by implementation partners/system integrators.

Strengths

■ Delmia Apriso has seen a significant increase in new clients since the acquisition in 2013.

■ Delmia Apriso is best-suited to discrete, repetitive, batch and hybrid manufacturing, and is ahighly configurable MES/MOM solution well-suited for global manufacturers with multiplefactories and manufacturing models distributed around the world.

■ Combined with recent supply chain software acquisitions and core competency in CAD/CAM/PLM, the Dassault Systèmes Delmia Apriso solution set provides full MOM capability under oneroof. In addition, prior to acquisitions, the suite was one of the more open MES-PLM vendorsolutions.

■ Dassault Systèmes management has shown strong support of the MES offering and anunderstanding of the importance of the manufacturing function in its business by its actions,including hiring a CEO with manufacturing experience for the Delmia business.

Cautions

■ While being highly configurable, clients and vendor references report implementation timesgreater than planned, with cost and time overruns, significant business process re-engineeringand value stream mapping sessions. In one case, a client started two pilots in separate plants


and wound up with effectively two different systems. Software governance is important in anyimplementation, but more so when the solution is as configurable as Delmia Apriso.

■ Clients in pure process industries that have implemented Delmia Apriso in some cases have notreceived expected results. Before committing to the solution, be sure to speak with multipleclients that have addressed similar business challenges and have gone through theimplementation journey with Dassault Systèmes. Dassault Systèmes does not offer DelmiaApriso as a SaaS solution within its own native cloud offerings; instead, it supports customersutilizing leading cloud service providers such as Microsoft Azure and Amazon Web Services(AWS). This takes advantage of infrastructure as a service (IaaS) technologies such as VMwareor Hyper-V virtualization.

■ Delmia Apriso does not offer subscription licensing. Licenses are tied to "resources," whichhave a very broad definition encompassing users and specific assets managed by theapplication. Manufacturers must completely understand the definition of resources prior toimplementing Delmia Apriso to avoid future surprises.

Emerson

In 2007, Emerson acquired Decision Management International and its MES product, Regulus,which eventually was rebranded as Syncade. The Syncade offering has a preferred integration toEmerson's process automation platform, DeltaV. The flexibility of its life science MES solutionmakes it well-suited for biologics/biotech implementations, and the industry's move to contractmanufacturers located more closely to its clients is an excellent opportunity for Emerson and theSyncade offering. Gartner estimates that Emerson has close to 800 customers for Syncade, withroughly 80% of this business located in North America and Europe.

Strengths

■ The Emerson Syncade system, coupled with the DeltaV process control system, provides anatively integrated configurable manufacturing solution for both "greenfield" and "brownfield"applications for life science pharmaceutical/biologics companies.

■ Clients report that Syncade provides a flexible solution that can be adapted to meet thechallenging needs for biotech environments where the use cases are continually beingoptimized.

■ Emerson performs the majority of its implementations, with only 25% supported byimplementation partners/system integrators, although it is in the process of expanding itspartner program.

Cautions

■ Some clients report implementation challenges with Syncade. Successful Syncadeimplementations have benefited from defining and documenting their process prior to startingthe project.


■ Some clients report product stability issues. Emerson has invested in updating performanceand adding cybersecurity improvements, sometimes at the expense of providing productfunctionality enhancements. However, the product has shown improvements.

■ In existing (brownfield) facilities, a Syncade solution integrated with different plant automationsystems requires standard interface configuration. This is not the same level of integrationprovided by a natively integrated end-to-end Emerson solution.

GE Digital

GE Digital currently markets several MES solutions, formed through several acquisitions and GEinternal development. The process manufacturing capability known as Plant Applications wasacquired from Mountain Systems in 2003. Production Manager (formerly known as Proficy forManufacturing Discrete or PfMD) was developed internally with input from GE manufacturingfacilities in heavy industrial. GE Digital developed Tracker for conveyor processes, built on GE'slong-standing Cimplicity product from several decades ago. It has used the product family internallyand has been selling the new functionality outside of GE as well. GE Digital's MES integrates withGE Digital's Predix platform, and Internet of Things (IoT) analytics, with current extensions mostlyfocused on asset performance management.

The creation of GE Digital, and the accompanying marketing campaign for the Predix platform, wasso pervasive that clients of GE Proficy (Plant Applications) were left wondering where the productthey had invested in fit into GE Digital's plans. This was further exacerbated by the fact that much ofthe new Predix/MES functionality was being developed, tested and deployed within GE's ownmanufacturing divisions as part of the GE4GE project rollout.

Gartner estimates that the installed base of GE Digital's MES products is nearly 500 companies,with even distribution across North America, Europe and Asia, supported by more than 1,000integrators, resellers and implantation houses. Half of GE Digital's implementations are supportedby these partners.

The key to GE Digital's success going forward will be how well it integrates/replicates thefunctionality of Plant Applications in the Predix Platform with extensions into OperationsPerformance Management.

Strengths

■ GE Digital's strength in MES comes from its long history with Plant Applications, as evidencedby large clients in CPG, mill products, food and beverage, and specialty chemicals.

■ It is leveraging its own manufacturing expertise, with internal industrial organizations intransportation, aircraft engines, power generation and medical device as customers and co-developers.

■ The well-publicized makeover of "Industrial GE" by former CEO Jeff Immelt has given GE Digitalmore market awareness than some of its competitors. It has a strong vision for the capabilitiesand architecture of its Predix/Brilliant Manufacturing Suite (BMS) platform. It also has a strongfocus on the industrial manufacturing sector.


Cautions

■ The amount of change and disruption that has taken place in the creation of the new GE andGE Digital has led to customer concerns that it has become difficult to get consistent messagesand that GE struggles with internal coordination.

■ Availability of Plant Applications' functionality within Predix is likely years away. Companiesmaking a GE Digital decision need to understand the GE Digital MES product roadmap.Problems can be avoided by working closely with the GE team, including top management atGE Digital, to ensure that bumps in the road are avoided.

■ GE Digital's strategy is to provide general MES functionality in both discrete and processmanufacturing disciplines, while leaving vertical-industry-specific capability/configurations tothird-party implementation partners. The availability and cost of implementation resources mustbe factored into the solution choice.

Honeywell Connected Plant

Honeywell recently reorganized the process solutions organization and created the HoneywellConnected Plant (HCP) business unit. The creation of HCP was driven in part by enterprise and site-level clients looking for ways to get started with IoT, predictive analytics and condition-basedmaintenance (CBM). HCP has well-defined entry points and a "smart operations" methodology. It isworking to help customers with varying levels of maturity, different vendor hardware and more,using, among other things, Honeywell's internet reference architecture and platform calledSentience. This new business unit is a collection of solutions from Honeywell Process Solutions(HPS), and Honeywell UOP alliances. HCP is conducting pilots and proofs of concept (POCs), and isexperimenting both internal to Honeywell and with customers. A result of this activity is anincreasing number of HCP clients managing their process plants from the cloud.

HCP provides a portfolio of products to serve key MES needs. The portfolio is an integrated suiteoperating on a unified technology platform and leveraging Open Platform Communications (OPC)and OPC Unified Architecture (OPC UA) secure plant connectivity. The MES suite enablesoperational and predictive analytics through secure connectivity, cloud and mobility to create smartoperating plants for improved reliability, efficiency and safety. Its specific features includeproduction accounting, process safety, asset performance monitoring and management, massbalance and data reconciliation, yield accounting, planning and scheduling, operations monitoring,visualization, inventory optimization, energy monitoring and management, enterprise collaboration,remote operations, tracking, port and warehouse management, shipping and logistics, keyperformance indicators, recipe and batch, genealogy, operations logbook, decision support, andadvanced analytics.

Gartner estimates that HCP has well over 2,000 companies using some form of its extended MESsolution, and more than half of these clients have some part of the solution hosted off-premises.Unlike most of its competitors in the process manufacturing space, HCP does not rely onimplementation partners in any significant way. Gartner estimates that less than 10% of HCPimplementations are supported by system integrators. Although this is counter to the trend we haveseen in other MES vendors, it has worked well for HCP. Nearly half of HCP implementations are in


Europe, and the Middle East and Africa (EMEA), with the rest split between the Americas (nearly33%) and Asia (nearly 20%).

Strengths

■ Although HCP has more than 2,000 clients in industries ranging from food and beverage, lifesciences, metals, and mill products, more than 75% of its client base is in the oil and gas, andspecialty chemical industries. That is its strength from an industry perspective.

■ Most vendors in this Magic Quadrant have cloud-enabled capability, and HCP has the mostimplementations of cloud-enabled MES solutions of the vendors in this Magic Quadrant. Thereare clients in its base that have plant-level equipment connected directly to the HCP internetplatform, running more than two years with minimal disruption.

■ HCP offers a number of licensing types (including perpetual, named user and SaaS). Users,assets, tags and volume are the high-level parameters that product managers can choose indefining the pricing model.

Cautions

■ HCP is early on in its move from a product-manager-based model in R&D softwaredevelopment marketing, pricing and deployment to more of a suite-based model, especiallywith respect to pricing. In the interim, clients may face some confusion with the wide array ofofferings.

■ Clients report that strong project governance is required, especially in time spent to create arobust architecture to meet the end goals of the project.

■ Clients evaluating HCP for process industry domains outside of oil and gas/chemical shouldensure that both resources and domain expertise are available for their industry, including clientreferences.

MPDV

MPDV provides an MES solution, Hydra, and associated data collection hardware, with a number ofMES modules for shop floor and machine data management, scheduling/sequencing, tracking andtracing, tool/resource management, distributed numerical control (DNC)/configuration datamanagement, energy management, gauge management, in-process inspection, complaintsmanagement, failure mode and effect analysis (FMEA), time and attendance/personnel timemanagement, personnel scheduling incentive wage, and access control. From the standpoint ofcoverage, MPDV Hydra provides capabilities usually found in larger enterprise suite vendorsolutions. MPDV is also unique in that it has not focused on a specific vertical industry; instead, ithas worked to provide generic technology that can be applied across multiple industries. Althoughits solution has a discrete manufacturing feel to it, Gartner has talked to clients that find MPDV to beas knowledgeable in process domains as more established process MES vendors.

Most of MPDV's client base (80%) is headquartered in Europe. It is seeing a growing business inNorth America, supported by its Chicago, Illinois, office, which opened in 2007, and Asia, supported


by offices in Singapore and Shanghai. Gartner estimates that MPDV will grow its base to more than1,000 companies in 2017.

Strengths

■ MPDV has been successful in navigating multiple industry verticals, something fairly rare forpure-play MES vendors.

■ Clients report that the Hydra user interface is easy to use and effectively streamlines themovement between modules.

■ Hydra provides capabilities in resource management (specifically, labor management) that arerare in MES/MOM application suites.

Cautions

■ Some MPDV clients have reported that, although there are a host of modules available, thequality of those point application solutions is uneven, with some of the newer capabilities notmeeting the expectations for some customers.

■ Without a strong partnership strategy, internal resources are required for all deployments.Clients often voice complaints about the time required to get access to "Hydra experts" to getproblems resolved. Clients report that implementation processes (and personnel) employed byMPDV sometimes struggle to take client-specific needs into account. MPDV recognized thebottlenecks and improves the resources continuously. The growing worldwide partner networkwill equalize this issue in the near future (e.g., two big system integrators localized in India weretrained intensively to extend MPDV's service capabilities and performance).

■ The rest of the MES market is rapidly moving toward cloud enablement and subscriptionpricing. However, beyond its cloud partnership with Fujitsu, MPDV has a wait-and-see strategyfor cloud enablement and subscription pricing, which is a caution.

Oracle

Previous to its move to cloud solutions, Oracle offered two dedicated MES solutions: OracleManufacturing Execution System for Discrete Manufacturing and Oracle Manufacturing ExecutionSystem for Process Manufacturing, an add-on application to Oracle Process Manufacturing (OPM).Both were modules of Oracle E-Business Suite. Oracle is now marketing the Oracle ManufacturingCloud, and MES is part of this total offering as part of the Plan to Produce supply chain vision.Released earlier in 2017, r.13 provided the bulk of MES functions implemented to date in the cloudsolution. The MES capability is similar in depth of functionality to other "designed for cloud" MEScapabilities available in the market today.

Gartner estimates that Oracle has an installed base of more than 1,000 MES customers, withroughly 15% of that number on the Oracle Manufacturing Cloud. Oracle has a fairly balanceddistribution of clients worldwide, with a slightly larger percentage in North America and slightly lessin Asia.


As with other enterprise vendors, Oracle has a large number of implementation providerpartnerships. Gartner estimates that 70% to 80% of Oracle MES implementations are supported bysystem integrators.

Strengths

■ Oracle Manufacturing Cloud is best-suited for high-tech electronics manufacturing or generaldiscrete industries with minimal industry-specific requirements.

■ Oracle Manufacturing Cloud is a solution that has capabilities for managing contractmanufacturers as part of a larger supply chain context, developed internally and refined byactual usage in Oracle's manufacturing plants.

■ Clients and Oracle references report that Oracle is a great partner and works on creative waysto solve complex problems.

Cautions

■ The Oracle Manufacturing Cloud has basic out-of-the-box MES functionality at the currentrelease, with significantly more features in the development and planning stages. A detailedreview of current versus planned functionality should be part of any evaluation process.

■ Gartner believes that Oracle will port over a limited set of Oracle MES functions that fit itsstrategy, and those that have proven to be most popular with its enterprise users, leavingbehind some functionality.

■ Evaluate implementation partners carefully, as not all will have successfully made the transitionfrom on-premises solutions to the Oracle Manufacturing Cloud solutions. Clients have reportedissues with implementation partners' levels of product understanding.

Rockwell Automation

Rockwell Automation is an industrial automation hardware and software vendor best known for itsAllen-Bradley line of programmable controllers, drive systems, motion control and industrialsensors. It also has an array of process control (OT) software and MES/MOM applications. Its MESoffering, FactoryTalk ProductionCentre, was released in 2004. It focused initially on discreteapplications, with batch/process applications added. Industry suites were developed using theFactoryTalk ProductionCentre platform for automotive, CPG and pharmaceuticals. PharmaSuite wasbased on Propack Data, which was acquired in 2002 and migrated to the FactoryTalkProductionCentre platform. Web services with HTML5 thin client were added in 2015. RockwellAutomation also has manufacturing-specific applications for performance (OEE), quality, productionand warehouse management, developed to allow scalable deployments.

Rockwell Automation leverages a large community of resellers and implementation partners toprovide both enterprise-level solutions supported by Rockwell Automation's enterprise globalorganization, and local and regional partners selling and delivering automation and informationsolutions. Gartner estimates that 20% to 30% of Rockwell Automation implementations aresupported by system integrators.


Rockwell Automation enterprise solutions have been deployed in corporate data centers (privatecloud), and they have technology partners, such as Microsoft and Cisco, that have worked withRockwell Automation to advance Rockwell Automation's technology from a cloud-hostingperspective and an IT/OT convergence perspective.

Gartner estimates Rockwell Automation's client base for MES at 100 to 200 companies, with fairlyeven distribution across geographic regions. Its MES business has enjoyed a growth rate above themarket average for MES.

Strengths

■ Rockwell Automation has a rich set of functionality inside and outside of the MES realm, forprocess manufacturing as well as discrete manufacturing — in effect, an MES and automation"platform."

■ It has developed strong partnerships with software vendors specializing in IT, cybersecurity andcloud hosting to complement its capabilities.

■ Rockwell Automation has industry-specific suites for automotive, CPG and pharmaceuticals.

Cautions

■ There are challenges with Rockwell Automation's portfolio complexity. Clients report that it isoften difficult to take responsibility for portions of the implementation and support because ofthe complicated nature of the product.

■ MES offerings are not yet available as hybrid cloud-enabled, and current solutions are licensed,not SaaS.

■ Clients report that, although Rockwell Automation implementation personnel are quiteknowledgeable, the knowledge transfer to the client is not always adequate. Machine buildersthat deliver the physical solutions are not always knowledgeable about the higher-valuesoftware assets, nor is the alignment with the system integrator delivering the software assetsalways there, which puts more onus on its clients to develop the governance.

■ Outside of the predefined vertical applications (AutoSuite, CPGSuite and PharmaSuite), mostMES capability is assembled for specific client needs, as opposed to being available as apredefined solution.

SAP

SAP acquired Visiprise in 2008, a vendor with two MES solutions. One of the solutions became SAPComplex Assembly Manufacturing Solution (CAMS), reflecting its heritage as a single-purposeapplication for aerospace and defense assembly. SAP S/4HANA release 1709 has the first release ofthe CAMS rearchitecture in S/4HANA Production Engineering and Operations. The other solution iscalled SAP Manufacturing Execution (ME).


SAP has standardized on SAP ME as its solution for discrete and hybrid industries. It comes without-of-the-box integration to both ECC and S/4HANA. SAP continues to build out MES capability,embedding a specific Manufacturing Intelligence and Integration (MII) kernel for analytics andintegration, and Plant Connectivity (PCo) for connectivity to production devices. Additionally, theextensive computer-aided process planning functionality that was core to the CAMS application isbeing rearchitected as a manufacturing engineering module, tied to PLM, ERP and MES for BOMreconciliation and process plan/work instruction creation.

Manufacturing Execution is part of the SAP Digital Manufacturing Suite, along with DistributedManufacturing (collaborative and additive), Manufacturing Intelligence and Integration, PredictiveQuality, and Digital Manufacturing Insights (insights and predictions).

Gartner estimates that 200 to 300 companies use SAP ME, with the largest industrial representationcoming from high tech/electronics and general discrete manufacturing, reflecting the heritage ofSAP ME. North America and Europe account for 70% of SAP ME implementations. Between 70%and 80% of SAP ME implementations are supported by system integrators.

Strengths

■ SAP applications are traditionally more acceptable to clients' corporate IT as they eliminate theneed for external integration. With SAP ME, SAP now has its own MES application with SAP-provided integration to the SAP suite.

■ SAP's stated direction to take a leadership role in Industrie 4.0 solutions has meant that thereare both investments and visibility for MES applications at SAP.

■ Product strengths are in serialized data capture, integrated quality management, inventorymanagement and the enforcement of production steps. SAP Hana's in-memory database willenable the collection and management of larger volumes of data for cross-plant reporting.

Cautions

■ The strengths above do not apply to manufacturers that are not SAP clients. As a stand-aloneMES, SAP ME would not be as attractive a solution compared with other stand-alone MESsystems.

■ SAP ME is a general discrete MES application; therefore, it may not be best-suited for industriesthat have very specific industry-related requirements.

■ Cloud enablement, outside of private (aka data center) cloud approaches are noted by SAP asfuture enhancements. SAP runs the risk of being late to the table with hybrid cloud MEScompared with some of its competitors.

Schneider Electric

Schneider Electric's large MES/MOM software portfolio includes several acquisitions, such as Citectand Invensys. This portfolio has been integrated into a common platform for a range of MES/MOMsoftware functionalities. This includes functionalities to manage different process characteristics, the


specifics of related operational activities and support for the industry-specific requirements instandards and regulations. Schneider's primary focus is on continuous, batch and hybridmanufacturing processes, but the company also has support for (and customers in) discretemanufacturing.

Core to the MES capability are the Wonderware applications, representing the best-known "device-agnostic" plant automation platform and the Skelta business process management (BPM)application. This combination provides a great deal of flexibility and connectivity for its customers.As with others in this Magic Quadrant, Schneider Electric is also pursuing cloud enablement andSaaS licensing. At this point, however, the implementations are few, and MES as a fully managedservice is available on request.

Although Schneider Electric supports multiple industry verticals, food and beverage is its largestsupported vertical by a large margin, and it is the market leader as far as MES revenue in the space.Gartner estimates that Schneider Electric has over 700 customers, with 70% spread relativelyevenly between North America and Europe. Roughly half of Schneider Electric's implementationsare supported by system integrators.

Strengths

■ Schneider Electric Wonderware has a strong position in the food and beverage industry (usedby 23 of the top 25 food and beverage companies).

■ Wonderware is a device-agnostic open platform, which provides for flexibility in connecting theMES layer to automation equipment, regardless of vendor.

■ Wonderware provides a BPM-based MES capability that can define processes that cover theMES functions and can span other domains as well.

■ Schneider Electric has adopted a "model-based" philosophy. It provides manufacturers with acodeless method of defining the entire manufacturing process, simulating changes to theprocess, then implementing the enhanced process including programming and commissioningof automation equipment.

Cautions

■ Clients report frustration with the time and effort required to master the implementation. Domainexpertise of your own capability as well as the software's capability are required for success.

■ Clients report that the necessary skills for implementation of the Schneider Electric MES are notuniversally available from implementation providers. In some cases, clients have needed toinvolve Schneider Electric directly, impacting time and cost.

■ Clients also report a lack of online training and user efficiency measurement of the MES toassist new users to develop faster.


Siemens PLM Software

Siemens holds a unique position in the manufacturing market as the only vendor that providessystems and solutions from ideation to design (CAD/CAM, PLM), manufacturing execution (MES),software for plant automation (SCADA, DCS) and plant hardware (PLCs, drive systems, motioncontrol and industrial sensors), and an IoT platform (MindSphere). Siemens entered the MES spacein 2001 with the acquisition of Orsi Automation, which became the Simatic IT MES platform. In late2014, Siemens acquired Camstar Systems, an MES known in the semiconductor and medicaldevice industries. Within the Siemens portfolio, MES is a central element of the MOM offering,which also covers advanced planning and scheduling, quality management, and manufacturingintelligence.

Overall, Siemens has been one of the most aggressive companies in the acquisition of CAD/CAM,PLM and MES technology companies. Since the creation of Siemens PLM Software from theacquisition of UGS in 2007, Siemens has acquired no less than a dozen companies in relatedtechnology spaces, with the stated goal of being able to provide end-to-end solutions from designthrough manufacturing for a comprehensive set of manufacturing industries.

The problem with this philosophy comes as new M&A activity, especially significant acquisitions,can cause changes in focus (positive and negative) for those component parts that were previouslyindependent companies. Case in point, previous to this year, Camstar clients voiced concernsabout the direction/longevity of the product. The expansion of Siemens' portfolio in medical deviceand electronics with Camstar has been bolstered by acquisition of Mentor Graphics (EDA, boxbuild, semiconductor), which should allay the concerns of Camstar customers.

Gartner estimates that Siemens has 2,200 to 2,500 MES customers, with half of those clients inEurope. Industry coverage is quite broad, with the largest concentration in life sciences andsemiconductors.

Strengths

■ Simatic IT, with its unified architecture that exposes services and data to applications, ispowerful in concept.

■ Siemens has a large contingent of resellers and system integrators worldwide that supportimplementations for both Camstar and Simatic IT.

■ Siemens gets high grades from some clients for product reliability and technical expertise.

Cautions

■ Siemens' Camstar clients have reported concern and confusion about product direction. Wesuspect that the stronger position that Camstar holds since the acquisition of Mentor will helpameliorate this issue with the Camstar client base.

■ Clients report that the expected level of industry domain expertise in implementation teams isnot there. We believe that this is a result of Siemens' acquisition track record, which has put astrain on resources for integration/rationalization and implementation of these products.


■ Siemens still struggles to deliver on technologies and integrations between software assets asthese assets continue to grow in size and number. Capabilities such as the Unified Architectureand predefined integrations between MES (Simatic IT/Camstar) and scheduling (Preactor) aretwo examples.

Werum IT Solutions

Werum IT Solutions' (Werum's) PAS-X is a leading MES for the pharmaceutical and biotech industry.PAS-X is used by more than 50% of the world's top 30 pharmaceutical and biotech companies andin about 100 to 120 companies around the globe. After 45 years as an independent company,Werum IT Solutions was acquired in 2014 by Körber as part of Körber's Medipak Systems Group.

Werum is the classic niche MES vendor in all respects. Being a niche player can be a very goodthing. Werum understands the pharmaceutical market and has leveraged its PAS-X product to bethe market share leader in the pharmaceutical MES market, with more market share than muchlarger competitors. It has a single-minded focus on the pharmaceutical industry, with 90% of clientsin pharma/biotech and 10% in medical device.

Werum has been building out its stable of implementation and service providers. This includes itsacquisition of the MES business of Factorytalk, a Thailand-based service provider, and, morerecently, Körber's announcement of a planned acquisition of Systec & Services.

Strengths

■ Werum has a strong knowledge of the pharmaceutical business and a proven product thatsupports this business, with an out-of-the-box MES product including best-practice librarytemplates for the different pharma business processes.

■ Werum's implementation methodology (Ready, Fit, Build and Run) has been developed andused internally within the Werum services organization. Its clients view this as one of its corecompetencies.

■ Werum's internal global software and services coverage is being enhanced with an extendedset of implementation and service providers.

Cautions

■ As Werum has not completely onboarded new implementation partners, sufficientimplementation expertise is sometimes not available for new implementations.

■ The current platform is client/server. However, Werum plans to release a native cloud capabilityin 2018 on AWS.

■ It remains to be seen how well PAS-X will be able to adapt to the rise of biologics and increaseduse of pharmaceutical/biotech contract manufacturers in emerging geographies.


Vendors Added and Dropped

We review and adjust our inclusion criteria for Magic Quadrants as markets change. As a result ofthese adjustments, the mix of vendors in any Magic Quadrant may change over time. A vendor'sappearance in a Magic Quadrant one year and not the next does not necessarily indicate that wehave changed our opinion of that vendor. It may be a reflection of a change in the market and,therefore, changed evaluation criteria, or of a change of focus by that vendor. In the case of theMagic Quadrant for Manufacturing Execution Systems, 2017 is the inaugural release of this MagicQuadrant, so, in effect, all vendors are added and none are dropped.

Notable Mentions

A number of vendors with reasonably capable and, in some cases, strong MESs did not qualify forthis Magic Quadrant. This does not mean that these solutions might not be viable alternatives forsome customers. We limit participation in this Magic Quadrant to vendors that demonstrate currentstrength in the market in several dimensions. These include market momentum, geographicalcoverage, product breadth and depth, and (where appropriate) compelling strength in a specificvertical industry.

There are several reasons a vendor might not have qualified. As stated in the qualification criteriaoutlined later in this Magic Quadrant, a vendor might not have or not have communicated to Gartnerthat it has the sales momentum, growth in revenue or international coverage necessary to qualify forthis research. These reasons alone should not prohibit users from considering these vendors. Theymay be strong in a user's geography or their criteria may fit the needs of a given user. Furthermore,one of these vendors may have capabilities that make it more appealing than other vendors in theMagic Quadrant — regardless of the characteristics that might have excluded it from this research.

For example, a company looking for a cloud-based, multitenant ERP/MES application in NorthAmerica might consider Plex for its success in that region. An organization seeking a workflowcapability with integration and manufacturing intelligence capability that spans software domainsincluding MES might want to consider Savigent Software.

Plex

Plex met all of the qualifications for inclusion in the Magic Quadrant except for internationalcoverage. It has been very successful in North America with its cloud-based, multitenant ERP/MESapplication, the Plex Manufacturing Cloud. In 2016, it extended its capability to supply chainplanning with the acquisition of cloud-based supply chain planning provider, DemandCaster.

Plex MES is an integrated component of the vendor's ERP offering, designed for discrete andprocess manufacturers in automotive, aerospace and defense, electronics, industrial, precisionmetal-forming, and food and beverage. Because it is a full suite, it is very attractive to themidmarket as a complete manufacturing business system. Larger companies that adopt Plex adopta two-tier ERP philosophy, with Plex's ERP integrating to a corporate ERP backbone.


Savigent Software

As the MES market grows and matures, new technologies will arise that are hard to classify in thetraditional MES model. Savigent is an example of such a technology. Savigent Software is aprovider of event-driven manufacturing operations management software. The company providesmanufacturing intelligence and system integration solutions anchored by a workflow automationplatform. Savigent Software's product suite meshes service-oriented architecture (SOA) andcontextual constructs to help manufacturing organizations drive processes across siloedapplications in a quick and nondisruptive way. This new smart manufacturing paradigm offers theflexibility to adapt existing systems and build new processes to match unique business/industryrequirements versus a traditional MES deployment. At the core of the software is a workflow enginethat can be configured to take input from a wide variety of devices and applications to makedecisions on what events/alarms/actions should take place based on these conditions. WhileSavigent got its start supporting the semiconductor industry, the company is seeing continuedgrowth in consumer packaged goods, food and beverage, and other industries.

Inclusion and Exclusion CriteriaTo be included in the MES Magic Quadrant, a vendor must have an MES solution that fundamentallysupports all core MES capabilities and at least some extended capabilities. The vendor must alsoexhibit a vision for next-generation MES in, at least, moderately complex manufacturingenvironments. Vendors must meet the following criteria for inclusion:*

■ MES market presence — MES software is sold and used independently of other servicesoffered by the vendor.

■ 2016 MES license and services revenue of greater than $50 million or subscription andservices revenue of greater than $50 million for the previous fiscal year (only license/subscription and services associated with packaged MES implementations).

■ Regarding current MES customers, the vendor must have:

■ At least 20 live MES customer (not site) references independently using the MES solutionbeing evaluated.

■ At least 10 new-named customers sold in the previous 24 months.

■ Implemented at least 10 new-named customers on this MES version in the previous 24months.

■ Global presence — The vendor must have at least 10% of MES customers headquarteredoutside of its home geographic region — North America, Latin America, Europe/Middle East/Africa, and Asia/Pacific.

* Note: Even if not all of the criteria are met, a vendor may be included in the Magic Quadrant as aNotable Mention or in an industry-specific contextualization.


Due to end-user demand for evaluations of other significant vendors' MES offerings, we alsoconsider inclusion of MES vendors that meet the following criteria, even if the offering does notmeet the initial MES specific criteria:

■ Major enterprise software vendor: The vendor must offer its own MES solution and havegreater than $500 million in enterprise applications software license revenue and greater than$75 million in supply chain management software license revenue in 2016. This is becausemany end users are interested in the MES offerings of the major application suite vendors.

Evaluation Criteria

Ability to Execute

Customer service and operations play a strong role evaluating the ability of vendors to effectivelyserve their clients. Gartner finds that customers consider a vendor's ability to provide the servicesand support necessary to effectively implement the MES is critically important in their ability toachieve the goals of the implementation. Because of this, operations becomes a key differentiatorbetween providers, as evidenced by client reference surveys. As MES impacts (and disrupts)production, the lifeblood of any manufacturer, the performance of the vendor (and its partners) inimplementing the systems effectively is critical. While historically MES vendors provided the majorityof implementation services, most vendors are developing an ecosystem of implementation partnersthat can supplement or replace the vendor's service capabilities. Furthermore, while companies arebuying MES applications, they are also investing in a long-term relationship with theirimplementation partner (vendor or third party), which increases the importance of operations.Consequently, while the breadth and depth of the MES product remains important, customerservice and operations have nearly an equivalent impact on a vendor's overall ability to execute.

Product or Service: MES vendors' product breadth, depth and technology are highly ratedcomponents of their Ability to Execute. The MES market is unique, in that different areas offunctionality are more important in some industry verticals than others, but there are keyfunctionalities that define MES and would be expected to be available across the industrylandscape. We evaluate the MES products across a range of criteria, including technology andfunctionality. We consider the depth and flexibility of core capabilities such as proceduralenforcement, order execution, data collection, data visibility, quality, tracking, dispatching andreporting/analytics. We also consider the existing breadth of the application's extended MES (akaMOM) capabilities, such as detailed scheduling, definition (BOM/recipe/specification) managementand resource management. Users with the most complex requirements and sophisticatedoperations are the most interested in a vendor's support for extended MES capabilities, whichremains a differentiating factor across various systems. Less sophisticated or less complex usersare most focused on core MES capabilities and might require less functional breadth. Thus, theycould be supported by a wide variety of solutions. Finally, since MESs have long been heavilycustomized, we place importance on the technical architectures of each MES, especially noting asolution's ability to adapt to change during the initial implementation as well as over the life of theinvestment.


Overall Viability: The viability issue in the MES space, especially when considering the size ofvendors covered in the Magic Quadrant, is different than it might be in other spaces. Almost all ofthe vendors covered in this document are offering MES solutions that they acquired from someoneelse. The viability considerations in this market lean more toward the viability of a solution within thecontext of the parent company's market strategy, not as much the viability of the company itself.For this reason, Gartner is only placing medium importance on the overall viability of the MESproduct. Although viability is important, it should not overshadow product fit, vendor expertise, totalcost of ownership (TCO), and service and support. We are often asked about the viability of theMES market, however, which we cover in other sections of this report.

Sales Execution/Pricing: Sales execution and pricing are becoming critical factors and, therefore,differentiators in the MES market, especially as MES vendors begin to adopt subscription pricingmodels. License pricing in the MES market varies widely across deals, depending on size. It seems,to a large degree, arbitrary and based on the specific circumstances of an individual initiative. Priceuncertainty has been exacerbated with the growth in cloud-based MES, where subscription-basedpricing models dominate. The combination of subscriptions, which have a finite beginning and end,and MES, which rapidly becomes a requirement for keeping a plant running, is perilous. Assubscriptions take hold, the ability of vendors to provide open and equitable arrangements forcontract renewal become paramount.

Marketing Responsiveness/Record: The MES market continues to evolve rapidly, and MESsolutions must keep pace to remain relevant. This makes market responsiveness and track recordmeaningful. We assess the historical and current performance of vendors to add to and enhancetheir MES solutions to keep up with the changing wants and needs of MES users. As such, we givemarket responsiveness a standard weighting.

Marketing Execution: While marketing promotion is important, we focus more on a vendor'sproduct marketing. We look at the product management team, processes and product roadmap tosupport ongoing innovation, track record of delivering on plans, and whether the vendor has theability to respond to market forces. As such, we give market execution a lower weighting.

Customer Experience: An MES vendor's ability to use and exploit functionality to drive businessvalue and provide a suitable customer experience is a critical element of a provider's Ability toExecute. We consider a vendor's track record with complex and sophisticated customers, but alsoits ability to effectively and efficiently service less demanding customers. Also critical is clientsatisfaction with a vendor's products as well as services, and how much manufacturing operationsdomain expertise and experience the vendor has and how it can employ this to help customers fullyexploit their MES investments. Although client satisfaction is always important, we also consider thenature of the relationship that vendors establish with clients and whether these are operational orstrategic. The size and growth of a vendor's client bases locally and internationally are also veryimportant because they demonstrate the vendor's ability to identify and satisfy the needs ofcustomers around the world. Thus, we give customer experience a high weighting.

Operations: Operational competence is a very important criterion. It considers a vendor's ability tomeet its goals, obligations and commitments on an ongoing basis. There are marked differences incapabilities across vendors, as confirmed by customer references. Vendor support, maintenance,


business and technical consulting, implementation partnerships, and field operations are importantparts of the MES selection process. Factors include the quality of the organizational structure, aswell as skills, experience, programs, systems and other vehicles that enable an organization tooperate effectively and efficiently on an ongoing basis. As projects become more complex, avendor's ability not only to sell and implement a solution, but also to help customers fully exploittheir MES investments, is critical to long-term success. Finally, a vendor's management structure,experience, skill and expertise play a significant role in a vendor's ability to harmonize its vision,strategy, tactics and actions. Because of these, we give operations a high weighting.

Table 1. Ability to Execute Evaluation Criteria

Evaluation Criteria Weighting

Product or Service High

Overall Viability Medium

Sales Execution/Pricing High

Market Responsiveness/Record Medium

Marketing Execution Low

Customer Experience High

Operations High


Completeness of Vision

Although the MES market is maturing, we foresee considerable changes related to the technology,adaptability, usability, breadth of functionality and enhanced decision-support capabilities. Thechanges embodied in these market shifts, driven by factors such as the Industrial Internet of Things(IIoT), digital twin/digital thread and governmental vision such as Industrie 4.0 will requireconsiderable nimbleness and competency on the part of vendors. Therefore, in the Magic Quadrantwe place strong emphasis on a vendor's understanding of these market dynamics and its productstrategies to support these offerings. Exhibiting and articulating a vision for where MES will be in thefuture, and exhibiting an innovative culture, remain distinguishing characteristics among vendors.

Since MES is just one component in what should be an integrated set of capabilities connectingmanufacturing to the extended supply chain, vendors are also evaluated on how well theyunderstand this emerging concept and what strategies they have to move in this direction. Whilehaving an MES vision is notable, a vendor's vision for broader supply chain collaboration is criticalto moving farther to the right side of the Magic Quadrant, and this differentiates offerings. Becausesupply chain collaboration is an emerging best practice, we also consider vendor strategies tosupport this concept beyond basic data or transaction integration.


All qualifying solutions in this Magic Quadrant for MES handle basic core MES. Anotherdistinguishing characteristic of vendors moving to the right will be the breadth of extended MEScapability, sometimes referred to as MOM capability. This includes the vendor's current and plannedsupport for MES systems of innovation capabilities like detailed scheduling, definition (BOM/recipe/specification) management and resource management.

Vendors' domain expertise, technology vision and vision for the MES of the future rank highly. Weconsider vendors' knowledge and vision for manufacturing execution and, more broadly, themanufacturing supply chain locally and internationally. We also consider a vendor's vision for MES,not simply process execution, which means demonstrating a compelling vision for howmanufacturing, business and technology trends will influence MES in the future.

Market Understanding: A demonstrated knowledge, proficiency and differentiated vision of thecurrent and future MES marketplace are critical considerations. Market understanding assesses theMES vendor's ability to understand MES buyers' wants and needs and translate them into productsand services. Vendors that show the highest degree of vision listen to, anticipate and understandbuyers' wants and needs, and can augment customer insight with their own MES visions. Vendorsthat simply respond to current market requirements without anticipating future requirements willlikely be unsuccessful over the long term. Consequently, we give market understanding a highweighting.

Marketing Strategy and Sales Strategy: Until recently, marketing strategy and sales strategy havehad modest impacts on the MES market, which had historically been dominated by specialistvendors focused on specific industry verticals. Today, marketing and sales strategies are becomingmore important, particularly as enterprise vendors become MES providers. However, we considervendor strategies for establishing their MES brand, and how they develop strategies and tactics forlocal and international expansion, of less importance than other factors, Therefore, we givemarketing/sales strategies a lower weighting.

Offering (Product) Strategy: Offering (product) strategy is critical, and it refers to an MESprovider's approach to product marketing, research and development, and solution delivery thatemphasizes differentiation. We consider strategies for functionality, usability, technology,adaptability, delivery methodologies and feature sets as they map to current and future MESrequirements, market trends and technology evolutions. In addition, we consider vendors' strategiesfor supporting end-to-end processes that span functional areas, such as order management,materials management, definition management and analytics. A vendor's understanding of thesemarket changes and its product strategies for successfully navigating these changes significantlyinfluence a vendor's Completeness of Vision. Therefore, we give offering/product strategy a highweighting.

Business Model: A vendor's business model (that is, the soundness and logic of its underlyingbusiness propositions) is a key indicator of its sustainability and how its overall strategies andtactics might affect its ongoing success in MES. For example, one vendor might focus on organicinnovation while another might concentrate on buying innovation through mergers and acquisitions.While the former might have a longer gestation period, it has potential product and technical


advantages. The latter might allow a vendor to get to market faster but cause longer-term productissues. Therefore, we give business model a standard weighting.

Vertical/Industry Strategy: In MES, a vendor's vertical/industry strategy is a key factor in how wellthe offering is aligned to specific industry requirements. Vertical/industry strategies are critical, sowe give vertical strategy a high weighting. A vertical/industry strategy may be a commitment tomastery of a few key verticals or relying on an ecosystem of partners to fill in the gaps between itssolution and the industry-specific solution that the customer desires. Both are viable approaches,but the vendor must have a well-designed strategy to be successful in what has been a veryfragmented market.

Innovation: Innovation is a critical differentiator. It is important for vendors to demonstrate theability to support innovation by staying close to the most creative solutions or complicatedproblems in the market to drive pioneering functionality. Innovation is a critically important factor inthe MES industry, even though manufacturing production has been conservative in the adoption ofnew technologies in the past. Innovation and thought leadership continue to play a strong role inthis year's evaluations. Leading vendors continue to enhance core MES with more investment inextended MES. Gartner continues to evaluate innovations in these practices. However, we alsoevaluate how a vendor is innovating with respect to supply chain collaboration. Innovation is notexclusive to product functionality, and go-to-market and delivery originality are also notable sourcesof solution differentiation. Leaders and Visionaries will be the vendors on the forefront of change,while the majority of vendors will lag in adoption, often for years. Consequently, we give innovationa high weighting.

Geographic Strategy: This research is focused on the global MES marketplace. Geographicstrategy looks at technology providers' strategies for directing resources, skills and offerings tomeet the specific needs of global manufacturing. At this stage in the evolution of the MES market,the majority of implementations, even from the enterprise megavendors, tend to be withmanufacturers headquartered in North America and EMEA, with a drop off in Asia, and a greaterdrop off in Latin America and the rest of the world. As the MES market matures, we will revisit theweighting of geographic strategy. For this Magic Quadrant, geographic strategy is weighted low.Inclusion criteria already require that at least 10% of 2016 revenue come from companiesheadquartered outside of the vendor's home territory. Several vendors did not qualify for thisresearch because they lacked the necessary global presence, but many of these remain strongofferings in their respective regions.


Table 2. Completeness of Vision Evaluation Criteria

Evaluation Criteria Weighting

Market Understanding High

Marketing Strategy Low

Sales Strategy Low

Offering (Product) Strategy High

Business Model Medium

Vertical/Industry Strategy High

Innovation High

Geographic Strategy Low


Quadrant Descriptions

Leaders

Leaders combine the uppermost characteristics of vision and thought leadership with a strongAbility to Execute. Leaders in the MES market are present in a high percentage of new MES deals,and they win a significant number of them. They have robust core MESs and offer reasonable —although not necessarily leading-edge — capabilities in extended MES areas. To be a Leader, avendor doesn't necessarily need to have the absolute broadest or deepest MES application. Itsofferings must meet most mainstream MES requirements without significant modifications, and asubstantial number of high-quality implementations must be available to validate this. Leaders mustanticipate where customer demands, markets and technology are moving, and must have strategiesto support these emerging requirements ahead of actual customer demand. Leading vendorsshould have coherent strategies to support supply chain convergence, and must invest in and haveprocesses to exploit innovation. Leaders also have market momentum and strong client satisfaction— in the vendor's local markets as well as internationally. Because Leaders are often well-established in leading-edge and complex user environments, they benefit from a user communitythat helps them remain in the forefront of emerging needs.

PLM/MES vendors and established automation vendors dominate the largest and most complexmanufacturing environments due to the breadth and depth of their current applications, theirthought leadership, and their position as the vendors that others look to emulate. They have movedbeyond basic MES, expanding their portfolios vertically and horizontally. In this Magic Quadrant,Dassault Systèmes, Siemens PLM and Honeywell Connected Plant are in the Leaders quadrantlargely due to their experience serving these large complex users with functionally broad and deep


MESs. These vendors tend to differentiate themselves most when extended MES capabilities are agreater aspect of the functional evaluation because their systems are deeper in these areas. Theyhave compelling visions for how MES will evolve over the next five years.

Key characteristics:

■ Reasonably broad and deep MES offerings

■ Proven success in moderate-to-high-complexity manufacturing environments

■ Participation in a high percentage of new deals

■ A strong and consistent track record

■ Consistent performance and vigorous client growth and retention

■ Enduring visibility in the marketplace from both sales and marketing perspectives

■ A proven ecosystem of partners

■ Global scale

Challengers

The critical characteristic of Challengers is that they have capable, proven and mature products,with numerous live customers. They also have consistent track records of successfulimplementations. Challengers' offerings often run some very large and complex facilities. Thesesolutions are in use by a large number of individual enterprises supporting multiple manufacturingoperations locally and worldwide. While vendors in this quadrant provide solid and established MESsolutions, there is generally one or more insufficiencies in offerings or go-to-market strategies whencompared with Leaders. These solutions are preferred by buyers that favor Ability to Execute overCompleteness of Vision. Vendors can have practical visions for these solutions and, more generally,supply chain execution, but vision and thought leadership are typically not as complete as withsolutions in the Leaders quadrant.

Vendors in the Challengers quadrant are mature, functionally solid and proven, with strong trackrecords of customer adoption and successful deployments. Their solutions typically have strongcore MES capabilities and some extended MES capabilities. Although offerings in the Challengersquadrant are normally functionally robust, the vendor or specific MES solution is not at the forefrontof innovation. The vendor is not typically an MES thought leader or the early provider of innovationleadership. Oracle and SAP continue to evolve, with vendors adding depth to their core MEScapabilities as well as some extended MES capabilities. Although these solutions have yet to matchthe overall depth and breadth of Dassault and Siemens, and don't have the process manufacturingcapability of Honeywell, they have become viable alternatives for existing customers of theenterprise vendor looking for entry-level MES capabilities. Rockwell and MPDV are also in theChallengers quadrant and represent solid MES capability for a number of industries.


■ A capable, proven and mature MES, with numerous live customers


■ A consistent track record of successful implementation

■ Often running some large and complex facilities

■ Offerings that are not as broad or deep as MES Leaders

Visionaries

To be a Visionary, a vendor must have a coherent, compelling and innovative strategy that seeks todeliver a robust and vibrant offering to the market. Visionaries are often thought leaders in one ormore MES solution dimensions (for example, analytics, model-based process development, verticalindustry or deployment strategies), and they tend to be on the leading edge of some emergingconcepts. However, these offerings have some deficiencies in their Ability to Execute in areas suchas viability, growth, global scale or operations. At a minimum, solutions in the Visionaries quadrantfall into one of two broad categories. They can be established MES offerings that have yet to matureinto leading positions in the market, or they can be innovative specialist vendors with unique andpotentially disruptive views of where the market is going. These vendors can exhibit innovation inMES products, services, or go-to-market and deployment strategies, but lack in other areas.

The Visionaries quadrant is populated with vendors solidifying their positions as thought leaderswhile maintaining their Ability to Execute. Many of them exhibit innovative solutions, deploymentmodels or go-to-market strategies. Vendors in this quadrant, while innovative and offering intriguingsolutions, have yet to solidify their long-term viability and global positions. GE Digital is an innovator,leveraging traditional MES capability with its new cloud-based platform. Schneider ElectricWonderware is pioneering the concept of model-based manufacturing for process industries andmaintains a stronghold in the food and beverage, and mining industries.


■ A coherent, compelling and innovative strategy that seeks to deliver a robust and vibrantoffering to the market

■ A thought leader in one or more MES solution dimensions that tend to be on the leading edge ofemerging concepts

■ A yet undemonstrated ability to handle a broad range of complex user requirements

■ Execution gaps or deficiencies

■ Innovation in MES products, services, go-to-market, vertical or deployment strategies

Niche Players

Although there might be an assumption that vendors in the other quadrants are better choices fornew MES buyers, in certain circumstances Niche Players are just as good or better choices forprospective users. This is because they might focus on a geographic or vertical component of themarket that is meaningful to particular users. However, this focus alone is not a compelling-enoughdifferentiator for a vendor to ascend to a leadership position. It would also have to perform well in


other dimensions. Although some vendors in the Niche Players quadrant often have solid MESsolutions for a specific industry or geography, they are not as broad as the MES solutions in otherquadrants.

Three vendors are positioned in the Niche Players quadrant. In the MES market, niche is a goodthing. Emerson and Werum are recognized as strong players in the pharmaceutical/biotech industry,and AspenTech excels in the chemicals and petroleum industries.


■ Focuses primarily on a geography or vertical market

■ May not be a generally differentiated offering, although it can have some unique capabilities

■ Is not a broad MES capability supporting multiple industries

■ Market momentum and product or company viability may be in question

■ May be lacking in growth strategies, either geographic growth or growth in other markets

ContextFor the last five years, Gartner has partnered with Manufacturing Enterprise Solutions Association(MESA) International to collect quantitative data from IT and business leaders at MES-user

companies. The purpose of this study1 is to assess if, and to what extent, manufacturing execution

system applications are delivering ROI and creating value for companies in the manufacturingindustry. Specifically, the study aims to identify the characteristics of organizations maximizing thevalue and returns on their MES investments.

MES buyers place particular emphasis on product breadth and depth, vendor expertise, andcustomer service and support. Vendor and product viability, as well as TCO, continue to be veryimportant criteria. However, they play less of a role in complex MES engagements and more of arole in less demanding implementations. TCO considerations have been key factors driving theincrease in interest for SaaS MES in the small and midsize business (SMB) market, as well assmaller manufacturing facilities for larger companies, where subscription pricing models reduceshort-term costs. This allows larger companies, some with hundreds of plants, to make MEScapability available to a larger percentage of their facilities (see "Survey Analysis: Multisite MESDelivering Benefits Today With Cloud(s) on the Horizon").

The MES market in the established geographies of North America and Europe is largely areplacement market. Survey respondents said the top five drivers, not in order of importance, for anew MES were:

■ A legacy MES was technically obsolete.

■ The company needed new functionality not offered in its legacy MES.

■ The customer identified financial benefits from a new MES.


■ The company's business had changed, and the legacy MES no longer fit the company's needs.

■ The legacy MES was not flexible enough to adapt to the current needs of the business.

Additional Influences

Digital Manufacturing

Digital manufacturing orchestrates the virtual and physical domains to support concurrent design ofprocess and product, production execution, and continuous improvement, and to plan and operatemanufacturing as an integral part of a value network. As a part of digital business, digitalmanufacturing is of extreme importance to manufacturers. With the rise in interest comes newtechnologies to support digital manufacturing, additive manufacturing, IoT and digital thread/digitaltwin. This impacts the MES market as overarching digital capabilities like IoT, and digital thread/digital twin, increase the volume and depth of data that must be shared between engineering,production, line of business and supply chain. At the 2017 Symposium Conference, Gartnerpredicted that 60% of IT resources would be dedicated to integrations in a digital business world.No one vendor will ever have the leading capabilities in all supply chain and business technologies.As a result, manufacturers that wish to continue in a vendor-agnostic ecosphere will be forced tocreate their own digital platforms and integrations to supply chain partners until there are industrystandards for digital twins (see "Market Guide for MPM and MbM for Discrete Manufacturing").

Data and Analytics

Data collection and data visibility are core components of MESs. As analytics applications becomemore pervasive, companies will look to mine the greatest amount of data that, for the most part, hasbeen collected and stored locally at the plant level. The analytics tools used are predominantlycloud-based and capable of managing structured and unstructured data. In contrast, most MESvendors collect, manage and analyze only data that is within their own environment. There is theopportunity here for MES vendors that can not only apply their domain knowledge to analytics, butalso, via development or partnerships, synthesize data from external sources into their analyticsplatforms.

Industrie 4.0

The vision for Industrie 4.0 was initiated by the German government in early 2013 and targeted,among others, Germany's large manufacturing industry and industrial base. Its vision for the futureincludes leveraging the IoT and sensor networks for flexible and intelligent production processesthat are integrated in and across company boundaries for the more efficient and flexible productsupply in the face of individualized mass production. Ultimately, the objective of Industrie 4.0 is tofacilitate smart value-creation chains from product idea to end of life/recycling, thus opening up newbusiness models and sales opportunities. Industrie 4.0 has become a global term as other countriesand regions launch their own manufacturing and supply chain excellence initiatives (see "Jump-Start Your Industrie 4.0 Initiative Now: Part 1 — Lessons Learned From Five Early Adopters in DigitalManufacturing").


The Industrial Internet of Things stands in the center of Industrie 4.0, and most, if not all, MESvendors headquartered in Europe have launched product and/or marketing initiatives espousing IIoTcapabilities.

In one sense, MES vendors, especially vendors from the automation side, have been dealing with aflavor of the IoT for years, with automated data collection from machines, process equipment andprogrammable logic controllers (PLCs). To these vendors, IoT is not new at all. However, this newclass of devices that are internet-connected has the capability of causing real disruption in the MESmarket.

Most IIoT success stories that have been publicized revolve around applying IoT sensors toproduction equipment (or products) and using the data collected in conjunction with analytics topredict when maintenance issues will occur. Manufacturers and vendors alike are looking foradditional application use cases for IIoT (see "Cool Vendors in Manufacturing Operations, 2017").As companies gain confidence, and new vendors spring up to supply IIoT solutions, we could see ashift in how and where traditional MES capabilities are leveraged by technology.

Consolidation

Market consolidation has slowed recently in the MES space, but we believe that the acquisitions willcontinue. The most likely candidates are:

■ Supply chain planning/execution vendors. Traditionally, these vendors treated themanufacturing plant as a black box with information flows in and out that are used in supplychain planning. Gartner has seen a noticeable uptick in interest from manufacturers for tightercoupling between production planning/scheduling and MES. Enterprise PLM vendors with MESassets have made acquisitions in the supply chain management space, with Siemens acquiringPreactor and Dassault acquiring Quintiq and Ortems. This is putting additional pressure onsupply chain planning/supply chain execution vendors to partner with (or acquire) MES assets.

■ Midmarket ERP vendors, like Aptean, Epicor Software, IQMS and Plex, offer ERP/MES suitesthat are more compelling to manufacturers than the ERP-only offerings from other midmarketERP vendors. This may compel other midmarket ERP vendors to enter the MES space viaacquisition.

■ Software aggregators like Constellation Software (owner of POMS in the life science space andMajiq in pulp and paper) could continue to build out their MES portfolio.

■ Industrial companies that follow in the footsteps of Applied Materials (semiconductor), KörberMedipak Systems (life sciences) and Dürr (automotive) in acquiring MES assets thatcomplement their core business.

Cloud Adoption

Gartner conducts a yearly survey with MESA International to assess cloud adoption in MESsystems.

Key findings of the 2016 survey are:


■ Respondents with 10 or more sites demonstrate strong interest to support hybrid cloud or shiftto a hybrid cloud model.

■ Latency and data security continue to be the strongest concerns for most manufacturers.

■ Future MES applications will be supported by hybrid systems that leverage cloud with enoughlocal on-premises technology to keep the plant operational.

Over the years, our joint survey with MESA International has continued to track the adoption ofcloud capability in manufacturing execution systems (see "Survey Analysis: Multisite MES DeliveringBenefits Today With Cloud(s) on the Horizon"). While adoption rates and predictions continue tomorph, our surveys year after year indicate progress. Respondents with 10 or more sitesdemonstrate the biggest appetite for hybrid cloud or a shift to hybrid cloud. This is especially trueas the reduced TCO afforded by remote hosting allows enterprises to deploy MES technology tofacilities that previously would have been deemed too small to adopt the infrastructure required foran on-premises system.

However, this shift toward cloud adoption by 2019 doesn't take away from the paradoxical desirefor — and fear of — hybrid cloud technologies in manufacturing operations today. These differencesin direction are often departmental (pro-cloud IT versus pro-on-premises manufacturing). Exposureto cloud applications (e.g., ERP, product life cycle management and quality management systems)has minimized some of the anxiety of system availability, but latency and data security continue tobe concerns for most manufacturers. This has left MES vendors in the unenviable position of havingto build out cloud-based applications while maintaining and improving their on-premises solutions(see "2016 Strategic Direction for Postmodern SCM").

The vast majority of respondents predict the demise of on-premises manufacturing executionsystems. Whether their future MES is from a cloud provider or hosted in a corporate data center, on-premises is on the decline. The future will consist of hybrid systems that leverage cloud (orcorporate data center) resources with just enough local (on-premises) technology to keep the plantoperational in the event of a network outage.

Partner Ecosystem

The increase in the number and size of enterprise vendors and automation vendors in this spacehas also had a profound impact on the implementation partner ecosystem. Larger vendors aredeveloping broader application sets with more generic capabilities. They have stated to Gartner thatthey will go to market with generic, configurable applications supported by industry-specifictemplates and will rely on implementation partners and integrators to fill in the gaps between theirdelivered solutions and the specific needs of vertical industries (see "Market Guide for MES/MOMImplementation").

The end result, as reported by clients, is that the burden of meeting the needs of specific verticalsfor specific manufacturers is shifting from the vendor to the implementation partner and end user(see "The Drive for Generic MES Solutions Means More Work for Manufacturers").


Market OverviewThe core MES market is mature, dating back more than 20 years out of shop floor control systems.MES core technology has fundamentally remained the same as a set of application functionalityable to respond to changes in the manufacturing process faster than ERP (then MRP) was able to.Notably, there have been and continue to be improvements in the depth, number of options andflexibility of these capabilities.

MES innovation hasn't stopped, however. Leading MES vendors continue to enhance and extendcore capabilities, as well as expand the breadth of their application footprints adding extendedMOM capability, as well as additional hosting and licensing options. Enterprise vendors areleveraging their application breadth and platform expertise to make MES part of a digital thread.

Today, the MES market is heavily weighted toward manufacturers in North America and WesternEurope. These regions represent 78% of MES licenses and maintenance revenue. However,projected MES growth rates through 2020 are expected to increase for emerging markets that todayrepresent only 19% of the market based on revenue. Net-new customer growth will be higher inemerging markets; however, because deals remain smaller in general, revenue growth will continueto favor North America and Western Europe.

Gartner Recommended ReadingSome documents may not be available as part of your current Gartner subscription.

"Survey Analysis: Multisite MES Delivering Benefits Today With Cloud(s) on the Horizon"

"Market Guide for Manufacturing Execution System Software"

"Market Guide for MES/MOM Implementation"

"Market Guide for MPM and MbM for Discrete Manufacturing"

"Cool Vendors in Manufacturing Operations, 2017"

"2016 Strategic Direction for Postmodern SCM"

"The Drive for Generic MES Solutions Means More Work for Manufacturers"

"Jump-Start Your Industrie 4.0 Initiative Now: Part 1 — Lessons Learned From Five Early Adoptersin Digital Manufacturing"

"Hype Cycle for Discrete Manufacturing and PLM, 2017"

"Hype Cycle for Process Manufacturing and PLM, 2017"

"How Markets and Vendors Are Evaluated in Gartner Magic Quadrants"


Evidence

Online surveys of 124 MES clients provided by MES vendors.

Online surveys and vendor briefings from 32 MES vendors.

More than 200 inquiries on MES/MOM in 2016/2017.

1 Gartner's survey of 109 MES practitioners was conducted online from 26 September through 7November 2016. Typically, respondents represented large global manufacturing companies of10,000 employees or more. There was a 43%-57% split of respondents between discretemanufacturing and process manufacturing industries, respectively. Fifty-one percent identifiedthemselves as IT, 17% as line of business and 32% as a hybrid business-IT role.

Evaluation Criteria Definitions

Ability to Execute

Product/Service: Core goods and services offered by the vendor for the definedmarket. This includes current product/service capabilities, quality, feature sets, skillsand so on, whether offered natively or through OEM agreements/partnerships asdefined in the market definition and detailed in the subcriteria.

Overall Viability: Viability includes an assessment of the overall organization's financialhealth, the financial and practical success of the business unit, and the likelihood thatthe individual business unit will continue investing in the product, will continue offeringthe product and will advance the state of the art within the organization's portfolio ofproducts.

Sales Execution/Pricing: The vendor's capabilities in all presales activities and thestructure that supports them. This includes deal management, pricing and negotiation,presales support, and the overall effectiveness of the sales channel.

Market Responsiveness/Record: Ability to respond, change direction, be flexible andachieve competitive success as opportunities develop, competitors act, customerneeds evolve and market dynamics change. This criterion also considers the vendor'shistory of responsiveness.

Marketing Execution: The clarity, quality, creativity and efficacy of programs designedto deliver the organization's message to influence the market, promote the brand andbusiness, increase awareness of the products, and establish a positive identificationwith the product/brand and organization in the minds of buyers. This "mind share" canbe driven by a combination of publicity, promotional initiatives, thought leadership,word of mouth and sales activities.

Customer Experience: Relationships, products and services/programs that enableclients to be successful with the products evaluated. Specifically, this includes the ways


customers receive technical support or account support. This can also include ancillarytools, customer support programs (and the quality thereof), availability of user groups,service-level agreements and so on.

Operations: The ability of the organization to meet its goals and commitments. Factorsinclude the quality of the organizational structure, including skills, experiences,programs, systems and other vehicles that enable the organization to operateeffectively and efficiently on an ongoing basis.

Completeness of Vision

Market Understanding: Ability of the vendor to understand buyers' wants and needsand to translate those into products and services. Vendors that show the highestdegree of vision listen to and understand buyers' wants and needs, and can shape orenhance those with their added vision.

Marketing Strategy: A clear, differentiated set of messages consistently communicatedthroughout the organization and externalized through the website, advertising,customer programs and positioning statements.

Sales Strategy: The strategy for selling products that uses the appropriate network ofdirect and indirect sales, marketing, service, and communication affiliates that extendthe scope and depth of market reach, skills, expertise, technologies, services and thecustomer base.

Offering (Product) Strategy: The vendor's approach to product development anddelivery that emphasizes differentiation, functionality, methodology and feature sets asthey map to current and future requirements.

Business Model: The soundness and logic of the vendor's underlying businessproposition.

Vertical/Industry Strategy: The vendor's strategy to direct resources, skills andofferings to meet the specific needs of individual market segments, including verticalmarkets.

Innovation: Direct, related, complementary and synergistic layouts of resources,expertise or capital for investment, consolidation, defensive or pre-emptive purposes.

Geographic Strategy: The vendor's strategy to direct resources, skills and offerings tomeet the specific needs of geographies outside the "home" or native geography, eitherdirectly or through partners, channels and subsidiaries as appropriate for thatgeography and market.


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