A few years ago, I started hearing backchannel whispers from manufacturers in the know. Supposedly, OEE (Overall Equipment Effectiveness) was more than just underrated. It was the gold standard metric that all manufacturers should aspire to.
Consider me surprised: this was one of the rare buzzwords that lived up to its hype. But there is one huge caveat: properly measuring OEE is, historically, a resource-intensive undertaking. As a result, OEE has (mostly) remained the province of the deepest-pocketed manufacturers.
Software AG's OEE app - why an app, and why now?
But as I learned more, a bigger storyline emerged. Is this OEE app an example of how industrial IoT can finally deliver on an elusive ROI? It's a potent question - and the answer traces back to a hackathon.
Before we go there, a brief description of OEE:
Overall equipment effectiveness (OEE) is a measure of how well a manufacturing operation is utilized (facilities, time and material) compared to its full potential, during the periods when it is scheduled to run. It identifies the percentage of manufacturing time that is truly productive. An OEE of 100% means that only good parts are produced (100% quality), at the maximum speed (100% performance), and without interruption (100% availability).
Software AG's OEE app is available (free) to all customers of its Cumulocity platform. Running the app incurs costs based on consumption, via a pay-per-use model (the OEE app is available via the Cumulocity app store). This app was built minumum viable product (MVP) style, meaning the capabilities will be expanded over time; other OEE-related apps from Software AG are on the roadmap as well.
Out of the gate, the goal was to cover 80% of the possible functionality. Is that enough? That's one of the questions I had for the lucky pair of Dr. Jürgen Krämer and Dr. Stefan Sigg of Software AG. Let's start here: why did Software AG release an OEE app?
Sigg, Software AG CPO and Management Board member, told me Software AG started in IoT with the goal of being a platform provider for industry consortiums, such as the ADAMOS strategic alliance for mechanical and plant engineering. But from the get-go, this alliance raised a fundamental question:
We joined ADAMOS as a platform provider. Early on, there was this question: 'Okay, there is this device connectivity, device management, the pipelining of the data from the edge and the cloud. But what do we do with it?
From hackathon to OEE app - an unexpected story
One difficulty: for different types of machine builders, the functional needs were different. Building exceptional IoT apps on the platform seems promising, but what kinds of apps can span across different types of machinery? "Everything was so customer-specific," recalls Sigg. Then, a hackathon brought a way forward:
It was really a grassroots intelligence. 'Well, you know, we all have the same problem... Would it be possible that an IoT platform could be the foundation of a configurable, even an out-of-the-box [OEE] experience for the smaller partners in the Consortium?
That 80% principle comes into play here. Could an OEE solution get to 80% of the core needs, across industries? The hackathon lightbulb went off:
Is there a way to look at IoT, not only from a platform point of view, but from an application point of view? Or a solution point of view?
So the OEE app was born, and with that, an energizing IoT direction.
What is important for me is that we do not get tired of trying to convey an outcome value out of IoT. It's clear that this is not so easy, but by example, people can relate, right?
So we looked at our UI; we looked at what we call solution accelerators, where we try to do something 80% or 90%... So we are approaching IoT, coming from a platform point of view, but knowing very well that the real interesting stuff is if you go upwards into the value chain. That's where we want to differentiate.
And yes, that hackathon app provided the basis for the OEE app announced last week. The hackathon version wasn't an app yet - it was an elevator pitch with a demo. But it won the hackathon, and the rest is history. Perhaps now, the promise of OEE can be extended. As Krämer, General Manager IoT & Analytics, and Member of the Software AG Executive Leadership Team told me:
If you are a mid-sized machine builder, it's all about time to value. If you need to start coding, and you have a project going over months, you don't have the developers - you want to get value out of IoT quickly. With this new app, we have something they can configure in a self-service session, and immediately provides value to them, because they have these OEE calculations. They know that about quality losses, downtimes, etc. And they can react and improve their business.
I gave Krämer and Sigg a good-natured hard time for burying the PR lead. The fact this came out of a hackathon is no small detail. As an enterprise hackathon judge, one of my perennial beefs is how few of the noteworthy ideas ever get productized. Well, this is a clear exception.
As to whether this OEE app will be a success, we aren't far enough along yet. I'd want to hear from customers who have realized value from the app (there is one, DVS Technologies, quoted in Software AG's OEE press release).
Yes, sophisticated IT shops are fine with build-your-own IoT, but most manufacturers need a head start. Pricing to fuel adoption? Another good step.Sigg:
It's all about adoption... We don't want to make [licensing] too complicated. That's not what people want. They want to have a basic consumption-based pricing model. What we are delivering here is very transparent and very easy to understand. Of course, it's in our interest to fuel this adoption and fuel this usage. The more direct value you can convey, the better the story is.
The 80% functionality issue doesn't concern me much, but I asked about it anyhow. Why wouldn't it concern me? Well, in an MVP-type model, you can always add features and functions. Often, that final 20% is functionality needed only by a few, and complicates things for the many. In other cases, that 20% is industry-specific. Here, you can build out industry versions; perhaps your partners can customize the last mile.
Or: you can flesh out that remaining 20% per customer needs. Sigg and Krämer said that production-line dashboards with specific views are one priority request. Another is: enhancement on the correlation of OEE calculations across machines. Krämer says the next OEE app on the roadmap is a "machine portal," which will allow customers to monitor the uptime status of multiple machines, and provide integrations to service portals and spare parts ordering systems, so that actions are triggered if something goes down.
If you told me ten years ago I'd be talking to Software AG about building IoT apps from hackathons, I would have asked you what white board you've been sketching on. But talking to Sigg and Krämer, their startup-style enthusiasm was palpable. We don't know if this will help pave a way forward for industrial IoT; I suspect it will. But I do know that an energized corporate team is uncommon. Sigg and Krämer seem to also appreciate this moment. As Sigg said:
In the industry, we've been talking about IoT for so many years... Of course, we do have our bread and butter capabilities that we talked about. But it really is a startup feeling.
Software AG's Cumulocity IoT acquisition allowed them to extend their integration/middleware expertise into the IoT market, and that's still bread-and-butter. But this, Sigg says, is a big twist:
This is opening up new dimensions, and not only an incremental dimension, but a really new dimension.
It sounds that way from here - now to prove it out.
Updated, 7pm UT PT on September 23, with a number of small tweaks for reading clarity.
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