MANUFACTURING BLOG

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meditations on manufacturing written by our team of industry insiders
By David Oeters • October 28, 2015

4 Tips for Understanding the Cost of an MES

Though it may seem counter-intuitive, cost is rarely reflective of benefit in a manufacturing software system.

 

Pricing of software can be… confusing. I can understand why many customers become perplexed when comparing the price between Manufacturing Execution Systems. With manufacturing, the cost of a product is the combination of materials, labor, production requirements and profit. A product with pricey materials and stringent regulations will cost more than a less complex plastic part with no regulations. This makes sense.

Software pricing is different. In the past, companies hired software firms to develop an MES. Labor costs were calculated by the developers working on the project. With the advent of Off-the-Shelf (OTS) solutions, development costs are shared by the companies using the solution. Even sharing the cost, development can be expensive, especially for manufacturing software. Consider this; even building a relatively simple MES could take several years of work by a team of developers. Doubt this estimate? Just ask the companies that decide to build an in-house MES.

 

What Drives the Price of Manufacturing Software?

This will give you a starting point for price, but there are other factors to consider, including:

  • Service Charges

    Almost every system will charge service fees. Configuration of the software might be a service and can vary widely between systems. Some companies have a plethora of modules to configure, increasing the cost. Other companies will tell you they are OTS, but require expensive customization. When you have a system that is truly OTS, with little required customization or configuration, the price will be lower.

  • Age of the System

    Unlike a car, the cost of manufacturing software doesn’t decrease over time. It seems counter-intuitive, but an MES will get more expensive as it ages. Old code and technology is difficult to use, so a venerable MES built 15 – 20 years ago will give programmers a headache, and the company will pass that cost to you. You may think you are buying a safe, proven solution, but that old software is being asked to do things it was never designed to do.  That “classic” system will require a massive implementation team and exorbitant costs with little benefit to the end users.
  • Initial Implementation Costs.

    Some companies will charge implementation fees for uploading and preparing your work instructions by converting them to the templates or formats used in their software. This can be very expensive and disruptive. Systems that reuse your existing processes and work instructions, and allow a controlled, phased implementation will be much less expensive and disruptive. This is common in a “Big Bang” implementation when a company tries to do all phases of the project at once, driving up the initial cost with little benefit.  A phased approach, allowing the customer to implement at their own pace, will manage the overall cost of the software.

  • Support and Training Fees.

    Complexity in software will increase cost, often adding both unnecessary functionality and training fees. This often happens in MES when you start combining different functionality, for example an MES and PLM, in a single solution. Additional training will be necessary for users to navigate the system. Other systems, especially older ones, add functionality with limited use with every new release, resulting in what they market as a “robust” product, but those older features have limited use on the modern shop floor. Over time, you’ll pay even more for the complexity in additional support just to keep the system running.

Matching Cost to Benefit in an MES


When looking at the price of a software system, you need to keep in mind price is not always a reflection of your benefit. Paying millions for an MES does not mean you’ll get more benefit. In fact, many times the factors that lead a company to price their software have nothing to do with how it can help a potential customer.


This is why it is so important to consider the ROI for a software system before you buy. Break down the cost, and look at how you will use the software and your intended return. Determine if the high-cost software system will deliver an equally large benefit in a short amount of time. Otherwise, you may be stuck with an expensive system that never matches the promises of the company that sold it to you.

Quantum Manufacturing Execution System is the next generation of MES
Quantum provides the data-driven edge manufacturers need by intelligently linking production to the ERP. With seamless communication across the business, manufacturing becomes an integrated business process, fueling efficiency and increased operations. 

Want to learn more, or see how you can seamlessly implement a data driven manufacturing solution?
Then
contact CIMx today for a free manufacturing ROI analysis.