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Challenges To Enterprise Systems Manufacturers: Delivering Flexibility, Managing Complexity, and Providing Optimal Service

Challenges To Enterprise Systems Manufacturers: Delivering Flexibility, Managing Complexity, and Providing Optimal Service

THREE CHALLENGES FACING ENTERPRISE SYSTEMS MANUFACTURERS In high tech, the term “Enterprise Systems” means large-scale servers, storage systems, networking equipment and accompanying software primarily targeted toward the Enterprise market. Enterprise Systems is a very intricate business, as the term suggests. One piece of equipment can have commodity hardware, custom ASICs, embedded software, and operating system and third party hardware and software components. Enterprise Systems manufacturing companies tend to be mid-volume businesses with a large product mix. Volumes are typically larger than a semiconductor capital equipment company but smaller than a personal computing company. Enterprise Systems companies have traditionally been among the high gross margin sectors in high tech, with some running in the 55%-65% range.

However, as margins have eroded and orders have dropped due to mass commoditization -- Huawei in networking, Dell in storage, Intel/Linux in server systems -- Enterprise Systems manufacturing companies have struggled to adapt to a changing market. These companies are faced with three challenges: delivering flexibility in their supply chains, managing configuration complexity efficiently, and optimally servicing their installed base.

First challenge: delivering flexibility The first challenge, delivering flexibility, stems from the way Enterprise Systems manufacturing companies are being forced to respond to fast changes in customer requirements and technology. This has placed huge demands on the flexibility of supply chain systems. Key issues revolve around managing outsourced manufacturing partners and suppliers, product transition (NPI, new products introduction), exception handling and...