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How Indian Manufacturing is Fast Adopting SaaS and Winning

Indian manufacturing is the 5th largest in the world and is projected to touch 1 Trillion USD in a couple of years, but the dream is to be the Global Manufacturing Leader.
An automated factory with all the machines connected to a network

How Indian Manufacturing is fast adopting SaaS and winning

There is a surprising revolution underway - Indian Manufacturing is rapidly adopting SaaS and winning. Read on.

Indian manufacturing is the 5th largest in the world and is projected to touch 1 Trillion USD in a couple of years, but the dream is to be the Global Manufacturing Leader.

The characterization of Indian manufacturing as a slow adopter of Tech and with low productivity is rapidly changing. A part of the credit goes to the increasing hunger of veteran business leaders & new-age entrepreneurs hellbent on competing with the best in the world and also credit must be given to the government for it's 'Make in India' campaign.

Source: https://twitter.com/airnewsalerts/status/873551944706437120

There is this undercurrent of innovation and automation happening on shop-floors which is a harbinger of good times. There is, of course, this temporary blip due to the impact of COVID and subsequent lockdowns - but this is also becoming a point for rebooting and fresh thinking for Indian manufacturing plants.

Let me talk about one such transformation, which we are pleasantly surprised with - Manufacturing SaaS.

New products must be brought to market in ever-shorter timeframes and customers demand much more personalized products. Rapidly changing markets require increased flexibility and an efficient use of resources and energy. All without compromising quality. - Siemens Website

For consumer products such as mobile phones, the replacement cycles are shortening to a span of months before new the models take-over. The automobile industry is similarly facing the challenge of moving quickly to electric cars and self-driving cars and still uncertain of what the future of the market will look like.

It may not be obvious at a glance, but these rapid changes impact even the upstream industry such as steel in material ways. E.g. if Tesla Truck's space-grade - stainless steel alloy body becomes a rage - it will drive rapid changes in steelmaking processes.

This uncertainty requires flexibility, speed & scale - which were normally never expected of manufacturing. Everyone agrees that there is only one solution to achieve this - Technology, but not just any technology.

Almost all Indian plants have some level of digitization in place - most of it is in the form of ERP or standalone manufacturing software suites which I refer to as ISS short for 'IT Services Software'. Most of them are provided and maintained by Indian software giants - TCS, Wipro, Infosys and Tech Mahindra over the last 20-30 years.

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Thanks to this, Indian manufacturing achieved considerable improvements - but now these same tech stacks are holding them back. These limitations are due to the business model as well as the technical limitations.

  • IT services partners are incentivised to 'write the code' and not 'drive impact'. So, what we see is a huge custom code written to just about work - with all the features crammed in enabling them to raise their invoices. Every breakdown or change request is actually an opportunity for the service provider to charge more. What never gets really measured is the efficiency that these interventions actually drive. Often they just replicate the tedious manual work now on a computer without adding the desired productivity impact.

A steel plant we visited had a comprehensive software to capture data from their processes with fancy analytics tools on top of it, for which they paid through the nose.

But, in practice even for the daily analysis, users were downloading data in excel, cleaning it up manually and then using excel functions to make use of it.

This we saw case after case where even the simplest changes in systems became missions and projects tracked in senior executive meetings.

In a tech company, a fresh engineer would have solved this without anyone even batting an eyelid.

  • What makes it difficult for manufacturers is bearing the entire risk of new IT deployments. These projects get structured as - one-time development charges followed by yearly AMC and license fees. The code which is developed becomes the IP of the manufacturer and along comes the responsibility of making it work. So, if the project actually fails (68% projects fail by some estimates), the loss is actually entirely borne by the manufacturer and all they are left with is this piece of code which is barely functional - and then they throw good money after bad as the last resort.
  • ISS is hosted in-house and owned by manufacturers and every breakdown needs a visit from the service provider and it is common for timelines to stretch into months and costs in lakhs. The bigger cost is the loss of productivity and the ensuing chaos while the solution isn't working.
  • ISS is often maintenance-heavy and they consume significant bandwidth of the internal IT teams. This extra burden reduces the ability of the team to drive new projects and bring in new innovations.
  • The stand-alone architecture of the ISS is such that it prevents them from leveraging the best of the cloud.

At Sparrosense all our alerts and reminders are powered using WhatsApp which is such an intuitive platform for workers & supervisors.

At the request of one of the manufacturing clients, we explored if we could power alerts from their existing ERP systems. The design was just not meant to power standard collaboration and integration by something like RestAPIs - and made integration with WhatsApp etc. difficult if not impossible.

  • As AI is making its presence felt at the shopfloors, ISS which was built and designed in the pre-AI era don't have the capabilities and flexibilities that are required for AI-driven systems. The AI models need continuous involvement of expert AI teams with access to data, to prevent accuracy drop due to changes in environments and content drift.
  • To stay ahead of the curve, you need your solutions to improve in speed, performance & accuracy every day. You will prefer that these improvements flow in from experiences and learnings of the best global manufacturers. ISS which provides updates once a year upon paying separate charges just doesn't cut it.
  • The on-premise model is now an expensive way to manage your data. The processors and the harddisks routinely get outdated, and managing the infra takes huge effort and then there is added risk of losing data.

The above points illustrate the frustration that manufacturers used to feel for not being able to reap the full proposed benefits of their digital journeys.

Manufacturers now realise the need of flexibility, rapid iterations, speed, scale, leverage AI & IoT and ability to integrate across tools is best served by SaaS - an approach which is already working wonders in the tech sector. This SaaS adoption is starting with Sales, HR and finance tools but is now rapidly entering the shopfloor - the advantages are obvious:

  • SaaS providers have no option but to ensure business impact, otherwise, they are not getting their subscription payments for the next month - this keeps SaaS providers on toes ensuring impact.
  • This just takes away the risk of clients completely. If the SaaS deployment fails you can just drop it and explore the next vendor. As you aren't paying upfront - you barely lose a few months' subscription charges in the worst-case scenario.
  • SaaS providers provide 24*7 support on calls and they have the incentive to listen to you and solve bugs - as every bug solved makes their offering better for all SaaS users.
  • Cloud deployment along with 24*7 support system frees up the IT teams of manufacturers from the effort of maintaining solutions and they can spend their focus on new innovations and impactful projects.
  • SaaS hosted on the cloud is designed for integration with other cloud offerings via standard APIs. For example, WhatsApp Integration just requires signing up for their service and going through standard API doc available on their website. This ease of integration extends to CRMs, ERPs, HRM and integrations with all other SaaS solutions that it might need to talk to.
  • Ensuring the accuracy of AI models needs continuous work to compensate for changes in environments and content drift. Also, as AI is rapidly evolving with new hardware, models and approaches being introduced at break-neck speed - the standalone deployment of AI are not practically feasible.
  • As one SaaS provider will be working for multiple clients globally - every improvement will make its way to all SaaS users in real-time.
  • The cloud has matured and internet access has reached all corners - it doesn't make much sense to not leverage the advantages of the cloud. Cloud enables scaling across plants and processes. The biggest benefit is that it reduces the burden of managing servers in-house - enabling plants to focus on their core operations

In Summary,

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Manufacturing, as well as SaaS providers, have come to terms with this shift and now it is just a matter of time in which this becomes the new gold standard.

Just for illustration - Asian paints has already adopted Sight machine a SaaS product for creating a Digital Twin of their plant. Quoting from the press release -

"Sight Machine’s (SaaS) platform transformed plant data into a digital twin of the entire production process, identifying and quantifying contention and bottlenecks. Asian Paints was able to reduce cycle time on one of the key production lines at one of its plants by seven percent, delivering very good potential return from the initial project alone."

What we are observing in our daily interaction with manufacturing leaders is that - they are already cognizant and eager to be part of this shift. We are fully confident that - India will not only participate in this trend but will emerge as a leader.

Startups have a critical role to play in this - by not only rapidly bringing the best in the world to India, but by building the best solutions in India and taking them to the world.

The next decade will be for Indian Manufacturing to win..!

About the Author

Abhinav is the founder and CEO at Sparrosense. He graduated as an Engineer from IIT Delhi and has 10+ years of experience. He has worked as a Management Consultant with BCG and KPMG working with clients across Finance, Banking Healthcare, Government, Technology.