We at Bowery Capital released the 2016 edition of Opportunities In Vertical Software in November, which laid out our point of view on ten specific verticals and the potential for various software solutions to dominate each of these ten verticals in the coming years. For ten weeks, we have released content focused around the impact of software on these ten industries. We have done several interviews in weeks prior covering the Agriculture, Logistics, Education, Legal, Restaurant, Insurance, and Construction verticals. For the manufacturing software vertical we conducted an manufacturing software interview with Jon Sobel. Jon Sobel serves as the CEO of Sight Machine. Jon has served on the management teams of several companies in pioneering industries, including Tesla Motors, SourceForge, and in its early years, Yahoo!
What are some of the most interesting developments in your industry over the last 10 years and how has software added value?
The manufacturing industry has changed more in the last 10 years than at any time since the Industrial Revolution. Automation, mass customization, global flows of capital and labor, and increased regulatory oversight are all leading to innovation, increased competitiveness, and urgency among industry leaders. Manufacturers are increasingly focusing on software and data. They are focusing on data for three main reasons: Operational efficiency, business process innovation, and business model innovation. Through technological adoption manufacturers have become capable of connecting manufacturing much more quickly and effectively to other parts of the business. For example, they can link production to sales and marketing, and join the data from the field to what is happening in the plant, all in an effort to improve the production process and end output. During the offshoring era, the industry focused on managing labor costs , but now global wage disparities continue to shrink. Manufacturers are focusing on innovation and digital capabilities to improve their market position.
What are some of the challenges / hurdles that still exist?
New investors who are starting to study Industrial IoT often mistakenly assume data acquisition and the perceived conservatism of manufacturers are the main hurdles. In reality the biggest challenges involve organizational readiness for new capabilities. In almost every manufacturing enterprise you will find people who want to adopt digital technology to address longstanding needs; the main difference between leaders and laggards is the level of support from Senior leadership.
When looking to enable a process with software what are the most important points for a buyer to think through?
Buyers succeed most when they approach the opportunity as a systematic, long-term data strategy, not a traditional IT project. Scale and long term architecture need to be top of mind. Organizations also need to alter behavior and move quickly – little to no progress is achieved without experimenting and moving fast. The smartest approach is to spend as much time on change management as is spent on technology adoption.
What is your vision for the industry in 5-10 years?
This year is a tipping point for digital. Major investments from companies like GE, Siements, IBM and others are leading the industry to focus on capabilities around data. That will have implications for how manufacturing itself is done. More connections between production and other parts of the enterprise will likely start to emerge. People with new skills will start entering the manufacturing environment. There is a lot of economic focus in recent years on the importance of a vibrant manufacturing sector and economists are recently focusing more not just on manufacturing jobs on the plant floor, but the multiplier effect of manufacturing. There is a renewed appreciation for manufacturing’s role in driving healthy economies.
Thank you for reading this Manufacturing software interview with Jon. Make sure to check out the 1st Manufacturing Deep Dive post discussing the History & Market Dynamics of Manufacturing technology as well as the 2016 edition of Opportunities In Vertical Software for the full report.