The modern manufacturing landscape is undergoing a revolution that is fundamentally changing the way companies manage and optimize their production processes. Software-as-a-Service (SaaS) offers a flexible, scalable and cost-effective solution that puts traditional Manufacturing Execution Systems (MES) in the shade.
Software-as-a-Service (SaaS) is both a software distribution model and a special form of software provision.
At its core, SaaS describes an approach in which applications are made available as a service via the Internet instead of being installed and maintained on individual customer computers in their local networks. This model differs significantly from traditional software license models, where software is purchased as a software solution, installed and maintained internally or by external engineering support team.
As a sales model, SaaS differs fundamentally from conventional models in the way in which software is made available to and charged for by end users. Customers typically pay a subscription that gives them access to the software over the internet. It also allows for regular updates and improvements that can be made without interruption or additional cost to the customer.
In terms of software delivery, SaaS characterizes a specific way in which applications are hosted and made available to users. In contrast to on-premises software, which is installed on the user's physical devices or within their company network, SaaS software is hosted on the provider's servers.
Users access it via the internet, typically using a web browser. This delivery method reduces the demands on the customer's IT infrastructure and lowers the barriers to accessing advanced software, as no large initial investment in hardware or licenses is required.
When deploying systems, it is important to distinguish between Cloud-hosted and Cloud-native systems, as the benefits of Cloud-based information systems are only realized through a Cloud-native architecture. Cloud-hosted systems are traditional On-premises information systems that have merely been "lifted and shifted" into a data center (into the Cloud), do not offer the significant advantages of current Cloud technologies, and fundamentally still rely on outdated technology ("old wine in new bottles"). For more information on this, you can read our article Cloud-native MES - Evolution and Paradigm Shift.
Microsoft and SAP are also important players in the area of cloud services and software-as-a-service. Both companies have played a key role in shaping and expanding the transition from traditional software solutions to SaaS models.
Microsoft Office 365, launched in 2011, marked Microsoft's decisive move into the world of cloud services, offering its traditional Office software suite (including Word, Excel, PowerPoint and later Teams) as an online subscription service. This move allowed users to access their applications and files from anywhere and on any device, representing a significant shift in the way people work and collaborate. Microsoft 365 also integrates other services such as OneDrive and SharePoint to provide a comprehensive collaboration and productivity platform.
SAP, a leading provider of business software, also has a variety of cloud and SaaS solutions in its portfolio to meet the needs of modern businesses. SAP offers cloud-based solutions in areas such as ERP (Enterprise Resource Planning), CRM, HR and business travel.
With SAP S/4HANA Cloud, for example, SAP provides a powerful ERP solution that was specially developed for the cloud and supports companies in efficiently managing and optimizing their business processes.
Before we turn to the revolution, let's first define what a Manufacturing Execution System (MES) is. An MES is an information system that enables the monitoring, control and optimization of production processes in a manufacturing company. From the start of an order to the finished product, it supports the efficient control of production processes.
Traditional MES solutions are characterized by high initial investments in the 6-digit range, complex implementation over months and rigid infrastructures. These factors can represent a significant barrier, especially for small and medium-sized enterprises (SMEs).
The availability of Software-as-a-Service (SaaS) in Manufacturing Execution Systems (MES) marks a revolutionary turning point for the manufacturing industry. This section highlights the key benefits that SaaS-based MES products offer - in case they are Cloud-native MES products - and why they are considered revolutionary.
The adoption of SaaS enables a significantly faster, easier and more cost-effective transformation of IT infrastructure in the manufacturing industry by providing seamless and cost-effective integration of advanced analytics and IoT technologies instantly, resulting in improved decision-making and process optimization.
The market for SaaS solutions continues to grow as more and more companies recognize the benefits of cloud usage, including cost efficiency, flexibility, scalability and improved collaboration.
Note: The following considerations of the various MES SaaS benefits apply exclusively to information systems that are based on a modern Cloud-native architecture - this should not be confused with Cloud-hosted solutions of the traditional on-premises MES world. More on this in our article Cloud-native MES - Evolution and Paradigm Shift.
SaaS MES systems from the Cloud offer unprecedented flexibility, enabling manufacturing companies to quickly respond to market dynamics and changing production requirements. Unlike traditional MES, which often have rigid and difficult-to-adapt structures, SaaS solutions can be customized with just a few clicks. This flexibility supports companies in integrating new processes, expanding or adjusting product lines, and optimizing production efficiency in real time.
The ability to instantly scale usage based on current demand is another key benefit of SaaS MES. Companies do not need to invest in expensive infrastructure that may only be utilized intermittently.
Instead, they can easily scale up or down their subscriptions to meet current requirements. This scalability ensures optimal resource utilization and prevents overinvestment in unneeded capacity.
SaaS MES models eliminate the need for large upfront investments in hardware and software. Through the subscription model, companies only pay for what they use, resulting in significant cost savings.
This payment structure makes it easier for small and medium-sized enterprises (SMEs) to access advanced MES capabilities that were previously out of reach due to high costs. In addition, SaaS models also reduce maintenance and upgrade expenses as these are included in the subscription fee.
The SaaS model also changes the traditional understanding of software licenses, as customers no longer purchase a permanent license, but instead pay for access to the software on a subscription basis.
With SaaS MES, companies automatically benefit from continuous updates and improvements. These are carried out by the provider without any additional costs or interruptions for the company. Users therefore always have access to the latest functions, security updates and technological innovations.
This up-to-dateness ensures that the MES solution always complies with current best practices and is robust against new security threats.
SaaS-based MES solutions are typically designed to be easily integrated with other systems and technologies, such as ERP systems, IoT devices and data analytics tools.
This compatibility enables seamless data transfer and use across different platforms, which forms the basis for a comprehensive digitalization strategy. In addition, SaaS models are future-proof as they can be easily adapted to new technologies and industry standards, helping companies to remain competitive in the long term.
In today's digital era, cyber security is a key concern for businesses of all sizes. SaaS-based MES solutions offer a significant advantage here, as they are hosted and managed by professional service providers who have extensive resources and expertise in cyber security.
These providers continuously implement the latest security protocols and technologies to protect their customers' data and infrastructures. This includes regular security updates, advanced encryption methods and proactive threat monitoring. For manufacturing companies, this takes a significant burden off their shoulders, as the responsibility for maintaining a robust security infrastructure largely shifts to the SaaS provider.
Opting for a SaaS model significantly reduces the company's own effort and responsibility in several key areas. Firstly, there is no need to build and maintain your own server infrastructure. The associated hardware procurement, setup and maintenance is replaced by the SaaS provider's subscription model.
Secondly, SaaS providers take responsibility for carrying out software updates and upgrades, meaning that manufacturing companies always have access to the latest MES features and security enhancements without the need for internal IT staff to manage these processes.
This allows companies to focus on their core competencies and allocate resources more efficiently.
Although the SaaS solution reduces the burden in terms of infrastructure management and software maintenance for an end customer, there remains a collaborative partnership between the SaaS provider and the user organization. Companies must ensure that their internal processes and systems are effectively integrated with the SaaS MES and that their employees are properly trained to utilize the full capabilities of the software.
To this end, SaaS providers offer what is known as onboarding, which fully introduces key users to the SaaS MES product and takes the first steps together with the end customer before they get into the driver's seat of "their" MES.
Discover more exciting articles on the topic of MES below:
Everything you want to know about Manufacturing Execution Systems (MES)
Cloud-native MES vs Microsoft Power BI for the digitalization of production
In addition, lean production, continuous improvement, Kaizen, Six Sigma and shopfloor management play an important role for MES in recognizing the potential for improvement in production. MES products enable efficient communication and coordination directly at production level (operational excellence), which is essential for identifying and quickly rectifying problems.
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