Understanding the value of OEM Systems Integration Services for Software Developers Considering Appliance-Based Systems

Transcription

1 OEM SYSTEMS INTEGRATION SERVICES OEM/EMBEDDED solutios Uderstadig the value of OEM Systems Itegratio Services for Software Developers Cosiderig Appliace-Based Systems ABOUT THE AUTHOR Homer Shao has over twety years i techology sales. His experiece icludes work with Motorola, Network Equipmet Techologies ad Verizo, as well as havig worked with two systems itegratio compaies. Curretly, Mr. Shao is the OEM-SI sales represetative for Cotietal Resources OEM/Embedded Solutios Group i Nashua, NH. A overview of OE Issues ad Solutios Appliace-Based System Market Idepedet software vedors are icreasigly turig to appliace-based systems as a meas of differetiatig their products, reducig istallatio difficulties ad gaiig a competitive market advatage. Commo applicatios for appliace-based systems iclude: etwork security devices, etwork access storage systems, voice-over-ip servers, backup storage systems ad gateway cotrollers to ame just a few. Appliace-based systems are closely related to software appliaces. A software appliace combies a software applicatio ad a streamlied versio of the system software (OS, file system, applicatio server, etc.) that readily istalls o idustry stadard hardware (Wikipedia). Appliace-based systems exted this capability to iclude the hardware platform as part of the solutio, providig the user with a true plug-ad-play system ready for immediate istallatio. Key reasos for deployig appliace-based systems iclude; accommodatig uique hardware requiremets, gaiig cotrol over applicatio performace, meetig FDA or NEBS requiremets, providig tur-key deploymet ad creatig a braded physical device. Appliacebased systems will elimiate a umber of support ad performace issues, but they brig with them a ew rage of maufacturig issues that a software compay is ulikely to be familiar with. Evaluatig Your Maufacturig Optios I-house capabilities For software compaies accustomed to shippig software CDs or providig a dowload service from a web page, the shift from software delivery to buildig complete itegrated hardware ad software systems represets a major chage i operatios. Ask yourself Do we have the capability (ad is the retur high eough) to create ad support all the systems ecessary to desig, build, deploy ad maitai physical computer systems? For start-up compaies, the additioal overhead associated with buildig a hardware maufacturig competecy represets a sigificat drai o scarce capital resources. Fuds best ivested i your core software wid up diverted to a whole rage of low-tech services required to support the hardware itegratio. Admiistratio, documetatio, assembly, software loadig, testig, logistics, ivetory ad hardware maiteace costs will all egatively impact the compay s balace sheet, decreasig the compay s chace of lauchig its product ad geeratig reveues before ivestmet capital is depleted. Outsource Maufacturig Outsourcig the hardware portio of the system allows your start-up compay to maitai its focus o the developmet of your itellectual property ad avoids the capital drai caused by the developmet of a iteral maufacturig competecy. The chasm betwee Du & Bradstreet Ratig: 5A2 WBENC Certified Wome Owed Busiess Certificate ISO 9001:2008 Registered

2 solutios OEM-SI: A systems itegratio compay that uses commodity compoets ad sub-assemblies to build custom computers for compaies that iclude computer hardware as a part of their deliverable product. software developmet operatios ad maufacturig operatios is clear-cut ad the outsourcig of the maufacturig fuctio will have few, if ay, egative impacts o the orgaizatio as a whole. A umber of differet maufacturig optios exist. Which is most appropriate for your compay depeds o two primary factors the product beig built your compay s attitude toward ad ability to hadle the various fuctios that deliverig ad supportig a physical device require Cotract Maufacturers Cotract Maufacturers, commoly referred to as CMs, are geerally best suited for devices requirig substatial amouts of custom fabricatio. Though the systems are ofte drive by off-theshelf CPUs, other electroics ad the chassis are custom. Devices requirig cotract maufacturig are ot geeric i ature; they typically have specialized I/O requiremets, custom packagig or specialized hardware circuitry. Custom hardware will cost more tha off-theshelf devices both i terms of actual compoet costs ad developmet costs, implyig either a very high-priced or high volume device. The services available from the CM vary. Some CMs provide all the egieerig ecessary for developmet of a custom system; others require you to submit complete egieerig specificatios. CMs may build a complete system, loadig your software, packagig the system ad readyig it for fial shipmet. Most ofte, a CM builds specific compoets of the system, with some level of hardware itegratio, but leaves the fial software loadig ad logistics to the system developer. PC Shops Small PC shops ad local custom itegrators ofte supply the early-stage systems eeded for developmet ad testig. These shops are resposive ad ca offer a good selectio of commodity compoets to meet the applicatio requiremets. What they lack is the ability to scale as the requiremet for systems moves from a few developmet systems to sigificat volumes. Furthermore, PC shops are ot likely to have the logistical ad support systems ecessary to support drop-shipmets to your ed users or provide braded customer service. Tier-Oe Maufacturers The tier-oe computer maufacturers Su, IBM, HP ad Dell all offer itegratio services. These providers do t offer the latitude of desig you ll fid with other outsourcig optios, due to the fact that they wat to keep their hardware cotet pure. But they do offer high quality products ad extesive field service support optios. Their egieerig support services are outstadig ad a developer may ejoy sigificat leverage with a tier-oe provider early i the developmet cycle (whe the provider is workig to archive a desig wi for a sigificat product). Tier-oe suppliers are most commoly egaged i applicatios where the software is loaded oto a early stock server requirig little or o chage other tha perhaps a custom bezel. I these cases the maufacturig work is limited i scope ad could be performed by the software developer. Oracle/Su ad IBM have bee aggressive i promotig this model. Both have a good selectio of NEBS-compliat systems that address the growig market for IP telephoy products. The build-it-yourself-o-a-tieroe-platform program works well for low volume applicatios but as volume scales, the tasks of receivig, u-boxig, imagig, testig, re-boxig ad shippig ca escalate to the poit of pai. This strategy becomes particularly fiacially paiful whe you realize that it s your ow highpaid egieers who are performig the above listed tasks. Tier-oe suppliers will take o whole projects ad do them o a outsource basis. But they re ot equipped to do so for small volumes. Wat IBM to maage the build of 1,000 servers a moth? They ll do it ay way you wat. What if you eed oly te servers a moth? You wo t get their full attetio. If you wat ad eed a direct, tier-oe outsource relatioship, a good busiess pla projectig large volumes ad a strog fiacial positio will assist i gettig a tier-oe vedor to support your project pla. OEM System Itegrators The fourth major group is the OEM systems itegrator (OEM-SI). OEM-SIs 2

3 solutios use commodity compoets combied with a rage of maufacturig services to provide a complete outsource service for software developers buildig appliacebased systems. These OEM-SIs are ot beholde to ay sigle, tier-oe supplier ad, as a result, choose from a dizzyig array of devices ad compoets to build essetially aythig you require. Though most OEM-SIs build systems based o off-the-shelf compoets, they may hadle some limited cotract maufacturig work ad usually offer bradig, packagig ad custom low-tech compoets such as bezels ad mior metal work. OEM-SIs provide a full rage of services icludig system desig, system assembly, logistical services ad post-sale maiteace. This group of maufacturers is best suited for compaies whose appliace is built o stadardized compoets ad who desire to outsource as much of the maufacturig process as possible. I essece, the OEM-SI has the ability to become the software developer s virtual factory. Hybrid Tier-Oe/OEM Systems Itegrator Several tier-oe providers have developed chael strategies that utilize system itegratio parters for OEM maufacturig applicatios. These programs, such as Oracle/Su s OEM Techology Partership (OTP) ad IBM s Value Net Solutio Provider (VNSP), address the eeds of software developers who desire the beefits of tier-oe products, but with lower volume requiremets. Through a chael marketig arragemet, the tier-oe providers pass product title ad full service beefits through select OEM system itegrators to the ed users. This arragemet results i a more flexible relatioship where the OEM-SI has the ability to add their full suite of services oto a tier-oe platform extedig the virtual factory cocept to lower volume, tier-oe applicatios. Beefits of OEM System Itegrators I Ca Build It For $$ THAT! Uless the device i questio is goig to be sold by the thousads ad custombuilt overseas (i which case it does ot fit ay of the described models), the cost of the compoets used to build computer systems is highly ielastic. A popular desktop chassis from Evercase ca be purchased for aroud $59.00 i small lots. Lots of 500 drop by the price by oly $2.00 a 3.4% discout. Microsoft liceses are particularly iflexible a quatity of oe Widows 2003 server licese, for example, costs $250. The same licese at a quatity of 100 is still $250. So be prepared, ecoomies of scale do t come ito play for quite some time. With a OEM-SI you will realize a cost beefit i the form of valueadded services. While the OEM-SI has compoet costs similar to ay other productio optio, their profits derive from efficiet maufacturig ad the appropriate pricig of services redered. Developers are discouraged from believig that a volume icrease from sigle uits to scores per moth will cause prices to vary much. I reality, volumes i the multi-hudreds per moth will be required to sigificatly impact the bottom lie price. Expese-Reducig Opportuities Desig Services All OEM system itegrators will provide some level of pre-productio egieerig support. This may be a formal, cotracted egieerig service or it may be the assistace of sales egieers who have extesive experiece across a broad rage of compoets ad platforms. As the software developer, you ca take advatage of this kowledge to gather iformatio o compoet performace, failure rates ad alterative solutios before committig to a desig. The OEM-SI will have existig relatioships with a umber of compoet vedors which you ca leverage to obtai additioal techical support. Compoet vedors may also provide samples, allowig the OEM-SI to offer special pricig o developmetal systems. 3

4 solutios Workig closely with a OEM-SI durig the early developmet phase leverages the itegrator s kowledge ad experiece. It also gives you, the software developer, a good sese of how iterested the OEM- SI is i your project. If a good workig relatioship is built at this poit, the result is a solid busiess foudatio upo which the rest of the value-added services provided by the OEM-SI are built. Vedor Maagemet ad Admiistratio Costs The OEM-SI plays a sigificat role i keepig the software developer s admiistrative costs dow. Pricig, orderig, ad trackig the flow of materials to keep a productio lie movig takes cosiderable back-office effort. Just reducig your purchasig efforts ca be sigificat from issuig multiple purchase orders for multiple compoets, to issuig oe order for the completed device. Oce a cotract is i place, the developer s order to the OEM- SI is simple ad the costs are fixed. The OEM-SI, o the other had, is orderig multiple products from a rage of suppliers with daily price variaces ad occasioal stock outages. The OEM-SI has the advatage of kowig its sources ad spreadig its purchasig efforts across multiple customers eeds this results i efficiecy that would be difficult to repeat i a sigle product shop. Oe of the most frustratig ad timecosumig aspects of buildig iformatio techology-based products for OEM applicatios is maitaiig a cosistet product build. Ulike ed-user data applicatios where ewer, faster, better is good ad users are happy to get ehaced products, i the OEM world $300 $250 $200 $150 $100 Systemboard Cost Vs. Life Spa Itel ExLP Itel Desktop ASUS Super Micro Product Life Spa (i moths) ITOX uplaed chage ca be disastrous wreakig havoc with your software applicatio. Builders of OEM devices eed a cosistet supply of exactly-the-same product esurig that idetical systems will be available over relatively log periods of time. OEM-SIs work with their cliets to determie which parts must be cotrolled, ad which parts ca vary withi a specified rage. For example, a motherboard would typically eed to be cotrolled; ay chage i the motherboard could have serious impacts o the system as a whole. Hard drives, o the other had, may ot have a sigificat impact o the fial product ad the software developer may agree that ay of a rage of drives ca be used as log as they meet the storage ad performace requiremets of the system. Each compoet withi a system has its ow life spa. Withi a class of products, some maufacturers will commit to guarateed life spas ad some maufacturers will ot (though they may have bee producig a product for years). This requires that the software developer ad the OEM-SI work together to develop a bill of material that matches the life expectacy of the system beig developed. Wherever possible, guarateed loglife compoets should be used. But, log-life compoets typically carry a higher price tag; so all decisios eed to be tempered by the impact of higher costs. I the case of regulated devices, as i FDA regulated medical systems, replacig compoets may cause a very expesive re-certificatio of the etire product; so payig a few dollars extra for a compoet that has a guarateed life spa would be a wise ivestmet. Evetually all compoets will go edof-life. The OEM-SI ca assist i makig the trasitio to ew compoets easier. Typically, whe a product goes ed-oflife, there is a otificatio period ad a opportuity to make a last-time buy. If the OEM-SI is properly trackig the device, they should be able to exted the availability of the compoet by six to eightee moths usig a strategy of lasttime-buy orders ad ivetory cotrol. The OEM-SI may require that the developer purchase the ivetory i advace. A better arragemet for the developer (with good credit) would be to issue a o-cacelable P.O. for the materials ad the pay as the systems are built. Ultimately, the decisios o which compoets to use are highly subjective, but must reflect the ature of the product beig built ad the cost costraits of the market to which it s beig sold. The experiece ad kowledge of the OEM-SI is highly valuable to the software developer, who i may cases will ot be familiar with the rage of compoets available or their log-term availability. 4

5 solutios Factors Drivig Appliace Adoptio Itegrated Software Vedors are icreasigly offerig their product as a tur-key hardware appliace. This may be drive by uique platform demads, as i specialized security devices, but the advatages of sellig a budled package ca exted to ay serverbased package. Key advatages to a appliace strategy iclude: Safeguards Your Reputatio Systems are sold with a kow ad repeatable performace capability; there are o chages from oe istallatio to aother. Elimiates Hidde Costs Sigle platforms reduce support cost ad allow egieers to focus o primary objectives, ot hadlig uforesee problems. Reduces Service Calls Streamlies the release of ew software revisios ad simplifies i-lab problem replicatio. Saves Time, Icreases Sales Elimiates the eed to test products across a rage of hardware platforms, reducig time to market ad gaiig a competitive edge i emergig techologies. Prevets Uwieldy Ifrastructures Avoids staff iflatio to support umerous hardware cofiguratios. Support is focused o the eterprise s core software while the hardware ad logistics are outsourced to a OEM-SI. Maufacturig ad Itegratio Beefits For the software developmet compay choosig to outsource maufacturig, the most obvious beefit is elimiatig the costs ad liabilities of settig up ad ruig a maufacturig shop. Outsourcig elimiates the eed to acquire the software loadig systems, hardware testig platforms, ivetory cotrol systems ad other tools required to ru a small productio ceter. It also avoids the space ad persoel requiremets that would otherwise be ecessary. Vedor certificatios with compaies like Microsoft or Itel ca be avoided if the outsourcig compay already has these credetials. If the outsource compay is ISO certified, you could state that your device is built accordig to ISO quality stadards ad spare yourself the high cost of a ISO certificatio program ad audit. Outsource maufacturers provide their cliets with a iheret ability to scale productio. Sice the outsource compay is already set up to hadle hudreds of devices daily, growig your productio from less tha a few doze uits a moth to hudreds of uits a moth should ot impact the maufacturer s overall capacity. Volumes that grow to thousads per moth could cause issues, but at that productio level, other maufacturig optios (icludig offshore custom platforms) would be viable. At those levels a review of your productio strategy would be i order. Shippig, Receivig ad Logistical Services A full-service OEM-SI is equipped with a professioal shippig ad receivig facility. This may seem like a simple thig, but imagie the logistics of hadlig dozes (let aloe hudreds!) of packages daily while workig out of a secod story office suite. Hadlig this work iterally would mea hirig additioal staff, settig up iteral processes, egotiatig with carriers ad a possible relocatio to space with a proper shippig dock. Outsourcig elimiates the eed to take o ay of these fuctios. The OEM-SI also has existig relatioships with the leadig shippig compaies ad is able to hadle domestic ad iteratioal shipmets easily. They uderstad the packagig ecessary for the products beig built ad will advise you o the desig of a appropriate package, assist with the procuremet of custom boxig, ad develop ay special labelig or pritig. Product Warraties ad Field Service Support The product warraty ad field support services required for the appliace deped upo the ature of the applicatio delivered by the appliace. Some applicatios madate same-day o-site support, while others may work well with a overight uit replacemet program. Whatever the level of support required, the OEM-SI is i a positio to help with at least part of the service program. At the very least they should pass-through the compoet maufacturer s warraty o a compoet uit-exchage basis ad perform repair ad refurbish services. But the OEM-SI also has the maufacturig tools to fully test the device ad the shippig ad receivig facilities to hadle deliveries. A system-level uit-exchage service program is somethig the OEM-SI should easily be able to arrage. 5

6 solutios If the OEM-SI maitais a service help desk for its cliets, the OEM-SI may be able set up a braded call ceter (aswerig the phoe usig their cliets ame). May software developers wat to take the first service call themselves so that they ca perform iitial diagostics the pass hardware-related problems to a secod-level service ceter. Usig curret IP telephoy techiques, these calls could be seamlessly trasferred to the OEM- SI s service ceter to iitiate overight shipmet of service spares. Coclusio ad Summary For the software developmet compaies lookig to build a appliace-based system o commodity hardware, the OEM system itegrator is a atural parter. With the OEM-SI compay assumig so may of the productio ad support fuctios, the cost to release a appliace-based system is greatly reduced. The software developer is free to focus o their core competecy which may eable them to itroduce ew products faster ad cosider appliacebased applicatios that would be too costly with i-house productio. Because the costs for OEM-SI services are based o a per system price, expeses are liear, with limited up frot costs. For start up compaies this ofte represets a much better use of scarce capital. For existig software compaies lookig to build a ew appliace-based product, the OEM-SI arragemet acts as a form of isurace. Should the ew appliace ot receive the market receptio expected, a ivestmet i uder-utilized productio facilities will ot bakrupt the compay. Whether the compay is a start-up or established developer, should the ew system succeed, productio ca be easily icreased to meet demad. The relatioship betwee the software developmet compay ad their chose OEM systems itegratio compay eeds to be ope ad flexible. Ievitably with youg compaies workig to develop ew products, time lies slip Specificatios chage Expected volumes may ot happe i the forecasted time frame. A OEM system itegrator with a complete uderstadig of the cliet s busiess is i a much better positio to adjust to the chages tha a compay that is just fillig orders. The two orgaizatios are truly parters i oe effort the success of the appliace device. To the software developer the OEM-SI is the productio departmet. To the OEM-SI, the software developmet compay is the software egieerig ad marketig departmet. Both parties wi through the successful developmet of a ew product that is efficietly produced usig the core competecies of each. About CoRes Cotietal Resources, (CoRes) is a $330M systems itegratio compay based i Bedford, MA. The OEM/ Embedded Solutios group provides a rage of itegratio services for both its paret compay ad idepedet compaies seekig outsourced maufacturig services. Based i Nashua, New Hampshire, the OEM/Embedded Solutios group builds custom products for customers i the software developmet, medical device ad idustrial machiery busiesses. CoRes is a ISO registered compay. The OEM/Embedded Solutios group is a authorized reseller for HP, IBM, Itel, ad Microsoft. Cotietal Resources, Ic Local Cotacts: Bosto Chicago Coecticut New Jersey New York City Philadelphia Washigto DC Headquarters: 175 Middlesex Turpike, Ste 1 Bedford, MA ITsolutios.cores.com 2011 Cotietal Resources, Ic. Specificatios subject to chage without otice. Cotietal Resources ot resposible for typographical errors. All product ad maufacturer ames are trademarks or registered trademarks of their respective compaies. Prited i U.S.A. CoRes