Hello, I’m Craig Rode and I’m the Industry Technology Strategist for the Microsoft World Wide High Tech and Electronics group. In this role, I help bring together technology and partners which provide solutions for our customers in High Tech. I’ve been involved in High Tech for over 30 years, in a variety of roles spanning development, product management, marketing, and sales. Prior to joining Microsoft in 2008 I was the VP of North American Sales Operations for CoCreate, (now acquired by PTC), a supplier of PLM tools to leading high tech manufacturers.
Years ago High Tech and Electronics (HT&E) companies began offshoring their manufacturing work to lower cost parts of the world to leverage lower labor costs. In some cases, they contracted with other companies to make their products or components. In others, they opened up facilities themselves. In both cases, the cost savings HT&E companies realized were tremendous despite the fact that they had to add IT and technical infrastructure costs to manage the projects. Today though, a similar move of the engineering task offshore is not going as smoothly and needs new solutions.
Sending the engineering function offshore makes a lot of sense. Design engineers really need to understand the manufacturing impacts of the design decisions that they make. Getting feedback from the shop floor is critical to the design engineer who needs to create products which can be manufactured at the lowest possible cost. And, for a lot of companies, enabling local engineering means that they can design products with local markets in mind. That’s key to attaining competitive advantages and market share in emerging markets. Finally, engineering can be less expensive in emerging markets.
Today, it is very common to find companies based in the US, EMEA, and Japan whose engineering resources are distributed worldwide. The problem? As engineering becomes decentralized and more dispersed, it becomes harder to manage, and collaboration becomes more difficult. The money saved because of lower labor rates may be lost if it is spent by flying personnel to and fro for project status review meetings.
Further, the distribution of intellectual property (IP) outside the walls of the engineering department creates new issues. HT&E companies’ survival depends on ensuring that their current and future product designs remain secure. This becomes increasing difficult to manage as engineering is more widely distributed. In addition, much of the information contained in US companies’ engineering databases are regulated by the International Traffic in Arms Regulations (ITAR) which states that access to certain types of product design information must be controlled to prevent citizens of certain countries from accessing it.
In fact, one company I worked with had its entire engineering system shut down by its own internal IT auditors until it could get those controls in place. Luckily, we were able to get them in compliance within a couple of working days.
When I was selling product lifecycle management solutions, one of my customers was a large California-based equipment maker that has engineering teams working together on their complex high tech products. These teams are located across the world with presence in Canada, US, EMEA, and Asia. Engineers from these teams work together on the same engineering models. This company relies heavily on CoCreate Model Manager from Microsoft partner PTC to coordinate their activities and manage the information to deliver high quality products in the shortest amount of time possible.
Microsoft’s collaboration-enabling solutions, like Microsoft Office Sharepoint® Server and Unified Communications can and have been applied in situations like this. Moreover, there is huge potential for cloud computing (Azure) because some of the countries where this work is being performed (like China, Vietnam, Malaysia) don’t have the IT infrastructure or the internet “pipes” to have real-time collaboration that requires fast, continuous connection. Total cost of ownership, Microsoft familiarity and ease of use, have made these effective solutions for companies that have offshored their engineering processes.