Manufacturer IT Applications Study

Spring 2013

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TABLE OF CONTENTS

Methodology 3 RESEARCH FINDINGS Primary product 6 Job function 6 Annual revenue 7 Number of manufacturing locations 7 Satisfaction with manufacturing IT applications 8 Downtime experience 9 Number and cost of downtimes 10 Systems run in virtualized environments 11 Plans to move to virtualized environment 12 Virtualization vendor 13 Incidence of high availability strategy/solution 14 High availability strategy/solution used 15 Important factors when making high availability purchase decisions 16 Preferred articles 17 WRITE-IN COMMENTS 18

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METHODOLOGY

Investigation conducted exclusively for Stratus.

Methodology, data collection and analysis by Penton Research.

Data collected March 26, 2013 through May 1, 2013.

Methodology conforms to accepted marketing research methods, practices and procedures.

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METHODOLOGY

OBJECTIVES Examine the satisfaction level among manufacturers with the reliability and availability of their

manufacturing IT applications. Investigate the use of high availability applications and virtualized environments among

manufacturers. Determine what factors are important when making high availability purchase decisions.

METHODOLOGY On March 26, 2013, Penton Research emailed invitations to participate in an online survey to print

subscribers of IndustryWeek magazine. By May 1, 2013, Penton Research received 372 completed surveys.

RESPONSE MOTIVATION To encourage prompt response and increase the response rate overall, the following marketing

research techniques were used: - A drawing was held for one of three $100 Visa gift cards. - Live links were included on the e-mail invitations to route respondents directly to the online surveys. - Reminder mailings were sent to non-respondents on April 1, April 16 and April 25, 2013. - The invitations and survey were branded with the property name and logo, in an effort to capitalize on

subscriber affinity for the brand.

Research Findings

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RESEARCH FINDINGS Respondents are primarily in management positions at a variety of manufacturing companies. About one in five (19%) indicate their primary product or service as machinery/ industrial equipment. Nearly half of respondents (46%) describe their job function as executive, general or supply-chain management.

What is the primary product or service at your company?

Base for both charts: all respondents (n=372).

27%

1%

2%

2%

3%

4%

5%

5%

6%

7%

9%

10%

19%

Other

Travel and Transportation

Energy and Utilities

Life Sciences

Forest and Paper

Construction

Chemicals and Petroleum

Electronics

Metals and Mining

Aerospace and Defense

Consumer Products

Automotive

Machinery/industrial equipment

8%

1%

2%

2%

2%

7%

9%

10%

18%

18%

24%

Other

Plant IT

Corporate IT

Finance

Sales

Plant production

Quality/Reliability

Supply-chain management

Executive management

General management

Engineer/Engineering

Which of the following best describes your job function?

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RESEARCH FINDINGS Respondents have an average $1.2 billion in annual revenue. Respondent firms operate an average 8 manufacturing locations.

What is your company’s (or parent company’s) approximate annual revenue?

1%

32%

7%

9%

16%

9%

8%

4%

13%

No reply

Less than $25 million

$25 million to $49 million

$50 million to $99 million

$100 million to $499 million

$500 million to $999 million

$1 billion to $2.9 billion

$3 billion to $5.0 billion

More than $5 billion

33%

29%

13%

11%

15%

One

2 to 5

6 to 10

11 to 25

More than 25

How many manufacturing locations does your company have?

Base for both charts: all respondents (n=372).

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Overall, the majority of respondents are satisfied with the reliability an availability of their manufacturing IT applications. Those who have a high availability manufacturing IT strategy or solution are more likely to be extremely satisfied than those who do not (17% vs. 5%). Additionally, those who run systems in a virtualized environment are more likely than those who do not to be extremely satisfied or satisfied (68% vs. 51%).

Overall, how satisfied are you with the reliability and availability of your manufacturing IT applications?

RESEARCH FINDINGS

Base: all respondents (n = 372).

2%

6%

42%

45%

5%

1%

4%

33%

45%

17%

2%

5%

39%

45%

9%

Extremely Dissatisfied

Dissatisfied

Neutral

Satisfied

Extremely satisfied

All respondents

Respondents with a high availability manufacturing IT Strategy or solution

Respondents without a high availability manufacturing IT Strategy or solution

1%

5%

42%

43%

9%

3%

3%

25%

58%

10%

2%

5%

39%

45%

9%

Extremely Dissatisfied

Dissatisfied

Neutral

Satisfied

Extremely satisfied

All respondents

Respondents who run systems in a virtualized environment

Respondents who do not run systems in a virtualized environment

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In the first four months of 2013, 28% of respondents have experienced downtime affecting one or more of their manufacturing applications. Larger companies are more likely to have experienced downtime, as nearly on in three respondents with revenues of $1 billion or more have experienced downtime.

Have you experienced any downtime this year that affected one or more of your manufacturing applications?

72% 68% 68% 76%

28% 32% 32% 24%

All respondents $1 billion or more in annual revenue

$100 to $999 million in annual revenue

Less than $100 million in annual revenue

Yes No

RESEARCH FINDINGS

Base: all respondents (n = 372).

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RESEARCH FINDINGS Overall, respondents have experienced an average 7.0 downtime incidents in the past year. Each incident costs an average $16,917. Larger companies have experienced more incidences at a higher cost per incident.

How many downtime incidents have you had in the past year?

Base for both charts: respondents who have experienced downtime (n=105).

7.0

12.8

5.2 4.3

All respondents $1 billion or more in annual

revenue

$100 to $999 million in

annual revenue

Less than $100 million in

annual revenue

What is the approximate cost of an average downtime incident?

$16,917

$36,538

$10,761

$7,927

All respondents $1 billion or more in annual revenue

$100 to $999 million in annual revenue

Less than $100 million in annual

revenue

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Sixteen percent of respondents currently run one or more of the listed systems in a virtualized environment. Among companies with $1 billion or more in annual revenue, 22% run one or more of the listed systems in a virtualized environment. Do you currently run any of the following systems in a virtualized environment?

0%

89%

2%

2%

1%

1%

2%

6%

3%

78%

4%

2%

5%

5%

4%

6%

1%

77%

1%

1%

8%

8%

9%

5%

1%

83%

2%

2%

4%

4%

4%

6%

No reply

None of the above

Other

OPC

SCADA

Historitian

MES

Batch All respondents

$1 billion or more in annual revenue

$100 to $999 million in annual revenue

Less than $100 million in annual revenue

RESEARCH FINDINGS

Base: all respondents, multiple answers allowed (n = 372).

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Overall,5% of respondents plan to put manufacturing systems in a virtualized environment in the next 12 months. Those who currently run systems in a virtualized environment are more likely to add additional systems (25%) than those who do not currently use virtualized systems (2%).

Do you plan to put any of your manufacturing systems in a virtualized environment in the next 12 months?

0%

31%

65%

4%

1%

51%

42%

6%

0%

50%

43%

8%

0%

41%

53%

5%

No reply

Unsure

No

Yes

All respondents $1 billion or more in annual revenue $100 to $999 million in annual revenue Less than $100 million in annual revenue

RESEARCH FINDINGS

0%

41%

57%

2%

0%

41%

34%

25%

0%

41%

53%

5%

No reply

Unsure

No

Yes

All respondents

Currently run systems in virtualized environment

Do not currently run in virtualized environment

Base for both charts: all respondents (n=372).

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Microsoft Hyper-V and VMware ESX are the most preferred among respondents who have chosen a vendor, however a large percentage have not chosen a vendor.

If you are currently virtualizing or plan to move to a virtualized environment, who is the chosen vendor?

Base: respondents who currently use or plan to move to a virtualized environment (n = 64). Multiple answers allowed

17%

8%

2%

19%

20%

23%

31%

No reply

Other

Redhat KVM

Citrix XenServer

VMware ESX

Microsoft Hyper-V

Plan to virtualize, but have not chosen a vendor

RESEARCH FINDINGS

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Nearly one in three respondents currently have a high availability manufacturing IT strategy or solution. Larger companies are more likely than smaller companies to have a strategy or solution in place. Do you currently have a high availability manufacturing IT strategy or solution?

1%

74%

25%

0%

71%

29%

0%

54%

46%

1%

68%

32%

No reply

No

Yes

All respondents $1 billion or more in annual revenue $100 to $999 million in annual revenue Less than $100 million in annual revenue

RESEARCH FINDINGS

Base: all respondents (n=372).

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The majority of companies are leveraging backup as their HA solution. Companies with annual revenues that exceed $1 billion are more likely to have advanced strategies in place, as 26% use built-in high availability functions, 23% use fault tolerant servers, 16% use windows clustering and 9% use high availability software. What type of solution or high availability strategy are you using?

Base: respondents with a high availability strategy or solution, multiple answers allowed (n = 117).

2%

12%

8%

5%

11%

11%

19%

20%

66%

No reply

None of these

Other

High Availability Software (Stratus Avance, Marathon everRun, etc.)

Windows Clustering

Virtualization based

Built in High Availability functions to your applications

Fault Tolerant Servers

Backup

RESEARCH FINDINGS

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RESEARCH FINDINGS Total cost of ownership and ease of deployment/management are most important when making high availability purchase decisions.

2.9

3.1

3.9

3.9

4.1

4.3

2.9

3.1

3.7

3.8

4.0

4.1

Consultant recommendation

Application vendor recommendation

Your unique high availability requirements

Initial purchase price

Ease of deployment and management of the solution

Total cost of ownership

All respondents

Respondents who use high availability strategies or solutions

How important are each of the following when making high availability purchase decisions? Average ratings based on a 5-point scale, where 1 = “not at all important” and 5 = “very important”

Base for blue bars: all respondents (n=372). Base for green bars: respondents with high availability strategies (n=117).

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RESEARCH FINDINGS Respondents prefer to read best practices articles, such as those on how to cost effectively improve the reliability and efficiency of plant/manufacturing operations.

Which of the following types of articles are you most interested in reading?

Base : all respondents (n=372). .

3%

16%

4%

34%

44%

No reply

None of the above

Articles that include technical specifications on solutions that guarantee uninterrupted processing for DCS, SCADA, MES and

BMS applications

Articles on the best available tools that help accomplish various manufacturing job functions

Articles on how to cost effectively improve the reliability and efficiency of plant/manufacturing operations

Write-in Comments

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WRITE-IN COMMENTS 1. What is the primary product or service at your company? Other responses: Agriculture equipment Agricultural, mulch, wood products Appliance Blood Banking Building Materials Manufacturing Building materials MFG Coating and Ink production Commercial Plumbing Fixtures Commercial Printing Commercial Refrigerators and Freezers Component fabrication for heavy

construction & mining equipment industry

Compressed gases for semiconductor, scientific, medical and governmental applications (including aerospace)

Computer manufacturing Consulting – 3 mentions Contract Manufacturing (Precision

Machining, etc.) Curtain Wall Custom fabrication of Stainless Steel

and Nickel Alloys Custom urethane molding for the heavy

duty truck and agriculture machinery markets.

Cutting Tools Deep Drawn fabricated metal products. Dental Equipment Diversified manufacturing

conglomerate Electrical Distribution Equipment,

Switchgear, MCC, HV Switches, etc. Electrical switchgear

Equipment shelters, telecommunications site equipment and solar industry site

Fabricated metal products/ Industrial clamping systems

Fabricating and construction of Condensate & Boiler Feed Sytems.

Fiberglass boat manufacturing Fixtures and Gauging Fluid Systems Food Food Production Furniture manufacturing Glass tableware manufacturing Golf Carts, Small Implement Tractors,

All Terrain Vehicles. Mining Industry, Lawn Tractors

Grinding wheels High Temperature Corrosion Resistant

Coatings Development and application

Hospitality Hvac and Industrial equipment Lighting reflectors Machining Management consulting Manf. of heavy wall bearings &

bushings for locomotives, compressors and HD engine platform.

Manufacturing Fans/Blowers Manufacture roofing material and

waterproofing products Manufacturer and Distributor of

Medical Devices

Manufacturing Manufacturing consultant Manufacturing of Rotationally Molded

Products ranging from Air Cargo Containers for the Aerospace and Defense Industry to Underground tornado Shelters and everything in between!

Material Handling Equip (Lift Trucks) Matting and flooring products Measurement Instrumentation Medical devices Medical Components Medical device MFG Medical Devices – 4 mentions Medical seating products Medical/surgical equipment and

supplies Metal & Plastic Manufacturing Metal storage products used in the

Office Furniture Industry Metal Working Roller Bearings Mfr of kitchen cabinetry Military garment Oem for food service equipment Office furniture Optical lens blanks. Packaging

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WRITE-IN COMMENTS 1. What is the primary product or service at your company? Other responses: Pet Food Pharma Plastics Print Printed Product Printing – 3 mentions Printing of labels and tags Process Lines in Advanced

Manufacturing Pumps Pvc compounder.

Rubber products Rubber, plastic and metal parts custom

parts Specialized silicon components for

semiconductor industry (non-metallic mineral)

Signage & Graphics Spice flavor/color extract Spill Response Products Steel door and frame manufacturing Steel packaging products

Supply Chain Integration and Management

Textile fabrics Textile finished goods Textiles – 2 mentions Usps - Mail Sortation/transport Valves – 2 mentions Wastewater Treatment Equipment Wholesale distribution

2. Which of the following best describes your job function? Other responses: Administration Chemical/substance compliance Consultant Continuous Improvement Corporate Facilities Management Customer Service Manager Director Manufacturing Engineering EHS – 2 mentions Global Manufacturing and Quality Human Resources Specialist

Lean Manager Lean Six Sigma Leader Maintenance – 2 mentions Maintenance Manager Maintenance Supervisor Marketing Occupational Health Nurse Owner Procurement/Subcontracts mgmt Product lawsuit consulting

Product Management Purchasing – 2 mentions Purchasing and Tooling Safety Administrator Safety and Environmental Safety Supervisor, Lead Auditor, Doc

Control, environmental Training Warehouse

3. To what extent are you involved in the purchasing process for your company? Other responses: All of the above except for Member of

purchasing committee and No involvement.

Decision Maker Distributor of DNC equipment for

CNC machine tools.

Oversight, strategic direction Purchase of capital equipment

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WRITE-IN COMMENTS 7. Do you currently run any of the following systems in a virtualized environment? Other responses: Baan Erp Kanban

Kiwi Plan Mq1 No clue

Not at this time Sap

9. If you are currently virtualizing or plan to move to a virtualized environment, who is the chosen vendor? Other responses: Esxi Jobscope Marblemaster No clue None of the above Our company has worked on emergent IT trends in our area for 33 years. We will design to suit our needs not to be restricted by

vendor's extreme shortcomings. You did NOT mention open source (only the vendor RedHat who uses open source). IT should be designed with business strategies driving decisions and to resolve specific strategic issues in the enterprise and on the production/process floor. The best approaches on this we've examined come from TIBCO, GE Intelligent Platforms, and IBM -- none of which (as a commercial vendor does Penton mention in this survey -- to bad your IT in manufacturing people didn't perform adequate vendor research -- but instead stuck with the traditional worn-out approaches add Cisco). Our view MUST include Apple with iPad technology and front-line floor apps for mobile shop floor use, to the Internet of things (specifically better use of machine sensor data and methods of collection (Autodesk 3D Sensor as an example)) and so forth as they flow into business analytics as a connected component of the entire Enterprise system of business strategic management (that's the 21st Century (1st quarter to 2026) model that should be discussed at Industry Week now.

11a. What type of solution or high availability strategy are you using? Other responses: Developed company specific Marine Suites IT applications I know the strategy is in place, I am unsure of the details. It is available 99.9% of the time. Not sure – 3 mentions Not sure where the "High Availability" VENDOR-based buzz hype came from??? It's one thing to get caught up in the juvenile under

30 hype world, it’s another thing to see reality and have systemic strategic solutions to problems, one of which being availability -- a strategic issue. Let' cut the marketing hype and BS vendor buzz wordage -- shall we?

VMS

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WRITE-IN COMMENTS 12. How important are each of the following when making high availability purchase decisions? Other factors: Applicability to wireless networks and M2M applications. Approval from the Corporate Headquarters Buy only the components we may need Historical cost information detail available for last ten years. I am the wrong guy to ask I don't know what "high availability IT strategy or solution" means. We are certainly not going to buy something that is not available. Ongoing maintenance and operational advancement and build prices post initial costs. Systems compatibility