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Wednesday, March 17, 2004
The pitfall of competetive tendering
From: John Symonds, REO (UK)
The practice of competitive tendering, in both the private and public sectors, prevents suppliers from putting forward their best technical proposal. They fear that adding costs to the bid will jeopardise their offer. This process causes a moral dilemma for suppliers because, though they know that there is a correct and better solution, instead they are
offering a basic and potentially troublesome one. In the case of AC motor control tenders, for instance, brake resistors,
surge protection, EMC and harmonic filters are frequently left out of quotations because they add costs to the bid. When challenged, the AC drive suppliers can truthfully say that they assumed the customer was aware of all
requirements. Suppliers are not to blame; instead it is the system of putting companies in strict price competition that is the culprit. In future, there will be more to lose than the accuracy of an initial bid. Tightening of future Directives will make it the legal responsibility of everyone in the supply chain to ensure equipment is correctly specified. Competitive tendering is likely to continue. It is therefore essential that these specifiers are aware of the potential pitfalls and regulations that relate to their industry. Therefore advantage must now be taken of the in-depth information that is freely available.
Feeling black and blue about EN60204-1 (Reply)
From: Simon Fowler, Madur Electronics
The concept of "blue" does not exist in the Slav languages, dark blue and light blue are considered to be two separate colours and have completely different names. You really have to specify one or the other for it to be translatable. lthough I work in Austria, this company is Polish owned and dominated, so I have had to get used to the problem.
Fat Cats: the unacceptable face of capitalism
From: Alan Smith, Talisman Electronics
This is one of the worst examples of the 'unacceptable face of capitalism'. Unfortunately as the whole process is controlled by people who have a vested interest in maintaining the status quo there seems no way of stopping the process. The big shareholders also belong to the same club, so are not likely to force large changes.The only hope is for Government to intervene. One of the biggest disappointments of this Labour Government is their assumption that
private enterprise is the best solution for all situations. As a result they are very reluctant to rock the boat apart from a little lip service. We are told that a general election is likely to be called during 2005, hence the shelving of any idea of legislation on this subject.
Fat Cats send me ballistic
From: Frank Thompson, UK
This is a subject which most definitely sends me into a ballistic state - how, as you say, can anyone justify seven figure settlements for failing executives. Over the past few decades the UK has been very fortunate not to have to pay for its oil and gas. Inspite of this we have ended up in this new millennium, 2000, with a huge trade deficit, a severe balance of payments deficit and a manufacturing base that is weakened beyond all recognition. As an engineer who stated life with the English Electric Company in the 1950's, I have watched money being squandered many times but the "fat cat" issue beggers belief. Unless some form of taxation is introduced to produce an equitable outcome for all, the engineering community will be totally demoralised for the future hard times which are just around the corner. Regards from a very thin university cat.
Wednesday, March 03, 2004
Feeling black and blue about EN60204-1
From: Dave Bethell, UK
I'll make this as succinct as possible, but why are only black and blue used for the majority of cabling detailed in EN60204-1 para. 14.2.4 (orange and red being for very limited and specific cases)? The distinction between light blue (neutral conductors) and dark blue (dc control circuits, both positive and negative) seems almost preposterous when one considers that hardly any cable manufacturers have other than 'blue' (witness RS and Farnell catalogue offerings), an honourable exception being Lapp who have both a 'blue' and a 'dark blue'. In fact most installers I know tend to reverse the light/dark applications due to the dearth of dark blue cabling suppliers. I understand that changes are in the pipeline for LV cable colours...?
Compact panel-mount USB connector
From: Dave Bethell, UK
Why does nobody seem to make a compact panel-mount USB connector to allow a shielded USB connection to be run through a metal plate? PCB mountable units are literally ten-a-penny, but how is one expected to get through the wall of a sealed/shielded enclosure or sub-rack to an extension cable to a PC or other piece of equipment housed within?
Thursday, February 26, 2004
Are UK CAD software buyers subsidising those in the USA? (Reply)
From: Alan Goswell, Leonardo Computer Systems Ltd
My company has been in the business of supplying CAD software for 15 years. We agree that the situation where CAD software is sold pound-for-dollar, is iniquitous. No wonder the Americans (where most CAD software comes from) refer the the UK as "Treasure Island"!
Mostly, prices are determined by the software vendors themselves, so we have no contol over that. However, in some cases we, the retailers, are allowed to set our own local prices. I can only speak for my company, but in the case of some products, we are able to offer prices close to what they are in the source countries. There usually does have to be a difference in selling price, and it is caused by the fact that most CAD companies give dealers in England the same discounts as dealers in their homeland. However, this is stupid, because the home country dealers do not have to pay for the level of marketing that we do; that is all usually done in the home country by the software vendor. We in the UK, usually have to pay for our own marketing, exhibitions and advertising, which can be very costly.
Most of the time we also have to pay for, or contribute to, localisation, e.g metrication. Both of these things cost money, and contribute to a slightly higher selling price in the UK. However, I do agree that the markups by some companies, and particularly the differences within Europe, are outrageous, and contribute in a small way to the bloated prices on practically everything that we buy, and the high taxes that we all have to pay in the UK.
It is a fact that the more popular a piece of software is, the higher its perceived value is, and the marketing people at the software vendor will be trying their hardest to set their sights on the highest price that the foreign market will bear. We have a polarised market where a few very popular products dominate. Perhaps if British engineers were a bit less jobsworth, and made more adventurous choices of what is often very good, but less well known and less costly, software, the CAD big boys wouldn't have things so much their own way.
Are UK CAD software buyers subsidising those in the USA? (Reply)
From: Kevin Quigley, UK
Before we go down the line of slamming one software solution or another let me just recap on the situation. As Roger Fry says, it is the pound-for-dollar pricing structure that is the issue.
Specifically, the UK market does suffer from inflated pricing. I struggle to see where the additional costs arise that justify a 90% price increase?
Development and beta testing of all MCAD systems is a global operation, so the costs are global. Manual production in English is the same for the USA and UK. The cost of translation for other markets is usually done internally using agents or local sales or technical people. Let's face it, if a market is too small to justify any sales presence at all, then the language options usually default to English. Teaching and training materials are the same. So on this basis costs, are the same. Besides, how often do you get a printed manual these days?
Shipping? Well perhaps the MCAD companies aren't aware that you can in fact produce CDs and DVDs virtually anywhere these days and distribute via a local office or dare I say, a locally based subcontractor (most volume CD manufacturers will offer fulfilment as well). Even if you choose to deliver from one location the chances are that the location will NOT be the USA, but lower cost locations. Customs issues are simply not relevant. Any half decent organisation can arrange this with minimal effort - if they can't then get someone in who can. Come on, this is a small package, not container sized machines or vehicles!
Online delivery? Most MCAD subscription arrangements give access to downloads areas for product updates. Typically, your £1000 of maintenance will give you access to this area and email technical support. Locally based telephone and email support is usually done via the VAR and charged for under local terms (typically £250-350 per license per annum). So, on that basis, maintenance for upgrades etc should be a global cost.
Marketing? Looking through the trade press I see that most MCAD marketing is done via reseller adverts or generic software company adverts or "editorials". Pretty much the same features appear in USA publications (the internet now allows us to access these magazines now!). There is very little localisation when it comes to MCAD marketing, aside from language.
There we are. I think that covers most bases. So where is the 90% cost increase?
Finally, the argument that the market expects to pay a particular price applies only if the lower cost technology is inferior. I hear this argument more from VARs than end users! Was it not the case in the mid 90's when SolidWorks came out that the big selling-feature was "we can do what Pro/E does for a fraction of the cost"? Funny, I don't recall that being a sales inhibiter! Now Alibre are doing the exact same thing to the mid range. The MCAD market is constantly shifting and price will ALWAYS play a part.
The example of Cadkey is not really relevant: there were other reasons for the price cut. Besides I'm not asking for USA vendors to reduce prices in the USA, just the UK and Europe! Lets face it. Solidworks/Solidedge/Inventor etc are all established players. They don't need to prove technical superiority or long term suitability to most buyers. They do need to drop the price!
As I said before, in this day an age of globalisation, there is no excuse for wildly differing prices in the MAIN markets. You can't hide the prices anymore. Its time to move on and show some real genuine customer support across the globe - where it counts - in the pocket!
Is it not absurd that the biggest users of apps like SolidWorks in the UK buy directly from the USA? As I said before, it will take just one of the main players to drop the price to USA levels to make the market shift in the UK.
Tuesday, February 24, 2004
Are UK CAD software buyers subsidising those in the USA? (Reply)
From: Roger Fry, SERVOTEST Systems
I am in total agreement with Kevin Quigley's comments, particularly the outrageous price of annual maintenance licensing. Why is the US dollar price translated to pounds, especially when the US Dollar is approaching 1.9 to the pound. We use Solidworks and CosmosWorks with an annual maintenance cost approaching £2000. I would love to add some of the additional packages to both pieces of software (motion, flow, etc.) but the initial and ongoing costs make it a non-starter. It is hard enough to get a budget for a newer computer.
Additionally even Solidworks is starting to suffer from "bloatware". More and more features (mostly unused) and feature enhancements that are a step backward. We have just discovered that components that could be analysed in previous versions of CosmosWorks can no longer be meshed. The software has been improved to make it more critical regarding small detail so it is unable to mesh complex parts that previous versions could. I now have the choice of spending a week slogging through the models, trying to patch the problem areas, or using the old versions that work fine. I have been paying an annual maintenance fee so I don't get these problems ...no fix has been offered by the support company - why?
Monday, February 23, 2004
Are UK CAD software buyers subsidising those in the USA? (Reply)
From: John Nolin, DesignSmith LLC
Although it would seem more logical to have a more equitable cost distribution between the US and the UK, Kevin misses several major cost factors that impact any large firm doing business outside the US. In North America, SolidWorks and Autodesk each have production offices in all 3 time zones, while in Europe separate sales and technical offices must be opened locally, at considerable expense. Particularly in Europe, it is expected to have senior staff accessible by cell phone on a 24 hour basis. And until everyone has broadband connectivity, shipping any technology outside North America adds considerable shipping and handling expense, not only in carrier fees, but in additional oversight to get through the various customs agencies smoothly.
That's not to say that the UK pricing does not have any additional markup, or that translation and localization costs are not spread out over a larger market area than is necessary. But having a single world pricing structure would effectively raise costs in North America to cover the extra expenses of truly global distribution.
Lastly, there is some market inertia, and a certain level of customer expectation, that also drives the pricing structure in any locality. Several releases ago CADKEY cut its pricing structure by nearly 2/3 in the hope of capturing a more significant market share. The experiment was a disaster, as many firms lost faith that it could be as good as the other mid-range MCAD products. Since then CADKEY has struggled to maintain what market share it did have, and has gone through 2 major ownership changes. Particularly in a technically sophisticated product such as an MCAD system, there is a perception that if it is priced too low, it is too good to be true. Which is generally correct, as the firms that try to get by on minimal profit margins in the hope of capturing a larger market share more quickly, either gradually go out of business as their expenses slowly sink them, or get taken over by a rival with a stronger cash flow.
Not to say that you shouldn't try to get the best value you can in any locality, but there is some value in paying a reasonable amount for a MCAD system in exchange for having full service locally and for that system around beyond the full life cycle of your products.
Friday, February 13, 2004
Are UK CAD software buyers subsidising those in the USA?
From: Kevin Quigley, UK
Since the advent of the so called mid range solid modelling CAD system in the mid '90s, the move to 3D CAD has been relentless. The sheer functionality of many systems is astonishing, but there is one critical issue that very few suppliers of MCAD software have addressed. That is the issue of global price differentials from market to market.
To this end the UK and European CAD users are particularly badly hit, and perhaps it is time for the European Union to investigate this anomaly and act on it.
What I find astonishing is that in this day and age of global information, CAD companies still maintain restrictive sales practices.
Why is it that a seat of, say, SolidWorks costs $4000 in the USA whilst in the UK it sells for £4000? Every major and most minor MCAD vendors are guilty of this. Does the UK market REALLY cost that much to service?
Is it not the case that the channel arrangements for all major systems are virtually identical in the UK and USA? In fact I would have thought it was cheaper to service the UK than the USA given geographical issues and time zones! Perhaps we are subsidising the USA buyers?
The same policy applies to maintenance. Again in the USA 12 months is typically around $1000-$1400 for most systems. In the UK it is £1000 to £1400. Why?
It is time for a change. The fact is that if one major vendor offered GLOBAL pricing then the entire market would shift to that model - they would have to! What would you buy? SolidWorks Office at $5000 or SolidEdge at £5000? There ARE some vendors that adopt global pricing (Think3, Ashlar-Vellum and more) but these are not (yet) major players. In this day and age of global sourcing most of the software development work is done at locations as diverse as India, Russia, USA, UK, France etc. So why the non global pricing? Surely this behaviour is anti-competitive and tantamount to a cartel?
Its time for a change!
Similar issues do occur in non CAD software for graphics and business use but on the whole the issues here are less pronounced as the software usually costs less and the price differentials are not as great. Lets see some genuine customer service and offer global pricing (subject to regional taxes and GENUINE costs). I suspect that the uptake of 3D CAD would be greater if the prices were lower - SolidWorks would be £2100 in the UK at current exchange rates - nearly HALF the cost.
Something to think about eh?
Wednesday, February 11, 2004
Suppliers are not open to integrated automation!
From: John Pogson, Yaskawa Electric Europe GmbH
The concept of integrated automation in manufacturing is a falsehood. Systems that have been tailored for end users frequently fall apart at the seams as soon as another manufacturer's equipment is added to the system.
All automation equipment manufacturers should be compelled to supply equipment capable of supporting a broad range of industrial interfaces as standard. Only then can the users of automated system be assured of any degree of future proofing.
The concept of interoperability, which is really what integrated automation should be about, relies on any make of equipment working with any other via a common interface. Surely then, truly open vendors would welcome supporting all available interfaces.
It is not an impossible dream. Yaskawa Electric supplies all its Mechatronic drives with no less than seven discrete interfaces as standard.
Or would a more open approach place too much emphasis for vendors on delivering the best technology, service and support to retain customer loyalty?
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