In this issue, I wrote an article on the changes coming in SCADA ("Change Is in the Wind for SCADA"). But the changes I talked about pale in comparison with the changes that are coming to the entire automation marketplace. For years, I have been warning privately that it was possible that the next acquisition of one of the top 10 automation companies might be a company outside the industry. I joked that maybe Google or eBay will buy (insert name of favorite automation company here). As the years have passed, the joke has ceased to be outlandish. Google worked with Opto22 for a couple of years on an energy saving system test project in San Diego with San Diego Gas and Electric that ran as part of iGoogle and used Opto22 components.
At eBay, there are over $100 million worth of automation products listed and sold annually. If eBay were a manufacturer, it would be close to being listed on the Top 50. For a year or so, you've been able to buy PLCs and other automation components (not just home automation) at Amazon.com. AmazonSupply is aimed at the large catalog etailers like Allied and others. So far, they have seen little impact. But AmazonSupply is new.
And now Google Shopping for Suppliers has debuted in a beta version. All you can buy are electrical and electronic components and parts. Guess what? Want a PLC? Just Google it!
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In our 2001 book, eBusiness in Manufacturing, Shari Worthington and I predicted the growth of reverse-auction and supply websites in the manufacturing sector. It appears now that we weren't wrong. What we (and all the proprietors of the mostly defunct websites we profiled) missed was the huge importance of search. Google has nearly complete control over search, and Google Shopping for Suppliers is a well-thought-out add-on instead of a daring new business venture. Amazon is the retail shopping site, and a move into business-to-business is also an intelligent add-on for it.
Many people, maybe even you, think that buying in the automation industry works this way: The engineer designs the project, produces a procurement list based on engineering specifications, and turns the list over to the purchasing agent, who lets an RFQ and determines the lowest bidder based on conformance to the engineer's specifications.
Well, no. Buying and selling in the automation industries have always been by means of relationships.
Engineers and procurement specialists have relationships with vendors and manufacturers from whom they preferentially buy. Engineers write performance specifications based at least in part on the product they want, not necessarily the requirements of the project. This is not underhanded, immoral or illegal. We all make purchasing decisions based on relationships. This is the basic concept behind social media marketing and the concept of branding.
What will the entry of Google and Amazon do to relationships? They will fundamentally change them. Instead of person-to-person relationships, we will be using brand relationships—how we feel about Amazon or Google and their ability to validate sellers and keep them honest. I'm not going to say that we will see the demise of the field sales engineer, but we'll see companies choosing to do business entirely online. It will also level the playing field. If you look on Google Shopping for Suppliers and AmazonSupply, you'll find Chinese vendors prominently listed.
Will this work? Of course it will. It's just another channel. The late Betty Hollander of Omega Engineering proved that you can sell hundreds of millions of dollars worth of automation products out of a catalog. Will you be comfortable buying automation products at Google or Amazon? My bet is that you will.