The manufacturing execution system (MES) software market is heading for a great divide.

That is one of the conclusions of a recent survey of the MES market by Bill Swanton and Alison Smith, research analysts at AMR Research, Boston, Mass.

MES systems are supply chain execution applications that manage the inventory, machines, labor, and order fulfillment activities on the shop floor.

Over the next 12 to 18 months, the industry leaders whose products support manufacturing processes across multiple sites, and even multiple languages, are expected to pull even further away from the boutique vendors with a single-site focus. That, in turn, may lead to significant consolidation in the industry.

"Manufacturers are seeking ways to optimize their global assets," says Swanton. "Companies are managing customer orders globally and need central visibility of capacity, order, and inventory status at each plant."

The result, says Swanton, is that MES users are looking for software solutions that allow them to centrally manage plants and products in real time—wherever those plants and products are located. In turn, they are looking for software vendors that can deliver MES systems globally. However, only 15% of the available MES products now provide out-of-the-box support for a multisite production environment.

Swanton expects that to change. There have already been several important developments, including the acquisition of Interwave Technology by Rockwell Automation and the creation of Visiprise from Teradyne and NetVendor.

"In 2003, we will see further structural change in the MES market," Swanton says. "There are other deals percolating. The question is whether these combinations will make large global manufacturers sign multiplant deals."