With the increasingly competitive nature of the electronics industry, more and more manufacturers find they need to co-source the development of their test systems. These manufacturers are co-sourcing or joining forces with companies that specialize in customized test solutions, often referred to as systems integrators.
The growing popularity of co-sourcing is fueled by many needs: manufacturers that do not want to venture outside their core competencies, businesses on tight schedules that do not have time to develop the equipment, or companies experiencing temporary shortages of resources. Whatever the reason, using a systems integrator presents many issues that must be addressed to achieve a successful turnkey test system.
Why Use a Systems Integrator?
A systems integrator is generally not a replacement for your internal test department, but rather acts in a supporting role. There is almost always a requirement for an internal engineering group that knows your product intimately and is available daily to solve problems in production. For companies with high overhead, it may reduce costs.
A systems integrator is not effective when the task cannot be defined clearly, the task is heavily dependent on other tasks being performed internally, or the task requires a high learning curve. In these cases, it is more cost-effective to use internal resources which are already up on the learning curve and can more easily interface with the other internal groups. Another alternative is to use contract labor at your site.
Adding Resources
The most common reason for using a systems integrator is to temporarily increase available resources, allowing a few internal resources to manage development of a complex test system. This is usually more cost-effective than hiring more engineers to perform the task and may be the only alternative in a tight labor market. During high growth periods, it allows management to concentrate on the core business, rather than staffing a large supporting organization.
Another advantage, which is often not appreciated, is the fact that the systems integrator operates autonomously. Project implementation is not affected by changing internal priorities, meetings or company politics.
Improving Schedule
In today’s business environment, time-to-market is critical to a company’s success. A systems integrator can provide many advantages to address this need.
In general, systems integrators can apply significantly more resources to a quick-reaction project than are available internally. Due to the large number of systems developed each year, they also have more varied and extensive tools, software libraries and processes geared to quick-reaction work.
Lower Risk
Choosing the right systems integrator will almost always result in lower risk than using your own staff, but selecting the wrong systems integrator can result in much higher risk.
The lower risk results from development of the system on a fixed-price basis, with the systems integrator absorbing costs associated with overruns. Internal work, on the other hand, is performed on a time and materials basis, so you directly absorb the overruns. Also associated with management of an internal project are high costs which, although real, are often ignored when a cost analysis is performed.
Define Your Goals
First you need to decide which type of relationship you prefer with the systems integrator. Do you want a vendor or a partner?
A vendor relationship is contract-based, with the letter of the contract and associated specification serving as the primary guide during system development. The vendor is expected to meet the contract “to the letter” and, upon doing so, you are obligated to pay for the test system.
This approach is usually associated with competitive bids. Vendor qualification may be performed prior to developing a bidder’s list to weed out those without the technical capability to perform the contract.
This approach usually results in the lowest initial system cost for development; however, it places a tremendous responsibility on the internal project manager to correctly specify the test station so all possible contingencies are covered. A change in requirements will result in a cost or schedule impact with the vendor now locked in on a sole-source basis.
The alternative is to enter into an informal partnership arrangement with the systems integrator. In this case, the integrator is not selected on the basis of low initial cost but on the overall ability to meet your requirements, commitment to your success, and lower total cost.
This requires a more in-depth evaluation. Bids may be obtained from various systems integrators or you may select the systems integrator first and get only one bid. But in either case, initial cost is not the primary factor.
In this arrangement, the systems integrator will work with you to see that you are successful, which may go well beyond the letter of a purchase contract. For this mode of operation, a minimal customer specification is required up front because you and the integrator will work together to develop an implementation specification to see that all goals are met–not only technical goals but cost, schedule and any other issues which affect your success. The resulting specification is usually better because both companies are involved in its development.
The goal for both you and the integrator must be an open, profitable relationship. For example, if you take advantage of this relationship to get a “good deal” from the systems integrator, there is a strong possibility the integrator will turn down any follow-on work and you will be forced back into a vendor relationship.
Specify the System
Before engaging a systems integrator, particularly in a vendor relationship, determine what performance you require from the system. A poorly defined requirements specification is one of the main causes of failure when using a systems integrator. In this case, the integrator provides a solution to your specification, but it does not meet your needs. This is also the reason partnering is so important, and preferred, over a vendor relationship.
Allocate the Budget
Your budget defines the type of system you can afford and the type of systems integrator with which you can afford to work. It is a good idea to share the general terms of your budget with the various systems integrators you are considering, particularly if you are looking for a partnership. If the integrator has a target going in, the solution can often be tailored to your budget, removing features which are nice but not critical or leaving them to be added latter.
How Do You Select a Systems Integrator?
There are a number of steps you should go through in selecting a systems integrator. These steps assume you are looking for a partnership relationship. If you want a vendor relationship, the same steps apply but you will likely allow cost to override most of the criteria listed.
Request Information: Consider the quality of the information sent. If this is low quality, it may indicate the same about the test system and associated documentation. However, a flashy brochure does not imply that the reverse is true. Many companies have quality marketing to make up for an inferior product.
Documentation: Request and review sample documentation from a similar project. Is it adequate for your needs? Can your people take over support for the system in the future? Will they be able to change the software without assistance from the systems integrator?
Company Background: Interview a potential systems integrator either on the phone or in person. Key questions to cover are:
How long have they been in this business? Are you confident that they have sufficient experience and expertise to handle development of your system? Or will you need to provide technical assistance to lower the risk?
What types of test systems have they developed in the past? Do they have experience in your industry and its particular problems?
What size projects have they successfully completed? It would not be wise to give a $1,000,000 project to a company which typically develops systems costing less than $100,000. Larger systems have unique problems not experienced when developing smaller projects.
How large is the company? If the company is small, what will be the impact if a key individual is out due to illness, vacation or a competing project? What is their current loading?
This does not imply that you will always want to go with the larger company. A small company may provide better service and response because your project is important to them, while the same project may be considered small and receive correspondingly less attention at the larger company.
What capabilities and expertise does the company possess? Can they provide the software required in the language and operating system you desire? Do they have the necessary hardware expertise, such as microwave test techniques or low-level analog signal handling? Can they supply the fixturing required or will you need to supply this to them?
Are they committed to customer service? When you talk to their people, do they respond quickly to your requests? Do they treat you as a valued customer or just another sales lead?
Company Philosophy: Try to determine how they view their relationship with customers and the market they want to address. Most companies will say they want a partnership with their customers, but their actions may not reflect this philosophy. If it is important to them, they will emphasize this point, as will their previous customers.
Similarly, see what they emphasize as their strengths. Is it low cost? Fast response? High quality? Remember that no company can be all things to all people. Low cost generally means lower quality, slower response or both. Fast response generally means higher costs to cover special handling and to expedite parts.
Get Referrals: One of the most critical steps is to get referrals, ideally from a company you know and trust. Many large customers will not give out a referral as a matter of company policy. However, a systems integrator who has been in business for several years should be able to supply the names of customers who will provide references.
Question these customers about the degree of commitment to customer satisfaction. How did the integrator deal with the inevitable project changes? Did it result in cost and schedule growth, or did the integrator absorb this in the interest of a partnering relationship?
How well did the integrator communicate and keep the customer informed of project status? Were there any surprises which should have been communicated earlier? Would they use the same integrator again? Do they know of anyone better?
Visit Their Facility: This option is generally not necessary if you have a good set of referrals and feel comfortable with the integrator. For a very large program it is still a good idea. This lets you meet not only the salesperson, but also the rest of the team which will work on your project.
It also gives you a feeling for the company culture and facilities. Do they have good people and sufficient tools to work effectively? Do the people you meet impress you as engineers you can work with and would want working for your company?
At this point, hopefully you have the information you need to define your project goals and select a system integrator. Part 2 of this article will cover some of the aspects of specifying and managing your test system to assure that it meets your requirements. It also will focus on the level of support and commitment that is required by your own company for the systems integrator to be successful.
About the Authors
Paul Hiller is the President of Symmetrix. He started his test system company in 1981 in California under the name of Test Quality Co., and changed the name to Symmetrix after moving the operation to Austin. He received a B.S. degree in business administration and an M.S.E.E. degree from the University of Wyoming. Symmetrix, 1301 Capital of Texas Highway, #C200, Austin, TX 78746, (800) 560-TEST (8378).
Joseph McDonough is a Field Project Manager at Hewlett-Packard. He holds B.S.E.E. and M.S.E.E. degrees from California Polytechnic University. Hewlett-Packard, 1421 S. Manhattan Ave., Fullerton, CA 92631, (714) 758-5929.
Copyright 1996 Nelson Publishing Inc.
April 1996