Less Services. More PLM…

Less Services. More PLM…

I’ve been discussing with colleagues Gartner’s Predict 2011: Manufacturer Revamp and Enhance Product Lifecycle Management strategies. Without Gartner’s subscription, you cannot get the document. The short passage on Gartner’s website says: Manufacturers are demanding that PLM software vendors deliver more value for the price in 2011. Top priorities include licensing models that enable lower spending and an increased ability to support software and electronics as part of manufactured products.

Customization Problem

In the beginning of the year, I wrote the following post – Is PLM customization a data management titanic. It seems to me, the customization is a biggest problem of PLM implementations today. Everybody understood, customization has a severe impact on PLM value proposition for the short term. Customer is required to make such a customization to make PLM system up and running.

Services Dependencies

Another aspect of a customization problem is long term dependencies on consulting and services. Companies are not able to maintain their implementations and required to have long term commitment with consulting companies. Which makes a solution even more problematic.

What is my conclusion? Gartner predicts vendors will be enforced to lower price in order to justify the need of customers to spend money on customization and support services. Make sense to me. At the same time, it creates opportunities for horizontal platforms and other alternative solutions. Just my thoughts…

Best, Oleg

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  • Yaser Kabakibo

    Hello Oleg,
    Allow me to add to your post that it was actually the services team from each PLM vendor that pushed for the evolution of the PLM tools in the right direction. The creation of customized modules and accelerators became standardized and offered to future clients to assist them in their work. Hence, reducing the need for that particular service, but clients will always depend on services team to address new issues as technology is evolving!

  • Hi Oleg,

    I would just disagree on your article title but not too much on the content.
    You say: “less service, more PLM”. Well, to me, software should only be service. But i agree with the gartner sentence: “Manufacturers are demanding that PLM software vendors deliver more value for the price in 2011”.
    There’s not enough value created from this service.
    More and more software business is on-demand.
    And it’s not only for software, with the PLMLab (http://www.plmlab.fr/ ) we recently made a conference where somebody from Thales explained to us that 48% of their revenue is based on service (most of their revenue was more based on selling systems). The best example he gaves us is about the UK air tanker contract with the Ministry of Defense. the MOD didn’t buy any aircraft for that, they are buying a performance. Something like “in a war situation any aircraft should be able to get gas within 2 hours”.

    Sorry i went a bit far from the main topic, but my main input was to say that, PLM will still be service and maybe just service (why would you buy a software nowadays? too much risk). But the point gartner made is right, today the service based model of PLM is not delivering enough value. Mainly because it takes too much service to just get live. Which is just like buying a software.

    Conclusion is: I think we need to focus on how much service is delivered before having a production PLM system running. Items to enhance: Software flexibility, customers knowledge on PLM,…

    Best,
    Yoann

  • Abhijit Patil

    When we buy and work with one application in our company, it becomes the culture of business and process.
    If we buy PLM as service only, it will not become that. Any Software application will get mature in company when people there will get involved in to that more and more. If we see PLM as service only, people will not get involved mentally to create and strengthen the processes of company.. I doubt PLM groth as Service only.

  • let’s wish that for the editor who sold the software! I agree for the culture of business and process, not so sure it has to be related to one software.If we explain to people that the important thing is the process and not the software, maybe they’ll even understand better the way things work in their daily work with the PLM solution.

    Best,
    Yoann

  • beyondplm

    Yaser, Thanks for your comment and insight! I understand your point. Service team (part of PLM vendor) normally is very involved into the development of solutions by pushing everything developed as services to the released product. Vendors are trying to leverage this point, and sometimes it turns into successful solutions. However, the opposite situation is when the service project is not compatible with the future product release. It is very painful situations, and I’ve seen few of them in the past. Best, Oleg

  • beyondplm

    Yoann, thanks for your comment and insight. The notion of Gartner’s paper was to stress the point around the value prop of licensed PLM. Services are easy can jump to 50% of the deal, which leaves customers very disappointed about the overall deal performance. I think “services” or “open source/maintenance” business models have a different price structure. So, the comparison is not apple to apple here. Best, Oleg

  • beyondplm

    Abhijit, thank you! You made an interesting observation about services and culture. I can tell you, that I’m using Google Apps and I feel it pretty much part of my organization. So, where is the point? I think, software can be delivered using a particular business model (licenses, service, etc). However, company decides how to use that… Does it make sense to you? Best, Oleg

  • I wasn’t talking about any business model type. The software is a service not an Asset of the company. At least it’s how i see it. In accounting, depreciation period for a software is one year (i wonder if there’s a different rule for high budget software). So how do you justify such a bill on a year. It can be licensed, open source, or any of those on a on-demand basis, it has to be a service.Just like we’re doing more and more with cars.
    At the end, whatever the price structure, someone will (try to) do a total cost of ownership analysis to make it seen as a monthly price of a service to support employees tasks.
    I think On-demand solution are great for that.

    Best,
    Yoann

  • Abhijit Patil

    I have been in PLM implementation for last 5 years and done the job for major tier one supplier and one largest OEM (Automotive) in India. Here I observe, people first get connected emotionally with the machine or tool they are using; they mentally own it and then only they can deliver quality. one more thing, at every place we don’t find very good skilled people who will only focus on business model and not the tool they are using. These are practical difficulties while doing implementation. Alas; we need to milk a bull sometimes (Customization aspect). While recruiting a designer in company, HR searches for a person who knows CATIA/PRO-E/UGNX etc, not the designer who knows modelling tools.

  • beyondplm

    Abhijit, I think, engineers are more mentally connected to tools they use, for example, compared to accountants. It becomes part of their philosophy. So, people are specialized in CATIA, Pro-E etc. Best, Oleg

  • beyondplm

    Yoann, Agree about TCO. I think, the main point wasn’t about business model and TCO. The perceived value of PLM delivered out-of-the-box is low – this is a problem. Customers compensates it using services.