How many PLM vendors disappear in disruption predicted by Gartner?

How many PLM vendors disappear in disruption predicted by Gartner?

yesterday-today-tomorrow

Shake-ups are not a surprise these days. It happens all the time and especially in technological fields. The last decade of web, mobile and  consumer tech innovations established a solid feeling of something new happens all the time. This “something” will come and change a status quo. Disruption is a lovely word. Lots of major tech and web companies even didn’t exist a decade ago. Imagine you life without iPhone, Facebook, Twitter, Amazon and many others.

However, enterprise field is a bit different. Still, there are lot of innovation and disruption. However, old vendors are alive and keep dominant positions. Here is a question – for how long? I’ve been reading Computerworld report from latest Gartner technological symposium. The report provides an interesting prediction with regards to the future of established IT vendors. Patrick Thibodeau of Computerworld is wring up in his summary:

“We know that most suppliers don’t dominate from one generation of IT to the next,” said Peter Sondergaard, Gartner’s research director. “Many of the vendors who are on the top today, like Cisco, Oracle, or Microsoft, may not be the leaders in the digital industrial economy.”

It made me think again about the trajectory of PLM and other enterprise software vendors. I remember Gartner presentation about PLM trends during PLM Innovation 2012 Congress in Munich. I summarized it in my post – PLM Perfect Storm 2012. Gartner’s Marc Halpern presented the following PLM market dynamics slide.

gartner-plm-position-feb-2012

Will tech upheaval happen in CAD/PLM domain? Who will dominate PLM space in 3-5 years? Gartner’s slide is only focusing on established vendors. Even if it looks interesting, the most important question to ask is who is not on the slide? Who is still “innovating in the garage” and out of spotlight? Computerworld write up speaks about that as well:

“Gartner analysts warned that a data explosion threatens to overwhelm, sensors will be everywhere, 3-D printing will change everything, and smart machines will replace people. CIOs that don’t adapt will become simple custodians of back-end systems. Companies that fail to change will join Kodak, Blackberry and Wang, each of which was slow to recognize new forces in technology.”

What is my conclusion? There are not many vendors in CAD/PLM domains. Few large and established vendors are dominating this space and playing strong M&A activity which leads to future consolidation and elimination of small vendors. Will technological upheaval predicted by Gartner apply for PLM space? Does it mean we are going to see new players in the design and engineering domain leveraging new digital eco-system to gain market share? This is a time for PLM blue chip advisers and PLM IT managers to keep up to speed with what is going around. Tomorrow can be different. Just my thoughts…

Best, Oleg

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  • Александр Волков

    Yo! Oleg, I think, what national software companies, supplied by national government have a good chance for country specific markets. 🙂

  • Scott Cleveland

    Both of us have been in PLM for a long time and we have seen how slow PLM market dynamics change, so I don’t see anything significant happening in the next 5 years. Further, once a company has implemented PLM software, switching to another vendor is extremely expensive and not a fun task.

  • beyondplm

    Alex,this is an interesting perspective. So, you are literally see how government will start lobby national enterprise software companies. I’d be interested to see how it will happen. Best, Oleg

  • beyondplm

    Scott, thanks for commenting! Yes, you are right- it is expensive and slow. However, because of last 10 years transformation and M&A activities, many companies stuck with outdated and/or previous versions deployed PLM projects. It is an opportunity for disruptors. Don’t you think so? Best, Oleg

  • Anything coming from Asia anytime soon?

  • beyondplm

    Why Asia?

  • Just felt like some low cost CAD solutions were coming from there. And the industry is still all over the place there. The step to produce a PLM solution without CAD integration is not that high. I would imagine that there could be a great chance to find new editors in Asia.

  • beyondplm

    Interesting observation. I think that overall cost of producing PLM is very high, if you include Sales and Marketing activity included. Without that, any new fully blown PLM product will be dead. Not sure about CAD – this is might be different.

  • InsidePLM

    Oleg hi, I follow your logic, but let me give it a different twist. Us having been in the PLM space for a while, observed some M&E’s in the past. For example; Eigner and Matrix (One) and even Metaphase, all synonymous of being a robust PDM.. still ‘small’ vendors. What is it they had in common…, absence of a XCAD product suite. Could an ultimate acquisition be the fate of all niche ‘one product’ PDM/PLM vendors in the end? For the large SAP, Oracle and others, is an absence of XCAD going to hurt their YOY PLM success? A large customer base and PDM/PLM being just another module among a broad portfolio is no silver bullet. Such portfolio may only appeal to some customers that follow a one-stop vendor strategy… or lack of PLM strategy? Does this make sense?

  • I agree that the trend depicted in the slide is fairly obvious. As you suggest, the question is if anyone can disrupt the status quo in a meaningful and worthwhile fashion. Over the last decade the battlefront has moved from PLM vs. PLM to PLM vs. ERP. In my opinion, ERP companies have the ability to move PLM to a higher level by augmenting structured product data (BOM) with other information: supply chain, quality, service, customer experience, and others.

    But mainstream ERP companies, namely Oracle, SAP and Infor, are doing only a mediocre job in messaging and delivering this value. At the same time, PLM vendors are much more active, trying to “redefine PLM” and seeking opportunities that some might considered the turf of enterprise players, such as supply chain, cost management, service, and retail.

    Bottom line? Not much change at the top as far as the players, but I believe that the sphere influence of “pure play” PLM companies will grow whereas PLM offering from ERP companies will lag. Nonetheless, Gartner’s Peter Sondergaard may be too hasty to predict the demise of Oracle or Microsoft. Replacing an ERP or a PLM system is not as simple as substituting a Cisco switch for a different vendor.

    The opportunity for innovative companies – established or upstarting – is to leverage the wealth of information to improve decision making in every stage of the product lifecycle. It’s more than just reiterating the growth of sensor-generated data and information explosion. It’s about providing rich context for higher-fidelity product and customer related decisions that are based on complex multidisciplinary data that currently resides in multiple systems: PLM,
    ERP, bespoke applications and myriad of emails, spreadsheets and the like.

    One last note. I don’t share Gartner’s opinion that we are close enough to the point where “3-D printing will change everything.” Much work is a head of us in order to “industrialize” 3D printing, but that’s a different conversation, which you can join here http://joebarkai.com/does-3d-printing-doom-the-supply-chain/

  • beyondplm

    I think, the vision of PDM/PLM as a “yet another small module” among broad ERP portfolio is a wrong one. The time for engineering throwing BOM over the wall of manufacturing department is over. More companies will be looking for solutions to manage product development processes and engineering data integrated with design. The decision taken during the design time is getting more important. The manufacturing landscape is changing. Just my thoughts…

  • beyondplm

    Joe, thanks for your insight, examples and links! To me the key point is related to how leverage information for decision making. It sounds good in “general terms”, but when it comes down to the earth in a real companies situation, traditional siloed approach and throw over the wall methods are still taking place. It will be interesting to see how many news companies will try to challenge the status quo of big vendors in ERP and PLM domain. But, I’m pretty sure, it will come a lot during 2010s. Best, Oleg

  • Hi Oleg,
    Absolutely. Poor organizational structure and culture that refuse to change can often kill a great technology almost any time. We had hopes that social networking technologies would help, and they do, at least to some extent, although I am not sure how pervasive true multidisciplinary collaboration and “social design” are.

  • Alberto Strazzabosco

    Process are still made of documents. SAP and others have an ERP approach that take care of metadata but has a very poor document management (sometimes a link to a shared file system), and no (o near nothing) integration with document production software (Office, CAD, Media editor, …)

    So, is PLM only about flow & form management, like ADOBE vision in LiveCycle Suite? I don’t think so.

    The answer could be simpler then we think. Many department has many different needs and one approach for all is not a correct answers. Many product connected in a single well integrated system is the best answer I found in 12 years of Document, Product Data and Lifecicle management system implementation.

    Do industries really need a single heavy PLM ?

  • beyondplm

    I don’t think industry need a single heavy PLM. Even today’s heavy vendors almost never can provide a single solution to large companies. I think, there are many companies these days are trying to find the next fff (form fit function) for a future concept of PLM. It might be process, document and/or anything else orientation..

  • Stan Przybylinski

    Hi Oleg,

    Change is inevitable. Here is a slide I created about 10 years ago, trying to document the evolution of the industry to that point. Easy to see that there have been a lot of changes.

    Joe has a point, about the need to combine product lifecycle data with other enterprise data. This should give a leg up to enterprise software companies, who provide those systems of record, to reuse a phrase in vogue. At the same time, however, the systems of engagement for product lifecycle participants have left a lot to be desired.

    I think that the usual suspects will be around for some time, since these systems never die. But there will be winbacks and replacements that will shift around the logos on solution provider Websites. This makes delighting the customer even more important for long term success.

    Stan Przybylinski
    VP of Research
    CIMdata, Inc.

  • Stan Przybylinski

    We are seeing moves to more atomized information, a la Google Docs. Dassault Systemes has blown up the data structure by going object-oriented (OO) in V6. Interestingly, the claim to fame for Comos, a unit of Siemens Industrial, that has AEC design and documentation tools? The benefits of being OO. Files have their place, but they are often where information and knowledge go to die. We need to do better.

    Stan Przybylinski
    VP of Research
    CIMdata, Inc.

  • Alberto Strazzabosco

    “Files have their place, but they are often where information and knowledge go to die” great concept explanation. That is one of the most important concept : information usability (use and reuse ad again) . And where does knowledge workers use it ?

    1) In process (of flows): that where all good PLM can automate and save time. Data extraction from file to metadata is a mast.

    2) In document creation, wherever in simple “first page” title and address auto compile for a word processed document or a more complex assembly drawing with in drawing BoM. (Many PLM are not connected to CAD and BoM is a separate document or data structure, but cannot place in drawing.)

    3) In document processing. With no (server side) integration INTO the document you cannot write inside the document. What about the state (new, controlled, approved, ecc…), many PLM work around it updating files when open by the user… but if I sand the file out of the organization without open the document: metadata are not Write into the document. (and many oder cases but I do not wont to write a poem).

    Did the major PLM software houses have understood that ?

  • beyondplm

    Alberto, I can see certain move towards more granular solutions. But, this process is slow, mostly because of change requires significant investment from companies to apply it into existing environments. However, technology is pushing forward and I can see this change is inevitable *agree with Stan :)*.

  • beyondplm

    Stan, thanks for sharing and commenting. Yes, I agree completely -existing solutions have a very long lifecycle and this is what will keep many companies alive in this domain. However, the replacement will happen more and more often by brining product focusing on a specific value and with low TCO.

  • shaunsnapp

    This is hilarious. Microsoft and SAP are included on the slide. SAP and Microsoft have no PLM solution, how can they be on the slide discussing PLM vendors.

    The story is different for each vendor. Microsoft literally has no PLM application. It is provided through Siemens or other such partnerships. SAP has had a fake solution that is one of the great non-solutions marketed as a solution that I have ever analyzed across any enterprise software category. Not one or two, but every SAP PLM purchase I have ever analyzed has added exactly zero to the buyer.

    This graphic shows something very clearly — that the multi millions paid to Gartner by Microsoft and SAP and Oracle (although Oracle does have a dying application it is not investing in, in Agile) really pays off big time! There is another very important PLM vendor that is not on Gartner’s chart. Lets see if anyone can guess who it is. BTW, they don’t pay money to Gartner. If you do not pay, you may not play.

  • beyondplm

    Shaun,

    thanks for your comment and insight! Yes, it is interesting perspective and demonstrate some specific characteristics of how consultancy and advisory works in enterprise software. I’m not sure it is all “paid advertising” :). However, the story about “never been fired by signing a contract with IBM” is still here. I’d love to get your opinion on one of my recent posts – Crowdsourcing and PLM consultant’s future.
    http://beyondplm.com/2013/12/16/crowdsourcing-and-plm-consultants-future/

    Best, Oleg