3 reasons why size won’t matter in PLM future?

3 reasons why size won’t matter in PLM future?

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The debates about small vs. large PLM implementations are probably as old as PLM software. Joe Barkai recently came with several very controversial blog series – Is PLM Software Only for Big Guys? One of these posts – Do PLM Vendors Think SMBs are Just Like Large Enterprises, Only Smaller? Note the following passage:

In my market research in PLM, PDM and related fields, and consulting work with engineering organizations, I often find that SMBs don’t think of themselves as being just like the “big guys”, only smaller. They believe they possess different culture, work habits and operational models, and perceive PLM as a tool ideally suited for large organizations with sizable engineering teams designing complex highly engineered products.

Another Joe’s post is questioning – Can PLM software benefit small company?

Looking at the profile and size of engineering companies using PDM software, especially those showcased by mainstream PDM and PLM vendors, one might easily reach the conclusion that these systems are, indeed, designed with the “big guys” in mind. This perception may be reinforced by PLM and ERP vendors that have announced products designed for the SMB market and abandoned them a few years later, when rosy revenue expectations weren’t achieved. Remember, for example, PTC’s ProductPoint and SAP’s Business By Design? Small engineering teams have come to think of PLM software as unnecessarily complex and limiting operational flexibility, not to mention the high cost of the software, IT overhead, and the pain of keeping the software up to date.

It is true, that historically of CAD and PDM systems came from large defense and aerospace industry. Since then, lots of innovation in PDM and later in PLM domains was about how to simplify complex and expensive solutions and make it simple, more usable and affordable. 80% of functionality for 20% of price… It worked for some CAD guys in the past. Is it possible in PLM? PLM system fallen into the trap of the simplification many times. As soon as new affordable solution came out for SME companies, it was demanded by large enterprises as well. You can hear an opinion that price was a key factor and PLM vendors didn’t find a way how to sell both enterprise and SME solution with right packaging and price differentiation. Not sure it is true, but to shutdown SME focused PLM solution is not very uncommon in PLM industry.

I shared some of my thoughts about why PLM vendors failed to provide solutions for SME. One of my conclusions was that cost and efficiency are key elements that can help PLM vendors to develop a solution for this challenging market segment.

However, Joe’s posts made me think one more time about “small vs. large” PLM challenge. I want to share with you my 3 hypothesis why size won’t matter for the future PLM solutions.

1. Horizontal integration

Large monolithic businesses with strong vertical integration are displaced by granular and sometimes independent business units with diverse sets of horizontal relationships. Businesses are looking how to optimize cost in everything – development, supply chain, manufacturing, operation. I imagine these businesses will demand a new type of PLM solution that can be used by network of suppliers and business partners rather than by single vertically integrated organization.

2. Technological transformation

In the past, many PDM and PLM vendors assumed SME solution as something that shouldn’t scale much, can run on a cheaper hardware and low cost technology and IT infrastructure. Cloud, web and open source technological trends changed the landscape completely. While most of existing PLM solutions are still running on the infrastructure developed 10-15 years ago, I can see them looking for new architectures and technologies that with no question can scale to cover a diverse set of customers – small and large.

3. Business dynamics

Business environment is changing. Businesses are more dynamic. New requirements are coming often and the demand to deliver a new solution or changes went down from years to months. In such environment, I can hardly imagine monolithic PLM solution deployment that can sustain for a decade as it was before. I would expect PLM vendors to think about new type of platforms and set of agile applications serving variety of business needs.

What is my conclusion? Business, technological and organization changes will affect future landscape of PLM platforms and applications. Small is new big. New technological platforms will be able to scale to support a diverse set of customers. Vendors will be moving from shipping CDs to provide services out of public and private clouds. As a result of that, the difference between PLM for SME and Enterprise PLM will disappear. Future PLM solutions will come as platforms with diverse set of agile applications. Just my thoughts…

Best, Oleg

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  • Gregory PERASSO

    Hi Oleg

    I think also that the “problem” is not necessary the size of the Company.

    But related to the “P” of plm. The Product size himself.

    As you say , PLM came from A&D companies , which build large and complex products , with a big need of “trackability” (regarding of the very long lifecycle of these products, certifications, compliance and Service/MRO )… same for Automotive or shipbuilding ….

    and in the opposite, most of SMBs works on smaller products …. or a large range of smaller products (where the customer target is may be more the large public) … with more a need of flexibility and rapidity for designing than trackability …
    Just my thoughts… regards
    Gregory

  • Well said, Oleg.

  • beyondplm

    Joe, Thanks for your inspiration!

  • beyondplm

    Gregory, thanks for sharing your insight! Yes, “P” matters. Also, the type of manufacturing, business relationships, global deployment, number of suppliers, diversity, etc. My main observation that large companies are transforming into community of suppliers. These communities can be not very different in terms of their PLM needs compared to SMEs. On the other side, it can be a good opportunity for PLM vendors to start next round of PLM platforms design. Current platforms are reaching their limits — http://beyondplm.com/2014/06/11/traditional-plm-have-reached-their-limits/

  • Charles Smith

    Great article Oleg with some very interesting points. Having previously worked within a company both as a Design Engineer and PLM implementation process lead that was moving from “small company” mentality of dedicated work groups for product development to a scalable matrix structure they saw PLM as a necessary tool to be able to enable this transformation.

    On the contrary it makes me think that because smaller companies often work in project teams and not a scalable matrix where the information shared between people during development is generally good because all are focused on a single goal there is not a feeling that a PLM system (which are often founded on principles of information governance, single source of the truth and traceability) is overkill in that situation. What do you think the other aspects of “PLM” the solution (not just the software but the methodolgies as well) lend themself to the smaller business?

    Thanks,

    Chaz

  • beyondplm

    Chaz, thanks for sharing your comment and experience! My hunch that we will move away from what you call “PLM for governance”. The need to control is still ‘in the blood’ of many IT managers and PLM implementations. It is easy and well understood concept of “single place of truth”. However, I can see even bigger companies these days are going to more flat operation models and project management becomes an issue as well as collaboration, data sharing and communication.

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