Fragmentation and Decentralization in Product Development

Fragmentation and Decentralization in Product Development


Centralization was a big deal in manufacturing 100 years ago. Famous River Rouge Factory was a giant plant that literally took an iron ore at one end and sent automobiles out the other. In 1917, doing everything in a single integrated factory seemed to Ford the only possible way to get the scale needed for Ford Motors. Back in the early 20th century, big companies were synonymous with efficiency.

Fast forward in 21st century. Things are different these days. Fragmentation Stressing the Enterprise article published by The IT Archipelago caught my attention few days ago. It outlines a survey made among 600 IT and business executives speaking about complexity of IT in a modern enterprise organization.

….a survey of 600 senior IT and business executives across a variety of industries and companies spanning the Americas, EMEA, and Asia-Pacific. The survey, conducted by the Economist Intelligence Unit (EIU), uncovered troubling concerns regarding IT complexity and fragmentation across today’s enterprise.

The survey concluded that IT is no longer a centralized function but instead resembles a fragmented ‘archipelago’ spread across the enterprise. This dynamic is the result of market forces, as most new business initiatives have a technology component and the proliferation of tech across business units. According to the executives, this is driven by companies purchasing or developing a broad range  of IT technologies, especially their own devices and multiple cloud networks. Indeed, the survey revealed that a typical enterprise organization is now running, on average, 8 cloud services—private and public.

The following number is extremely interesting – a typical enterprise organization is now running on average, 8 cloud services – public and private. Take a look on the following chart for additional numbers.


One of the conclusion made in survey is that we can only expect these islands to rise.

The IT archipelago describes a chain of independent IT functions that is emerging across the enterprise. Given the fast pace of technology change in our times, it seems likely that we can only expect these islands of assets, decision-making and authority to continue to rise.

The survey made me think again about current paradigm of PLM and disintegration challenges. Check out my earlier blog here. Most of existing PLM systems today are focusing on the establishment of single version of truth in the organization. Nothing wrong with that. The demand for centralization is natural.

However, current PLM architecture is creating data silos. Each team, division, company is a silo of information, data, files. It is not unusual to see multiple PLM systems at the same large company because of different reasons – historical M&A activity, complexity of implementation, tools and version support.

Fragmentation is a big deal for engineering software and manufacturing organization. The development processes are becoming more distributed. Join ventures, mergers, divestitures and co-development projects all have unusual product development environments. Chad Jackson of Lifecycle Insight is made an interesting write up about Decentralized Product Development environments. Navigate here to read more.

Product development does not always happen under conventional circumstances; nevertheless, it must be executed on schedule and according to plan. Sometimes, a great opportunity emerges and a co-development project needs to ramp up instantly. Other times, a program must adhere to a rigid schedule, as typically happens in the aerospace and defense industry. And in yet other cases, ongoing development must be partitioned off while the company undergoes a merger or acquisition. These unconventional situations are a great opportunity for a business. However, they burden product development efforts with new and unusual requirements and constraints.


What is my conclusion? Traditional PLM environment might not be a right answer for fragmented organization and decentralized product development. Such type of projects are not allowing to setup PLM system and focus on a single version of truth in a specific organization. The organization is virtual and distributed. Data is distributed between the teams. Processes are spanning across organizations and teams. This is a challenge for modern product development tools. Think about taking 100 years old Ford Rouge factory and expanding it to the size of the world. Houston, we have a problem – new platforms and new data management technologies will be needed to solve the problem of fragmentation and decentralization. Just my thoughts…

Best, Oleg

Want to learn more about PLM? Check out my new PLM Book website.

Disclaimer: I’m co-founder and CEO of openBoM developing cloud based bill of materials and inventory management tool for manufacturing companies, hardware startups and supply chain. My opinion can be unintentionally biased.


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  • marclind

    Oleg, nice post and good points you make over & above

    These situations are actually not that ‘unconventional’..
    they’re quite common at global companies and we/Aras are seeing them pretty
    regularly these days.

    The scenarios that Lifecycle Insights identifies are suited quite
    well for using the Cloud for PLM – even when there’s an existing corporate PLM

    We’ve seen a number of divisions at large companies stand up
    Aras on Azure for these types of initiatives

    Seem like people are starting to realize that there’s a place
    for cloud-based PLM deployment’s today and that the “move everything to cloud
    PLM” is just hype 🙂


  • beyondplm


    thanks for your comment! Remember how divisions and teams have started to setup SharePoint instances 10 years ago? It could be a way for many companies to start a replacement process.

    I checked Aras on Azure. It looks crazy complex in terms of price. I have no idea how much will it cost. Some other vendors are simply saying ~100$/user/month. Why Aras cannot do the same?

    take a look on examples here —

    Thanks, Oleg

  • marclind

    Yea they’ve got every possible option on those pages – you should bring that up w/ MSFT. Easy answer is on our website and cost is based on machine (~$900/mon) which enables you to have hundreds or thousands of users at a fixed cost, ideal for global companies that want pricing predictability.
    Plus, most enterprises already have pre-bought Azure so they can just use it with no additional expense.

  • beyondplm

    It is funny what you’re saying. In old days IT was buying or renting Dell-racks on fixed terms. Now they have pre-bought Azure. So, what is the difference? If servers are belonging to companies, there is no advantages for cloud economy of scale.