How PLM vendors can find a formula to serve midsize manufacturing companies

How PLM vendors can find a formula to serve midsize manufacturing companies

Creative Commons Creative Commons Attribution 2.0 Generic License   by  kosmolaut 

For many years, midsize manufacturing companies were underserved by PDM and PLM vendors. First it was about CAD file management. PDM was complex, clunky and expensive. It was an overhead that engineers were not able to tolerate. Later, it came to PLM segment. PLM demonstrated its value for large enterprise companies, especially in automotive, aerospace and industrial equipment manufacturers. But for midsize companies it was too expensive and complex.

Check my article about core PLM sandwich for manufacturing companies. According to PLM analyst Jim Brown of Tech-Clarity, midsize manufacturing companies are stuck between expensive PLM suites and consumer oriented file sharing systems.

Midsize companies may find themselves in-between because: (1) Product and organizational complexity drive them beyond basic PDM capabilities; (2) A full-featured PLM implementation may feel out of reach. Midsize manufacturers need to choose a system that quickly delivers the core capabilities they need to streamline product development but also gives them room to grow value over time. So what’s the right size PLM to fit a midsized high-tech company?

Earlier today, my attention was caught by another article – PLM software overview: From car manufacturing to the clothes trade. The article speaks about a progress PLM industry made for the last 2-3 decades and values PLM brings to different industries.

The article brings reference to research – Cloud-Based PLM Market by Application by Research and Market promising cloud-based PLM business worth $40B USD mainly because of increased mid-market manufacturing adoption. Here is the passage from the article:

The cloud-based PLM market size is estimated to grow from USD 18.65 billion in 2016 to USD 40.55 billion by 2021, at an estimated Compound Annual Growth Rate (CAGR) of 16.80% from 2016 to 2021.The cloud-based PLM market is driven by factors such as increased adoption of cloud technology by Small and Medium Enterprises (SMEs) and the enterprises inclination toward improved design review & increased resource utilization.

According to this research, the future of cloud PLM for SME is bright. But according to experts serving SME market, existing PLM enterprise suites have little chance for success. Here is an opinion of Chuck Cimalore, CTO for Omnify PLM:

“In the past, few PLM vendors focused on the SME market. Now, larger PLM players are realizing the opportunity and are trying to strip down their large, often-cumbersome enterprise PLM system to adapt to SME’s requirements. The only problem is these systems were not designed for this market. Larger PLM systems were not architected with out-of-the box functionality.”

So, what is needed for midsize businesses? In my view, the core set of functions should include: (1) design data management, (2) bill of materials, (3) part catalogs, (4) manufacturing planning and procurement. In my view, it is extremely important to provide a complete set of functions integrated together. Midsize companies have little ability to run complex IT operation with multiple solutions and custom development.

What is my conclusion? During the last 10 years, PLM vendors made a great progress in the maturity of products and demonstrating success for enterprise companies. At the same time, midsize manufacturing companies are underserved by the same PLM vendors. Their focus was (and still is) on large companies. And as a result, PLM vendors have no solution to sell. Existing enterprise PLM suites are not capable to scale down. They are too complex and too expensive. The demand of manufacturing businesses to have out-of-the-box core PLM solution tailored to midsize company with future ability to grow. This is a very tricky combination. Industry still need to figure out what is that. 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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  • Michael Wendenburg

    before starting this discussion, we should define what we want to understand by midsize. Oleg, you recently visited CONTACT Open World. Almost all CONTACT customers are considered mid sized companies in Germany and many of them are full-fledged PLM and not just PDM customers. It also very much depends on the industry. NO mid sized automotive or aerospace supplier has a chance to survive without PLM because they are forced to implement it for compliance reasons by their customers. Just my thought:-) Regards, Michael

  • beyondplm

    Michael, you’re right. Midsize has many flavors. I think some large PLM/ERP vendors even have multiple levels of mid-size (small, medium, large). It is also true when you speak about “suppliers”. Because things are different for Tier1, 2, n. So, yes- devil is in details. But the smaller company you work with, you have less chances to see PLM system implemented. I hope we can agree about that :). Best, Oleg