PLM services – exits and transformations

PLM services – exits and transformations

Market is transforming. New technologies and new business models are coming to PLM space changing the way business is done. For manufacturing companies implementing Product Lifecycle Management solutions a significant portion of business is services. According CIMdata analysis, services are about 58% of cPDM business

Engineering.com article A Market in Transformation: Accenture, TechniaTranscat and the Changing Realities for PLM Service Providers by Verdi Ogewell brings some interesting data points and example about transformation of PLM service providers. In simple words – the process of consolidation is underway. PLM service providers are acquiring another service providers and getting bigger. In the market of high demand for PLM consulting resources, companies want to be bigger and have bigger reach of knowledge and services.

Why PLM services are needed. Because each implementation is basically a toolkit approach doing everything customer wants. Read this passage:

Why are PLM service providers needed? Basically, it’s because the systems themselves can be described as a “naked” structural set of functionalities. Let’s say that any given system covers 75 percent of what it’s supposed to “do” for a product development team. In the case of PLM, we’re talking about providing modules in areas such as product definition, simulation, systems engineering, project management and workflows. This is the same across all major systems, from Dassault Systèmes’ 3DEXPERIENCE as well as in Siemens PLM’s Teamcenter, Autodesk’s Fusion Lifecycle, and PTC’s Windchill, though functional scopes may vary.

What drives service? Digitalization and platformization. Read these two passages:

Digitalization is the most fundamental and relates to extracting real-world value from digital data.
With such a definition, the “brave new world” is already on the move.  According to a survey, top-performing businesses are currently spending 34 percent of their IT budget on digital transformation. In 2018, that figure is expected to rise to 44 percent.  Radical advances in digitalization are underway.  As for PLM, the impact is profound. Driven by big data information management, CIMdata asserts that, “Information management as we know it today is being re-engineered top to bottom. Undergoing changes are predictive analytics, data mining, search, digital manufacturing and virtual commissioning, data migration, interoperability, simulation and optimization—not to mention collaboration among people and increasingly intelligent machines.”

Platformization is the movement toward platforms to support enterprise strategies and solutions. The main point of this type of Product Innovation Platform (PIP), as described by Gartner analyst Marc Halpern, is that solutions from multiple software developers can be seamlessly deployed using a Service Oriented Architecture (SOA). As PLM spans from product concept through product life, and integrates people, processes, business systems and information, these capabilities cover activities from engineering and manufacturing to general business functions.

Although, these are fancy and nice words, from IT standpoint this is a technological nightmare. To replace or upgrade systems after 10-15 years of production requires huge effort and resources. Life seems to be good for service providers. But the question is for how long? Implementation scope is growing and probably can reach sky high numbers as large manufacturing firms will try to figure out their path to full digitalization. Do you think manufacturing companies are going to spend another 10-15 years on implementation of new set of technologies and products? I don’t think so.

Which brings me to think about sustainability of PLM services and future business and technological model transformation. Digital movement will introduce new type of infrastructure and opportunity to deliver it cheaper, faster and easier.

I share my thoughts about transformation in PLM services. PLM business model transformation: from selling software to buying services; How to disrupt PLM consulting and services.

PLM consulting and service is very labor intense, dependent on unique knowledge and availability of knowledgable people. Manufacturing companies will be looking how to implement PLM and new service companies. These companies will look for an alternative way of buying PLM services. It might not come to super large OEM first. They are paying lot of money for implementation and services and will keep doing so for the next 5-10 years.. However, the change will come bottom up. Mid range companies will be looking how to cut their IT expenses while transforming into new “digital enterprise”. And after validation, they will push these PLM changes upstream. It was always a case in PLM industry. We might see relatively large manufacturing companies unwilling to pay for expensive services and look for alternatives. And alternatives will come in a way of new type of cloud PLM solutions. It doesn’t mean end of PLM consulting and services, but it will eliminate a lot of overhead of IT, installation and configurations. It will introduce new customization and deliver tools. And it will be a path towards digitalization of manufacturing.

What is my conclusion? PLM consulting services are consolidating to better serve growing demand to take PLM implementation to the next technological and business level. But the cost of these services is extremely high. Manufacturing companies will be looking for opportunities to change business model and demand faster ROI and lower TCO. And it potential will come in a way of new digital platforms with new service and delivery models. 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.

Share

Share This Post

  • Pingback: GHZ Partners | IT Services, Software()

  • Dennis Nagy

    “…Although, these are fancy and nice words…”
    And I’ve never seen/heard the word platformization before. Did you invent it or where did you see it first? I fear the blogization of the English language! 😎

  • beyondplm

    Dennis, thank you for your comment and question.

    I think, CIMdata first promoted “platformization” term in the context PLM. https://www.cimdata.com/en/platformization-some-common-definitions.

    However, people outside of PLM are using it as well.

    Best, Oleg