I usually say, the most though competitor is status quo. Why status quo is complex? Because it requires a potential customer to make a change, which is very painful. Even if the change will lead to improvements, people will be looking how to avoid it if they can. Because people are bad. Read more about in my article PLM and Bad People.
Lifecycle Insight article by Chad Jackson brings some amazing statistics from his latest research.
One quarter of all respondents are using paper forms, either exclusively or alongside other technologies, to execute product development. This represents a considerable risk when you think about the inherent flaws of using a paper based process, including the possibility of losing forms. Even a move to exclusively using basic digital technologies, such as email and desktop applications, would be an improvement in this regard.
Only one-fifth of small businesses (less than $10M in revenue) are using enterprise systems, even alongside other technologies. This is a strong clue that the right sized solution has not been exposed to those smaller businesses as of yet. Could this change with more and more PLM systems moving to the cloud?
In my earlier article about competition with status quo, I brought this picture from Michael Skok presentation for startups.
One of the problem to compete with status quo is an entry barrier. If it is too high, companies will stick with current solution or an absence of the solution. In the past, CAD and PLM vendors used the following methods to decrease complexity of entry barrier: 1/ CAD integration; 2/ Out of the box solution; 3/ Cloud (SaaS) solutions.
Chad Jackson is rightfully asking if cloud can be a way to reduce an entry barrier for companies to move into digital solution from paper. However, I think, the question requires some clarification. The problem is actually not about the cloud, but about a potential solution to replace current process. That’s why companies are using email and Excels, because an entry point is easy. Cloud applications actually have great potential to compete with status quo. Not not all cloud app is the same. Most of PLM system, even if they are delivered by PLM vendor as cloud-based hosted version are still too hard to understand, too slow to implement and too complex to maintain.
What is my conclusion? Manufacturing companies are stuck in the past. Current business practices are representing painful status quo. To make a change, companies need to make an effort and PLM is still a very complex and painful system to deal with. Especially when it comes to small companies. They cannot justify the cost of expensive PLM solution. Small manufacturing businesses are looking for nimble and nimble solutions that can easy capture data and help to transform processes from paper to a digital form in an agile form. Just my thoughts…
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.