Yesterday, I shared my thoughts about PLM “Always be competitive” that was triggered by blog article of Sami Grönstrand of Outotec. We exchange few messages and then I stumbled on another Sam’s writeup – PLM. Cloud first? Model Based first? API first? I say: Business first. A term “business” is recently getting more traction in PLM discussions. As far as PLM implementations moved from the area of focusing on CAD file management to cover a broader range of product development and manufacturing, the question how to justify PLM development became absolutely important. But here how it can go wrong in my view and Sam’s article helped me to think about it.
Here is the passage I captured from the article:
I have gladly followed discussions in the #PLM arena lately, witnessing good progress and disruptive things — challenging the status quo. Advancements in #Cloud, #SaaS, Web #APIs, #MBE, and so on. However, when I think about this topic with my own background — 20 years in industrial equipment business operations — I feel the need to add one more view to the discussion.
The main question I have is: how does PLM add value to business? Proposing cool things and investments to the decision makers, the first comment is: “Show me the money”.
While it is hard to argue with “Show me the money” way of business adjustment, the question is not accurate. And the right question must phrased as – show me the problem. One can argue, the connection between problem and money is obvious, starting from the problem can help to make an assessment of urgency. Therefore I want to start from the environment or status quo of manufacturing companies using (or not) PLM systems.
An average manufacturing company spent few millions of dollars in PLM development and potentially asking a question – what is next? The answer on this question is usually multi-phased. Let me take you through several typical examples and business scenarios.
1- PLM system from a known PLM vendor. Unless, PLM implementation went south, you will see a champion for PLM implementation created a vision and made PLM implementation a real thing. It includes relationships with vendors, service providers and support environment to keep PLM up and running.
2- Multiple PLM jungle . This is not an unusual as you might think. Typically happened because of two main reasons: deliberated decision to implement best of breed combination of services or result of M&A activities (mergers, acquisitions, liquidations, etc.)
3- Home grown PLM. While I can see much less examples of home grown PLM development for the last 5-7 years, it is still a valid business use cases. In such situation, company spent significant amount of resources developing vision and technology to support data and process management. Most of problems from #1 can be still applied here.
4- No PLM. This is a variation of home grown PLM with growing process complexity and recognizing that doing business with Excels and emails aren’t very good.
Now lets get back to “problems”. I can see 2 potential use cases that might require a company to take an action:
– Issues with existing environment.
– Manufacturing business needs
In my view, these two business cases are different. Issues with existing environment can trigger company decision to make a change. At the end it all comes to maintenance, upgrades and cost. Upgrade related issues are most painful, because it causes company to literally stuck in the past. Manufacturing business needs can be broad. These days, I can think about three key business factors in manufacturing environment – productivity, connectivity and standartization.
As you can imaging, business use case for each of these situations can be very different. In some cases, like “release lock” the problem is obvious. It means organization is stuck with old PLM system without possible way to move on. However, in some other cases to connect PLM to a business problem is not an obvious think and PLM vendors can face a very tough competition. After all, a status quo is one of the hardest competitive forces. To change is hard, even things are going pretty bad.
What is my conclusion? “Show me the money” can be a good lead validation criteria for PLM sales. You want to know that customer has an intention to buy and implement PLM system. No money – no business. However from PLM side to say “business first” can be a catching phrase and a big danger. I like Sam’s attitude towards the business. But without getting into a details it can be dangerous. In my next articles I will discuss business use cases and provide justification for PLM implementation. To understand what is the right problem to focus on, can help to create a successful PLM business. Just my thoughts..
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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.