Organizational Gravity – How PLM project can get CEO attention?

Organizational Gravity – How PLM project can get CEO attention?

Here the theme that bothers PLM salespeople for years. How to get a corner suites people (CEO, COO, CIO, and other CxOs) attention to PLM projects. PLM salespeople are always looking up to ERP projects that getting so much attention from C-level executives and wonder why PLM cannot get the same one.

Angad Sorte’s article Why PLM does not get attention from your CEO?  is getting straight to the point –

When “PLM” word refers to PDM system (software) in the company it loses its importance because the so called PLM system has only fraction of PLM data and processes, which is mainly engineering design and BOM related data.

Most of the time the top executives of the company fail to understand the benefits of PLM as it’s definition, scope and ownership is not clear or limited. PLM system ownership is often confusing and swings between IT and Engineering. The company is not able to move from Level 2 to Level 3 as shown below. Figure is illustrative.

The article put some sort of blame on top executives that fail to understand the value… sigh. Would it be such pain relief? It is CEO’s fault that he (or she) doesn’t understand PLM. And the solution seems to be simple – just redefine PLM as including everything.

The first step is to define a PLM process across company and map how each system will participate and how data, people and process are interacting from start to end. The CXO group should be made aware that when they refer to PLM system , then they are referring to PDM + ERP + SLM + CRM + SRM + any other system in company which manages the product lifecycle.

Seems to be a good idea? I doubt…  In my recent article – Conway’s Law and enterprise PLM implementation, I discussed how organizational structure is reflecting system development.

Organizational structure influences the PLM data model and communication. The way any PLM system is implemented is impacted by the way the organization works and how processes are organized. It can be a good thing because it gives us a way to plan PLM implementation by researching an organization, people, data and their relationships. This is could be a good method to build a stable PLM system

So, to make such a prolific change as combining all enterprise systems (PDM, ERP, SLM, CRM, SRM) under the PLM umbrella, we need to redefine the organizational structure and to make PLM people responsible for everything else or we need to make people on C-level take PLM responsibility. I can see how PLM-minded people can become promoted to C-levels, it won’t happen overnight, the second is something I like to discuss.

How to make C-level execs to get interested in PLM? To make that happen, we need to think about what is on the top of the list for C-level execs and check how does it match to the PLM value proposition and how companies are communicating that.

I always have three things on my mind when I talk to C-level execs. They are super busy, but these 3 points will always getting CEO attention:

1- Increase sales
2- Reduce cost
3- Create a new business

This is how it works. If you start speaking to them about how to optimize the engineering process or ECO approval process, you will be very quickly re-routed to the appropriate department managers or people responsible for processes and operations. But if you will connect PLM value proposition to how increased sales by explaining how the sales cycle will become faster as a result of PLM implementation and bring numbers to prove it, you can get your CEO attention and your dream deal approved fast.

It works for the largest corporations and small to medium-size manufacturing companies. I remember how one company was successfully making a sales quotation process down from days to minutes using PLM driven product configuration and six figures check was signed almost immediately. Because it was all about increasing sales and overbidding competitors.

At OpenBOM (disclaimer- I’m CEO and co-founder), we positioned our Design to Purchase process focusing on how to optimize purchase orders, which automatically got super attention from CEOs and COOs of the companies – they had huge concerns about wrong purchases and dead inventory. But the root cause was mistakes created in the Bill of Materials and wrong rollups. It was the way to connect cost reduction to the Bill of Materials and inefficient Excel-driven mechanisms.

What is my conclusion?

For a long time, ERP projects always had attention from C-level execs because ERP implementation is always connected to the money. And it directly connected to metrics to manage sales, expenses, and businesses. ERP sales did their job by connecting dots in the right way to speak C-level exec language. PLM sales are typically poisoned by two things – (1) engineering and (2) complexity. Both are non-starters and killers to get C-level attention. They usually gravitate to the topics I mentioned –  sales, cost, and new business. Just my thoughts…

Best, Oleg

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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  • Brian Sohmers

    Very well said! Brian

  • beyondplm

    @briansohmers:disqus thank you!

  • Ryan Bateman

    I am struggling with this myself. The company I’m working for is investing in a new ERP and has selected Epicor. The leadership team believes the ootb capabilities of ERP will remove the need for PLM as it has a PLM module. Personal I’ve not been convinced. Do you have any suggestions about the questions I should be asking to guide the business down the correct path?

  • beyondplm

    @disqus_AnwzGUPxhY:disqus Unfortunately. it is a very old question. Leadership team believes PLM is part of engineering and focus on ERP. I know it sounds too simple, but 1-3 from the list in this blog is the answer. For every company, the story will be different, but these actions are well connected to everything PLM team does.

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