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Analytics

Will cloud PLM go shadow?

by Oleg on March 25, 2014 · 7 comments

plm-shadow-it

If you are not familiar with the term “Shadow IT”, you better do. The term is not completely new. Wikipedia article provides definition and speaks about different aspects of shadow IT activities. Interesting enough it has both negative and positive aspects. While (in general) usage of non-approved by IT applications is not a good things, it provoke innovation and overall tech progress.

Shadow IT is a term often used to describe IT systems and IT solutions built and used inside organizations without explicit organizational approval. It is also used, along with the term “Stealth IT,” to describe solutions specified and deployed by departments other than the IT department. Shadow IT is considered by many an important source for innovation and such systems may turn out to be prototypes for future approved IT solutions. On the other side, shadow IT solutions are not often in line with the organization’s requirements for control, documentation, security, reliability, etc., although these issues can apply equally to authorized IT solutions.

Lately, the wide spread of SaaS application created a new dangerous trend in the development of shadow IT. At the same time, it introduced a new opportunity for innovation. My attention  caught the article speaking about research McAfee did together with Frost & Sullivan- The Hidden Truth Behind Shadow IT. You can download research here. It provides some very interesting numbers about adoption and usage of non-approved SaaS applications.

non-approved-app-usage

It is not surprising, but IT people itself are representing a significant portion of non-approved SaaS applications usage. Also, not very surprising the categories of applications.

types-of-non-approved-app-usage

Nevertheless, I found the follow passage the most important. The reason for high interested in SaaS application fast adoption is the fact they people just want to get a job done. For most of them IT approval is an overhead and extra work. 

What drives employees to “go rogue”? Is it boredom? Restless energy? A desire to rebel? Alas, the truth is less romantic. It turns out users overwhelmingly turn to non-approved apps for one reason: they need to get their jobs done. As shown in Figure 3 below, the top drivers cited by both LoB and IT respondents are related to gaining access to the right tools, fast. Nearly half of respondents indicate a comfort level with their preferred software package. While whimsical personal preferences may play a role, it is equally likely that respondents’ familiarity with a package means they can avoid a learning curve and thus get their work done more quickly. Users also cite slow approval processes for new software, and inadequacies of “approved” software.

So, here is the question – what does it mean for future of cloud PLM? Usually, product lifecycle management programs are going through long process of evaluation, approval and implementation. I can see two potential scenarios in which cloud PLM activities can go shadow. First one is related to  activity driven by departments and/or divisions. At the time, department finds difficult to get everybody aligned, implementation of cloud PLM can be a good alternative to have usage and get job done. Another one is individual productivity and cross company usage. Think about supply chain scenarios, for example. In the case BOM planner can achieve better collaboration with other suppliers, he can decide to use cloud PLM without getting company and IT aligned.

What is my conclusion? I want to differentiate PLM business strategy and PLM software. Business strategy requires alignment, planning and getting everybody on board. The situation is different with PLM software. In my view, it should be first about getting job done. Today’s perception of PLM software to be slow, complicated and expensive. Cloud is going to change that. In the past, popular  software was very often stolen. In the world of SaaS, non-approved and free software is probably a good starting point for future success. Just my thoughts…

Best, Oleg

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plm-vendors-differentitation

Differentiation. Competitive advantage. Value sales. I’m sure you’ve heard these buzzwords many times. Competition is part of everyday business life. Usually, I don’t speak about competition. I searched across my blog and founded only one reference to competition related writing – PLM Competition Toolbox. But I want to look in my crystal ball today. Here is the article that made me do so. Over the weekend, I’ve been reading Joe Barkai’s blog post – How To Win Without Differentiation. Article speaks about how to develop differentiation strategies and what to do when differentiation is not coming easy. I liked the following passage:

When value differentiation is too vague and difficult to demonstrate, price competitiveness does not work. Potential buyers seek other ways to drive their decisions, and, as Vermeulen points out, they rely on other factors, such as the seller’s brand, status in industry, and prior relationships. In other words, the buyer switches from assessing and comparing features and costs to differentiate based on the brand’s credibility and trustworthiness.

The article made me think about PLM vendors competition and differentiation. PLM industry is dominated by small number of large vendors (namely alphabetically – Autodesk, Dassault, Oracle, PTC, SAP and Siemens PLM). There are some specific competitive niches each of these companies were developed for the last 10-20 years. However, looking on websites and public marketing materials about PLM solutions, I can see less visible difference. These companies are targeting similar businesses and within time it is not simple to get value differentiation between brands.

Enterprise software is an interesting business. One of the characteristics of software for engineering and manufacturing is lifetime customers and legacy software. The lifecycle of customers in this domain is relatively long. It goes from extremely long in defense, aerospace programs to long in automotive and others. To get familiar with engineering software (such as CAD and PLM) takes time and effort. You need to cross educational barriers. So, when you already “in”, the entrance barrier for competitor is getting bigger. Overall investment and significant amount of customization play another role. This business is different from selling smartphones. After spending few millions of $$$ on a specific solution, it is very hard to justify the replacement of this solution with a competitor.

So, what will differentiate PLM vendors in coming 10 years?  What will become future competitive advantage? Technology will obviously play some role, but I mostly agree with Joe – “Don’t oversell technical wizardry. Buyers of enterprise software and services consider your product roadmap and long-term commitment to the space as much as they do to your product features and engineering skills. So, it is very hard to create sustainable technological advantages in this market. Very few companies succeeded to do it in the past and kept it for a long time.

However, there is one thing that getting more and more value points. I call it “vertical experience”. Sometimes vendors call it “industry practices”. However, it can go much more beyond what vendors are doing today in this space. I can see specific vertical solutions focused on design patterns, bill of material management, change management, services, suppliers related to particular segment or industry. The niche can be big enough to serve business of service providers as well as provide an impact on overall vendor business. This is a place where PLM vendors will be able to show big value to customers and fast implementation ROI. It is not simple and it takes time and dedication.

What is my conclusion? Vertical (or industry) specialization can become a future goldmine for PLM vendors and solution providers. To develop deeply integrated solution including specific behaviors in data and process management is not a simple task. Customer experience is something that very hard to gain. However, once achieved it can be leveraged for a long time. Industry verticals can become a future differentiation factor for large vendors and startup PLM companies. Just my thoughts…

Best, Oleg

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plm-software-selection-rules

Enterprise software choice is a complex decision process. The time when you was able to buy a software from trusted XYZ vendor and sleep safe is over. These days IT and other software decision makers are facing challenges related to technological and business options related to new business models, cloud technologies, specific vendors, user experience and many others. You need to swim in a sea of changes in enterprise market in order to decide what software to choose.

Very often you can hear debates about what is Product Lifecycle Management – vision, business strategy or software. Whatever PLM  means, companies and people responsible for PLM strategy and software need to make their buying decisions related to PLM software, vendor and implementation.

Last year I posted about how you can select PDM software in 5 simple steps. The last step was open ended and assumed that you need to make strategic PLM decision. Here is a quote from last year article:

“If you company is looking how to manage product development processes beyond controlling and sharing CAD (product) data, you need to evaluate PLM system. Don’t make a PDM choice without making your PLM decision first”.

Today, I want to propose few rules that can help you in the decision process related to PLM software and vendor selection. It is not about how to build your overall PLM strategy – I will mostly focus on software and vendor choices. 

1. Find real PLM use cases compatible with your requirements. Use trusted advisers that will help you to navigate to examples of PLM software usage. PLM software market place is opaque. There are lot of online information, analyzes, comparison and testimonials about PLM software. To make real financial, technological and product assessment of vendor is tricky. However, you should remember to buy a software that can perform according to your need.

2. Analyze your company engineering software (CAD and PDM) and enterprise environment (ERP). Regardless on grand PLM vision, you have to integrate PLM software with environment, which includes connection to CAD/PDM, interoperability with ERP system(s) as well as many other design, engineering and manufacturing system coming from other vendors including homegrown software developed by IT department and contractors.

3. Don’t buy immediate technological advantages. For most of PLM systems, technologies doesn’t change much for the last 10-15 years. Even if PLM software vendor claims some technological uniqueness today, it will be adjusted in 2-3 years by new development, another new technologies and technological acquisitions PLM vendors are making. If you want to make some tech-driven decision, do it ‘test based’ for a specific use case and/or process in your company.

4. Cloud PLM is first about software eco-system and IT strategy. Cloud can bring lots of advantages. However, if your company is still on premise and IT is conservative, think carefully before pushing into cloud PLM race. You can burn time and resource on convincing your company and solving “general cloud software obstacles” before getting PLM value pay off.

5. PLM usability is relative. Everybody wants (and claims) to be easy to use like Google these days. However, devil is in details and enterprise software is different from consumer web. Also, what looks simple for you will be different for your colleague. Test by yourself, but don’t underestimate software evaluation by people outside of IT ecosystem. There are few books and online resources for UX (user experience) passionate people – try them out. Start from Steve Krug’s book Don’t Make Me Think - it will help you to build a sense of simplicity and own guidance.

6. Don’t buy PLM vendor roadmaps. Most of roadmaps are aspirational.  You must look on available software releases and community of users. Community will give you an indication of how careful vendor is following their roadmaps, promises and (mostly important) long term software compatibilities.

7. Open source software isn’t much different from functional and technological standpoint. Open source software is not cheaper and simpler – it is just a different business model. There are variety of open-source flavors and you need to read all legal provisions. Involve your legal advisers to help you to go through language and meaning.

What is my conclusion? In my view, PLM software domain will be turbulent in 2014. New companies, technologies and business models are coming to disrupt and change existing industry landscape. However, your PLM software buying decision will probably stay with you more than 1-2 years. So, my recommendation is to review available software, make trials, experiment and build use cases. These days software vendors are open to convert customers into their trusted advisers. Don’t afraid to be a part of the PLM vendors’ development process and decision making. In most of cases, it is fun and you will love it. Just my thoughts…

Best, Oleg

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PLM v BIM: Common or Different?

January 1, 2014

As a matter of fact, PLM and BIM domains are quite independent. Nevertheless, I can hear more and more voices recently trying to create a marriage between these two. The latest one that caught my attention just before New Year party was Jos Voskuil’s blog – 2014 The year the construction industry will discover PLM? It […]

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PLM Data Tagging Is Getting Some Traction

October 7, 2013

Tagging is one of the most popular ways to classify information. Tagging became a mainstream way to classify information in almost every web application these days. Initially introduced on photo sharing websites, tagging expanded almost everywhere. Tagging is an important feature of every “Web 2.0″ solution. You can read more on wikipedia here. Here is […]

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PLM real implementations: too long to be on-time?

July 7, 2013

One of the looongest US weekends I remember  is going to end. This is a time to get back from relaxing holiday atmosphere  to business reality. I’ve been skimming social channels and stumbled on PLM statistics posts published by my good friend and PLM blogging buddy Jos Voskuil. Navigate to the following link - PLM statistics–the […]

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Cloud PLM and disruptive technology economic impact

June 14, 2013

We love word “disruptive”. It is so nice and tasty. However, very often, we use it without thinking twice what does it mean. Read materials from many startups and large companies – you found lots of statements about “disruptive technology” or “disruptive innovation”. Wikipedia article provides a very decent definition of what disruptive innovation and […]

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PLM and The Art Of Simplicity

April 11, 2013

For many years, enterprise software was known as a place where development of new features was one of the main priorities. To have comprehensive list of features was considered as absolute necessity. The army of sales people and advisers spent enormous amount of time in validating and comparing features of enterprise systems. From the early […]

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CIMdata PLM Forum: PLM Never Ends

April 10, 2013

I’ve been attending North American PLM Market & Industry Forum organized by CIMdata earlier today. CIMdata is running these forums across the different geographies. Navigate to the following link to learn more about future locations and forums. Here you can see the agenda. I’ve made some calculation. The pure presentation time was about 6 hours. […]

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PLM Focus Debates and Strong Anglo-Saxon Vocabulary

April 5, 2013

Working with engineers is like herding cats. Try to put few engineers in a room and get an agreement. If you have 4 engineers in a room, you probably will have about 5-6 opinions about what is the right way. No surprise. That’s what happens when engineers are trying to agree about what is the […]

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