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Analytics

PLM-for-SME

PLM is in the focus on many companies these days. Questions how to improve processes, optimize cost and improve quality are important and PLM vendors are laser focus on that. But… with one small clarification . It works for large manufacturing companies. To transform business processes is the way PLM succeeded to deliver ROI and demonstrate clear value. It is hard to find large manufacturing company these days that is not implementing  kind of PLM. You can see multiple options – complete home made PLM system developed by IT department (usually based on some of available PLM toolkits), combination of older PDM/PLM system with some additional development and complete solutions from leading PLM companies.

However, when it comes to small manufacturing companies, the situation is very different. It is not rare to face the question “what is PLM and why do we need it?” as well as to see customers confused about the difference between PDM and PLM. The last one is a big misleading factor in PLM marketing. Few weeks ago I posted Why PLM stuck in PDM? The article raised lots of comments and opinions. The question I want to ask today is about why PLM software and strategies failed to deliver value to small manufacturing companies or so called SME (small and medium enterprises).

Speak to software vendors about PLM and SME and you will learn about top three PLM inhibitors – (1) limited financial resources, (2) lack of IT support and (3) diverse set of requirements. While PLM competition for large OEMs is getting stronger, SME becomes a very attractive opportunity for PLM to growth. It is an attractive and turbulent market with lots of innovative companies. Together with growing number of smaller suppliers. To win this market is a very interesting opportunity with significant growth potential.

SME remains a very challenging place for PLM vendors. The question about how to serve SME with PLM solutions is open for a long time. Large PLM vendors tried to serve these customers by scaling down their large PLM product suites and developing special packaged solutions. Newcomers tried to provide special applications for SME. Open source, SaaS, Out-of-the-box (OOTB) applications… After all, SME PLM marketshare remains very fragmented with lot of opportunities and no mainstream solution.

It made me think about some problems in existing PLM strategies for SME. I can see some similarity with mass customization trend in manufacturing. The time when car supposed to be “Ford” and “black” is over. Automotive and other manufacturers explored new opportunities to customize their solution to satisfy turbulent market with diverse set of requirements. So, focus on the niche markets and individual customer is important. In the past, it was a strategy Japanese firms captured marketshare in U.S. PLM vendors are trying to win PLM SME market by focusing on flexibility of their solution and OOTB applications.  The problematic part of this strategy is cost. This is where flexible PLM failed. The cost of PLM implementation is still very high. Marketing, sales, business development and implementation services are not allowing to PLM vendors to scale their PLM operations for SME.

What is my conclusion? Low cost and efficiency. When it comes to customization and fulfillment of diverse customer requirements, low cost and efficiency are “must have” components of your strategy. Flexible platforms and OOTB Apps are not enough. Cloud solved some problems related to cost and IT support but left implementation services cost open. PLM vendors need to think how to deliver PLM services at low cost or think about alternative strategies. So far, PLM vendors failed to deliver to SME. Cost of the delivery is too high. After more than a decade of “focus on flexibility”, I think it is a time for PLM vendors to find an alternative. Just my thoughts…

Best, Oleg

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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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7 rules for selecting PLM software in 2014

January 17, 2014

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 […]

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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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