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Why all PLM software will be SaaS soon?

by Oleg on November 26, 2014 · 0 comments

plm-cloud-dream

I’ve be sharing many of my thoughts about how different cloud technologies can be used to implement PLM. Nevertheless, once in a while, I’m also getting comments and questions about acceptance of cloud PLM for large companies. Usually, it comes in the intersection of security and readiness of large manufacturing companies for cloud (SaaS) software.

TechMVP article – The benefits of SaaS transformation: both the obvious and non-obvious shows some very interesting perspective on that topic. Let me go straight to security question:

The second common objection stems from the thought process amongst large enterprise CIOs regarding whether to allow certain applications to live outside of the enterprise’s firewall.  IT managers and executives – sometimes speaking about legitimate security concerns and sometimes speaking to protect their jobs – stand in the way of core applications moving to the cloud via a SaaS vendor.  At the same time, these same decision makers have adopted Salesforce.com for CRM, and allow unencrypted email between employees and non-employees, thus calling into question the sincerity of their argument against other SaaS applications.  The successful adoption of CRM in the cloud has opened the floodgates for virtually all other types of applications to move to the cloud even over the objections of certain IT managers.

Towards this end, we have seen in recent years the advent of ERP (FinancialForce, Workday), Marketing Automation (Eloqua, Marketo), and Software Development or ALM (GIT and Rally Software) in the cloud.  These types of applications manage information that is often considered the “crown jewels” of corporate data, and thus are the types of applications that some thought would never take root in the cloud.

I can observe a significant growth of SaaS software adoption by manufacturing outside of pure engineering domain. You can see software in different categories – ERP, CRM, marketing, project management, software lifecycle management and many others. Imagine manufacturing product with software code managed using GIT? What will be the point to reject PLM system managing engineering bill of materials in the cloud?

Another interesting perspective is related to creation of new software companies. The graph below demonstrate a complete dominance of news business starting SaaS companies.

saasapps

One more data point is coming closer to PLM business and related to implementation of ERP systems. Panorama consulting solutions published an interesting 2014 ERP report, which speaks about type of ERP systems implemented in 2013. As you can see SaaS and hosted system is accounting together for 96% of all systems.

type-of-erp-software-2013

What is my conclusion? I wonder what percentage of new PLM systems implemented in 2014 will be SaaS. The number is probably not very high. However, traditionally, it takes long time to decide about PLM system. My hunch, that broad adoption of SaaS software in other domains will push manufacturing companies to evaluate more PLM systems and make their decision faster than before. SaaS lower risks and upfront cost, which can be an additional factor for manufacturing companies to taste cloud PLM sooner than later. Just my thoughts…

Best, Oleg

photo credit: Robert Hensley via photopin cc

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google-data-center

Companies are moving to cloud these days. The question vendors and customers are asking today is how do we move to the cloud. I’ve been asking this question in my post few month ago – PLM / PDM: Why the cloud? Wrong question… I discovered multiple options for customers to start their move to the cloud – mainstream cloud productivity tools to share data and collaborate, to migrate existing PLM platforms to cloud using IaaS strategies as well as to build new type of platforms and tools using new type of cloud platforms and infrastructure.

Today, I want to show the perspective on public cloud from both sides – large provider of public cloud infrastructure (Google) and large manufacturing company (GE) and to see what is the intersection between their strategies.

Google – example of public cloud platform

My attention caught Google presentation – The next generation of Cloud. Navigate your browser to the following link to watch it. Besides the fact it was inspiring by the exact same question – “How to you move to the cloud”, it provided a very interesting insight on the aspect of Google public cloud platform.

google-1google-2google-3google-4

Hardware cost is declining and Google is adjusting public cloud to match economic realities. Together with economic of scale and utilization, I can see a trajectory towards decreased of public cloud cost even more in the future. 

Large manufacturers move to the cloud

So, what customers are thinking about public cloud? Inforworld article just published an article presenting GE strategy to go all-in with public cloud. Presented as an interview with GE COO Chris Drumgoole, article outlines his aggressive plans to migrate to public cloud services — and how they support GE’s organizational goals. Read the article and draw your opinion. Here is my favorite passage:

Drumgoole won’t talk specific numbers, but he claims that “north of 90 percent” of the apps deployed by GE this year have been in a public cloud environment. We’re big fans of the idea that everything ends up in the public cloud utility model eventually. “Eventually” is the big caveat, because some people within GE would argue that should be tomorrow, while others would tell you it’s 15 years from now. It’s a subject of good debate. But either way, the regulatory environment we live in right now prohibits it. In a lot of spaces, when we say technically that we think something should be public, and we’re comfortable with it being public, the regulatory environment and the regulators aren’t quite there yet and we end up having to do some sort of private or hybrid cloud. That’s probably one of the biggest barriers to us moving more public.

Drumgoole speaks about connected devices, big data and analytics as a significant driver to move data to the cloud. I reminded me one of my previous posts – IoT data will blow up traditional PLM databases (http://beyondplm.com/2014/09/23/iot-data-will-blow-up-traditional-plm-databases/). The amount of data is huge and it will certainly require new approach in data management. Here is the example of how much data produced by jet engine these days:

Take one of the jet engines we make, and if it’s fully instrumented. On a typical flight, it’s going to generate about two terabytes of data. Not everybody fully instruments them, but if you instrument it the way people would like in order to get predictive data, you’re talking about 500GB per engine per flight. A flight with a GE engine takes off or lands every three seconds. All of a sudden, the data gets very, very large very, very fast.

PLM vendors and public cloud

As for today, I’m not aware about any PDM/PLM software using Google Cloud as a platform. The majority of cloud PLM software built on top of infrastructure provided by collocated hosting services and variety of Amazon cloud infrastructure. Dassault Systems and Siemens PLM made few public statements about support of diverse set of cloud options and IaaS infrastructure. It would be interesting to see future evolution of PLM cloud platforms.

What is my conclusion? The technology and economic of cloud is changing  these days. My hunch, it will pull more vendors and companies to use public cloud in the next few years. Software companies will try to balance between leveraging technological platforms and cost. At the same time, customers will try to balance between regulatory requirements and opportunities to make data accessible and scale without limits. Interesting time and significant opportunity. Just my thoughts..

Best, Oleg

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data-silos-architecture

Data is an essential part of every PLM implementation. It all starts from data – design, engineering, manufacturing, supply chain, support, etc. Enterprise systems are fragmented and representing individual silos of enterprise organization. To manage product data located in multiple enterprise data silos is a challenge for every PLM implementation.

To “demolish enterprise data silos” is a popular topic in PLM strategies and deployments. The idea of having one single point of truth is always in mind of PLM developers. Some of my latest notes about that here – PLM One Big Silo.

MCADCafe article – Developing Better Products is a “Piece of Cake” by Scott Reedy also speaks about how PLM implementation can help to aggregate all product development information scattered in multiple places into single PLM system. The  picture from the article presents the problem:

product-data-silos

The following passage is the most important, in my view:

Without a PLM system, companies often end up with disconnected silos of information. These silos inhibit the ability to control the entire product record and employees waste unnecessary time searching for the correct revision of the product design. As companies outsource design or manufacturing, it becomes even harder to ensure the right configuration of the product is leveraged by external partners.

Whether your company makes medical devices, industrial equipment, laptops, cell phones or other consumer products – PLM provides a secure, centralized database to manage the entire product record into a “Single Record of the Truth”… With a centralized product record, it is easy to propose and submit changes to the product design, track quality issues and collaborate with your internal teams and supply-chain partners.

The strategy of “single record of truth” is a centerpiece of each PLM implementation. However, here is the thing… if you look on the picture above you can certainly see some key enterprise  systems – ERP, CRM, MES, Project and program management, etc. PLM system can contain scattered data about product design, CAD files,  Part data, ECO records, Bill of Materials. However, some of the data will still remain in other systems. Some of the data gets duplicated. This is what happens in real world.

It made me think about 3 important data architecture aspects of every PLM implementation: data management, data reporting and data consistency.

Data management layer is focusing on what system is controlling data and providing master source of information.  Data cannot be mastered in multiple places. Implementation needs to organize logical split of information as well as ability to control “data truth”. This is the most fundamental part of data architecture.

Data reporting is focusing how PLM can get data extracted from multiple sources and presented in seamless way to end user. Imagine, you need to provide an “open ECO” report. The information can reside in PLM, ERP and maybe some other sources. To get right data in a right moment of time, can be another problem to resolve.

Last, but not least - data consistency. When data located in multiple places system will rely on so-called “eventual consistency” of information. The system of events and related transactions is keeping data in sync. This is not a trivial process, but many systems are operating in such way. What is important is to have a coordinated data flow between systems supporting eventual consistency and data management and reporting tools.

What is my conclusion? To demolish silos and manage single point of truth is a very good and important strategic message. However, when it comes to nuts and bolts of implementation, an appropriate data architecture must be in place to insure you will have right data at right time. Many PLM implementations are underestimating the complexity of data architecture. It leaves them with marketing slogans, burned budgets and wrong data. Just my thoughts…

Best, Oleg

picture credit MCADCafe article

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PLM for Small Teams – Autonomous Alignment

June 19, 2014

This week is very fruitful for PLM events. PTC Live 2014, Siemens PLM connection, GrabCAD media event. Twitter and other social networks can help you catch up with multiple events at the same time with minimum time. So, in 1-2 hours, you can get up to speed with news and updates. Chad Jackson’s and Allan […]

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What PLM vendors can learn from manufacturing startups?

June 13, 2014

About half year ago, I was looking for bluetooth location trackers. The solution that caught my attention was Tile. I liked the slick video and interesting design. At that time I learned that Tile grabbed $2.6M via crowdfunding – very remarkable result. However, I noticed that solution is not available. I followed Tile since than […]

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PLM Implementations Challenges and 3 Organizational Lenses

June 4, 2014

It is not unusual to hear people speaking about PLM implementation and changes that need to be done in the organization. Very often, PLM vendors or implementers are calling this process business transformation, which is literally supposed to make a change in everything that related to product design, engineering, manufacturing, support and services. So, to […]

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PLM Services, Department Stores and Digital Future

June 2, 2014

Don’t be surprised if your most trusted CAD/PLM service provider will be acquired tomorrow. According to Joe Barkai’s post- PLM Service Providers Ready To Deliver Greater Value, we have been witnessing a wave of mergers and acquisitions of PLM services companies (the examples – Accenture / PRION Group, Accenture / PCO Innovation, KPIT-Tech / I-Cubed […]

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Will PLM Vendors Jump into Microsoft Cloud Window in Europe?

April 10, 2014

Cloud is raising lots of controversy in Europe. While manufacturing companies in U.S. are generally more open towards new tech, European rivals are much more conservative. Many of my industry colleagues in Germany, France, Switzerland and other EU countries probably can confirm that. Europe is coming to cloud systems, but much slower. I’ve been posting […]

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Why PLM stuck in PDM?

April 5, 2014

I’ve been following CIMdata PLM market industry forum earlier this week on twitter. If you’re are on twitter, navigate here or search for #PLM4UM hash tag on twitter. The agenda of PLM forum is here. The following session discussed one of my favorite topics- PDM v PLM. PLM: Well Beyond Just PDM by Peter Bilello. […]

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Why hard to sell PLM over the phone

February 26, 2014

Life is transforming around us. Technology and communication are coming to our personal and business life. So, it comes to enterprise sales and PLM. The debates between new sales models and enterprise sales old schoolers are heating up. I posted about it last year and enjoyed many lovely conversations with sales people. My conclusion after […]

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