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Cloud

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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european-plm-cloud

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 about cloud implications and constraints in Europe. Catch up on my thoughts here – Will Europe adopt cloud PLM? and here PLM cloud and European data protection reforms. These are main cloud concerns raised by European customers – data, privacy and specific country regulation. With companies located in different places in EU, it can be a challenge.

Earlier today, I’ve heard some good news about cloud proliferation in Europe coming from Microsoft. TechCrunch article – Microsoft’s Enterprise Cloud Services Get A Privacy Thumbs Up From Europe’s Data Protection Authorities speaks about the fact Microsoft enterprise cloud service meets the standards of data privacy in several European countries. Here is a passage that can put some lights on details and what does it mean:

But today comes a piece of good news for Redmond: the data protection authorities (DPAs) of all 28 European member states have decided that Microsoft’s enterprise cloud services meet its standards for privacy. This makes Microsoft Azure, Office 365, Microsoft Dynamics CRM and Windows Intune the first services to get such approval. The privacy decision was made by the “Article 29 Data Protection Working Party,” which notes that this will mean that Microsoft will not have to seek approval of individual DPAs on enterprise cloud contracts. In its letter to Microsoft (embedded below), chair Isabelle Falque-Pierrotin writes, “The MS Agreement, as it will be modified by Microsoft, will be in line with Standard Contractual Clause 2010/87/EU… In practice, this will reduce the number of national authorizations required to allow the international transfer of data (depending on the national legislation).”

Majority of PDM / PLM providers are friendly with Microsoft tech stack. Some of them are completely relies on MS SQL server and other Microsoft technologies. Most of them are supporting SharePoint. Now, these PLM vendors have an additional incentive to stay with Microsoft technologies for the cloud. It can be also a good news for manufacturing companies already deployed PDM/PLM solutions on top of Microsoft technologies and developed custom solutions.

What is my conclusion? The technological landscape these days is very dynamic. The time, one platform worked for everybody is over. In light of technological disruption and future challenges tech giants will be using different strategies in order to stay relevant for customers. Will European cloud regulation keep PDM/PLM players with MS Azure and other Microsoft technologies compared to alternative cloud technological stacks? How fast will take to other players to reach the same level of compliance? These are good questions to ask vendors and service providers. Just my thoughts…

Best, Oleg

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plm-componentizing

Product Lifecycle Management is not a software. It is business strategy and approach. One of my blog readers mentioned that in the discussion few days ago. Nevertheless, manufacturing companies are usually talking about PLM systems and platforms as something solid and unbreakable. The same picture you can see when looking on PLM online marketing materials and brochures. Despite recent changes in broad PLM acceptance and value proposition, companies still see PLM as a software mostly for engineering domain or driven by engineering IT. One of the dreams many PLM vendors developed for the last decade is how to reach the C-level management such as CIO and engineering executives. In other words, how to reach ERP level of acceptance and awareness.

Earlier today, my attention was caught by Toolbox.com article about modern ERP trends. Navigate to read ERP Trends: Shifting from Big ERP Systems to Componentized ERP Environments.  Cloud is changing the face of ERP. The technology is breaking ERP into pieces. One of the results – two tiers ERP configuration. Here is the explanation I captured from the article.

Because of the coinciding innovations in cloud technology, instead of deploying and implementing traditional ERP infrastructure, organizations started adopting a two-tier, or hybrid, ERP model. Two-tier ERP is a method of integrating multiple ERP systems simultaneously. For instance, an organization may run a legacy ERP system at the corporate level while running a separate ERP system or systems, such as cloud ERP, at a subsidiary or division level for back-office processes that have different requirements. To facilitate the adoption of the two-tier methodology, vendors increasingly opened core databases and application programming interfaces and provided customization tools, thus spurring the advent of self-contained, functional ERP components or modules.

So, what does it mean for existing and future PLM strategies and products. More specifically, it made me think about the possibility to break large and heavy PLM platforms into sets of re-usable components. ERP componentizing example speaks about splitting ERP system into modules such as – supply chain, financial, management, human resources. So what potential PLM split can look like? I can see two possible ways here – business process and lifecycle. The first one is something probably we can see a lot in existing PLM platforms. Requirement management, Design Collaboration, Change Management, NPI, etc. I’ve been thinking about Lifecycle as an alternative approach to the traditional business process oriented approach. Lifeycle approach means to develop applications to serve people with their everyday tasks based on maturity of product in the development or services. Think about manufacturing assembly line. Different tools and operations are applied to manufacturing product to bring it to life. Now think about PLM and software tools. PLM components will be used to create product (actually product data and related information).

Toolbox article also speaks about difficulties of componentized approach. The main one is a potential growth of TCO because of the need to integrated data coming from different modules. Here is the passage I specially liked:

The data from the second-tier cloud ERP or modules typically require normalization to integrate with the legacy ERP system at the corporate level. Although direct cost is associated with master data management to ensure consistency and no redundancy, by extending the life of the legacy system, the intention is to reduce the total cost of ownership (TCO) while meeting additional needs for flexibility and functionality. However, the shorter duration of implementing and deploying a two-tier ERP model can actually lead to increased TCO if the indirect costs, such as training, hiring staff, and vendor support, are not taken into to account, as well.

The same problem will arise if we try to break PLM into components. With no solid data foundation, ability to bring and integrate various PLM components will be questionable. The integration cost will skyrocket. Compatibility between PLM components versions will make it even harder. Nevertheless, I can see growing business requirements, customers’ demand and shorter lifecycle for software products as something that will drive future PLM technological changes. Componentizing will be one of them.

What is my conclusion? To break large and heavy PLM suites into configurable and flexible components is an interesting opportunity to satisfy today’s dynamic business reality. However, two fundamental technologies are required to make it happen – scalable open data platform and reliable integration technologies. Just my thoughts…

Best, Oleg

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How cloud PLM can reuse on-premise enterprise data?

April 7, 2014

Cloud becomes more and more an obsolete additional word to call every technology we develop I hardly can image anything these days that we develop without “cloud in mind”. This is absolutely true about PLM. Nowadays, it is all about how to make cloud technologies to work for you and not against you. For cloud […]

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CAD is half pregnant by cloud

March 31, 2014

The usage of cloud is growing every day. Started as an option to simplify collaboration and data exchange, it is proliferating into spaces such as backup, computation and many others. CAD and design are remaining one of the most conservative zone of the cloud and engineering software. Commonly agreed opinion – desktop is the best […]

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Will cloud PLM go shadow?

March 25, 2014

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 […]

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Why PLM vendors might decide to beat Amazon?

March 21, 2014

Amazon is an absolutely marketshare leader in cloud computing. Because “cloud” is such a big and vague word these days, we must clarify and say “public cloud”. So, you may think for most of us, cloud is equal to Amazon. AWS EC2 allows us to spin new servers quickly and provide great services to everybody […]

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CAD Collaboration & Cloud: Chat With GrabCAD’s Hardi Meybaum

March 12, 2014

I had new kind of experience yesterday. It was on demand webinar. To me it was more like live blogging conversation. In case you following my twitter closely, you probably noticed Engineering.com webinar yesterday – CAD Collaboration & the Cloud: On-Demand Webinar with GrabCAD & Beyond PLM. I had a chance to meet and talk […]

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Who will create Google Sheets BOM (Bill Of Materials) Add-On?

March 11, 2014

For the last few years, I’ve been chatting about the opportunity to use Google infrastructure and tools to innovate in PLM, engineering and manufacturing.  Google enterprise apps influence on PDM/PLM market is still minor these days. However, I believe, Google cloud infrastructure and tools are consistently inspire established vendors and new companies to develop better […]

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Does PLM have a chance to win over ERP dominant position?

March 5, 2014

PLM and ERP have long “love and hate” relationships in manufacturing world. You can find lots of materials speaking about complementary roles of PLM and ERP. This is of course true. However, integration between PLM and ERP never been easy. Despite many technologies, systems and solutions available on the market, customers are often skeptical about […]

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