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

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


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 ease of integration between these systems. My hunch, ERP and PLM are clashing over the data that both system supposed to manage such as Bill of Materials. One of my older articles speaks about The ugly truth about PLM-ERP monkey volleyball. I think beyond specific data and process management aspects both ERP and PLM vendors are competing for “CIO priority” in the company.

In my view, the net-net after almost two decades of competition: ERP more often is taking dominant position in the company. At the same time, PDM and PLM have more challenging position to expand system usage beyond engineering and R&D organizations downstream. The situation is obviously different between larger and smaller companies. The problem of integration between ERP and PLM is dominant for large OEMs and suppliers. The problem of PLM cost and decision to use both PLM and ERP among departments is more critical for smaller manufacturers.

Cloud computing is one of the largest and most disruptive technological trends these days. Cloud certainly disrupted many existing domains. We can see a lot of cloud disruption in enterprise domain these days. CMSWire article Will Disruptive Cloud Computing Kill Enterprise Resource Planning? is specifically focusing on how cloud tech can disrupt ERP domain. Read the article and make your opinion. Article references Gartner study – Predicts 2014: The Rise of the Postmodern ERP and Enterprise Applications World (you need to pay to get access). Here is an interesting passage:

According to the report the problems that are impacting on ERP are historic. In fact, they go back nearly 20 years. From the mid-1990s, enterprises invested in ERP solutions because they addressed problems that had been inherited from the 1980s, when systems were not reliable enough and did not integrate with newer applications. However, many of these service provides went beyond implementations. They provided extensive customizations on top of the work that was outlined on the licenses, with many setting up software factories with thousands of programmers to provide those customizations. The net result of 15 years of continuous customization, the report added, are ERP implementations that are now “arthritic,” incredibly slow and expensive to change

Gartner is also making prediction about future development of ERP solutions and transforming of large monolithic suites into set of smaller and flexible application services:

Longer term, over the next 10 years and more, we envision a scenario where more of the market ‘flips’ to the cloud. Instead of having on-premises core solutions that are complemented by innovation or differentiating processes being supported in the cloud, some organizations will move all their ERP functionality to the cloud. These won’t be single vendor mega-suites but instead will be loosely coupled suites of cloud functionality,” Nigel Rayner, co-author of the report said.

This prediction made me think about potential transformation in the balance between PLM and ERP systems (or maybe services in the future). The focus on smaller adaptive services can give an opportunity to PLM vendors to provide solutions in functional areas that raised controversy and competition in the past – change management, item master management, BOM management and few others. By providing new modern cloud manufacturing applications PLM vendors will be able to takeover inflexible legacy ERP suites and integrate with other ERP services.

What is my conclusion? The disruption time is good for changes and revisiting of old status quo and decisions. The historical balance of PLM and ERP is one of them. By providing flexible and agile product lfiecyle services, existing PLM vendors and newcomers can win over the existing status in many manufacturing companies. Just my thoughts…

Best, Oleg


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