The world around us is very disruptive these days. Nothing stands still. You cannot stop innovation and progress. Engineering and manufacturing software is not fastest changing domains. It explained by slow changing process, high level of complexity in product development and significant capital investment manufacturing companies made in existing PLM and other enterprise software. Nevertheless, to think PLM will stand still is probably a mistake that potentially can happen in the community PLM vendors and experts.
I’ve been reading Google CEO Larry Page Spoke At TED article. Unfortunately, TED didn’t stream his talk, so everything based on twitter stream. My favorite passage was related to the Page’s explanation about why companies are failing. Here is the quote:
“The main thing that has caused companies to fail, in my view, is that they missed the future,” Page said.
The article made me think about what potential “future” that PLM companies can miss today in our fast moving engineering and manufacturing software ecosystem. So, I decided to look into my ‘crystal ball’ today and pickup top 3 things that potentially can be missed by PLM vendors:
1- Downturn in premium price of PLM software
The price of PLM software is a challenging factor. Which is true, in general, about enterprise software. I think, customers are worrying about what will be total cost of ownership for PLM software. Result – huge interest to develop ‘predictable business models’, which include scalable parameters identifying how to pay for PLM software. The strategic mistake that can be done by PLM vendors is to miss the point where new TCO models will be conflicting with existing business and revenue models.
2- Switch from data ownership to openness and data share business values
Openness is another heavily discussed topic in engineering software. The demand of customers is not be locked on a specific vendor. The situation when company is using software from different vendors is not rare and if we include supply chain scenarios, openness requirements is probably one of the most critical. However, most of business models today are fundamentally assuming customer lock on a particular type of software, file types, databases, etc. Technology and business disruption in this space can remove lock and become a surprising factor for existing vendors.
3- The importance of vertical integration.
Integration of enterprise business and information systems becomes more and more important. Manufacturing and production environment is moving towards digital forms of mass customization. The involvement of engineers into the process of manufacturing is getting more tight. The future cost saving is in even deeper optimization between product design and manufacturing. By missing the importance of these aspects existing vendors can be outperformed by modern cloud (and not only) vendors and newcomers.
What is my conclusion? Some people calling what happens these days in manufacturing as the next industrial revolution. I don’t want to put specific stickers. Nevertheless, engineering and manufacturing business is getting even more competitive. Internet, cloud, diverse competition, cost pressure and new business models – this is only short list of disruptive factors that will be very important in the future of digital manufacturing. Just my thoughts…
Best, Oleg
