PLM users won’t move to the cloud because of cost

PLM users won’t move to the cloud because of cost


ERP is a long time PLM rival for dominance in manufacturing enterprise organizations. I’m sure you are familiar with the the following discussion topics – what are roles of ERP and PLM in product development process, BOM ownership,  enterprise data management, visibility to CIO, etc. 

However, here is a new one – cloud. It looks like PLM and ERP will be competing on the speed of cloud adoption. Surprised? Navigate to the following link to read Cloud ERP replacement doubled last year to 24% – Forrester article by Diginomica. Article references Forester research Application Adoption Trends: The Rise Of SaaS speaking about sudden raise of cloud (SaaS) adoption.

Here is my favorite passage from the Diginomica post:

In The Rise Of SaaS, author Paul Hamerman, vice president and principal analyst for application development and delivery, states that cost has become secondary to agility and speed as a motive for SaaS adoption. The top drivers cited by respondents included business agility, speed of implementation and faster delivery of new functionality. He recommends his readers prepare for a number of changes in the way they support business applications, including a shift in perceptions of what counts as legacy:

The new legacy systems are licensed, premises-based applications that are typically customized and difficult to upgrade. As better and better SaaS options become available, look to replace these systems with more flexible and sustainable SaaS solutions.

The key message – it is not about cost, but about agility and speed of cloud solution adoption by enterprise organizations. It reminded me my 2 years old article – Will ERP be on the cloud ahead of PLM? PLM vendors are coming to the cloud and it looks like almost every PLM vendor today has their “own version of cloud PLM”. However, can PLM vendors expect a hockey stick in the level of cloud PLM adoption? This is a good question to ask these days.

It seems like PLM vendors got the first part of SaaS – how to cut IT, installation and update cost. This is where newcomers and existing PDM/PLM vendors are clearly shining these days. However, there is a second part – how to make organization to adopt PLM development processes supported by cloud PLM faster? This is a place where cloud PLM is not very much different from “before cloud” PLM, in my view. This process is still long, requires lots of communication with customer including services and deployment. It is business transformation that usually takes so long and requires too many resources and time.

What is my conclusion? Money is not an issue for business. Time is the issue. What I can hear all the time – manufacturing companies have no problem to pay for PLM solutions. The problem is in the way PLM solutions are implemented, speed of business transformation and solution adoption. This is a place where PLM vendors should look for future cloud PLM hockey-stick moment. Just my thoughts…

Best, Oleg

pic credit to Diginomica


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