How PLM vendors can compete with manufacturing status-quo?

I attended startup event yesterday in MIT. It was organized by by Startup Secrets with participation of Michael Skok and Alex Osterwalder. If you’re not familiar with Alex’s books – Business Model Generation and Value Proposition Design, I certainly recommend you to check it out. In my view it is good not only for startup, but for any project activities with customers. For the purpose of this conversation think about typical project of selling PLM system to a customer.

One of the things that caught my special attention was a topic of inertia. Michael Skok was talking about inertia as one of the most critical part in the success of startup or any other project. Think about it as a competition with a status quo. You may think, your product or project is the thing that customer mostly need. But guess what? Life is happening anyway. Customer is managing his own priority lists and your project is probably not on the top of the list (or not in the top of the top 10 problems).

It made me think about PLM business and more specifically about how PLM vendors can compete with a status quo of manufacturing companies. Think about it- all manufacturing companies today are actually manufacturing things and successfully shipping  products to customers. Some of them are doing it better than others. However, very often, when you come to sell PLM to a customer, your activity is not driven by emergency situation. It usually in the area of information control, streamlining processes, quality improvements, better collaboration, etc.

Historically, PLM solutions came to large aerospace and automotive companies because of a single reason – it was the only way for manufacturing company to produce aero-planes and cars. Without these tools, companies cannot manage product structures, configurations, etc. Now think about large amount of manufacturing companies that using #1 PLM software in the world – Excel. They do it with a help of CAD, ERP, Excel and other DIY solutions. This is a status quo. PLM is maybe a good idea for them, but something that requires a special effort, which is not going in balance between pains and gains – this is a place where I found Value proposition design study really helpful.

Customers would probably consider PLM system, but an entry barrier is too high. I can recall 3 examples of how PDM/PLM vendors removed to entry barrier in the past.

1- CAD/PDM integration. Back in 1990s, PDM vendors came with the idea of integration between CAD and PDM systems. It was hard for engineers to use data management system outside of design (CAD) environment. Integrating UI was a way to eliminate complexity of use.

2- Out-of-the-box PLM solutions. Earlier PLM systems came in a form of a toolkit combining data modeling environment, API and some generic tools. Applications engineers helped companies to turn it into products. It requires time and resources. The idea of templates that can come out of the box was a good one. It moved PLM systems adoption one step forward.

3- Cloud PLM. IT resources and cost of hardware was another significant problem for PLM adoption (especially for smaller companies with tight budget). The idea of SaaS software and cloud PLM developed for last 3-5 years is removing an additional barrier towards PLM adoption.

What is my conclusion? Do you think PLM vendors removed all barriers and PLM adoption will skyrocket in the next few years? Unfortunately I don’t think so. Cloud is a good way to remove IT barrier. However, PLM abstraction model and implementations are still too complex. It hard for many companies to grasp the idea of PLM and form a strategy to implement PLM. Consultants and advisers can help, but the scalability of it is questionable. Therefore one of my earlier conclusions was – Cloud is not a final way to re-think PLM.  We still need to think how to re-imagine PLM to make it affordable yet easy to implementation for many manufacturing companies in the world. Just my thoughts…

Best, Oleg