Engieering.com article earlier this week brought the news of significant deal related to the PLM implementation services domain – Indian HCL Buys Volvo IT, Wins Battle with IBM. The remarkable thing – Volvo is divesting its IT services and shift towards usage of external providers. I found the following passage interesting:
“Car manufacturers such as VW and Mercedes-Benz and other high-tech manufacturers that created captives have sold them long ago, and although Volvo had some external clients, it didn’t seem to make much sense for it to branch out into IT by owning an IT services company,” says IDC analyst, Charlotte Poulsen, adding that another problem was that Volvo IT didn’t show strong growth or strong profitability. “HCL Technologies provide significant cost-savings, we will also make a capital gain when the contract is signed,” said Jan Gurander, acting CEO, AB Volvo, owner of Volvo Trucks, Renault Trucks, Mac Trucks, Penta marine engines, Volvo Construction Equipment, etc.
The deal is might be not as big compared to acquisition of IT service companies. But it somehow connects to my old thoughts – what is a next big deal in PLM services. It has been some time since I published my post, but implementation services are remaining a critical part of every PLM implementation. In my view, it represents an interesting trend. PLM implementations are expensive. It takes time, resources and requires very specialized workforce with a deep knowledge of PLM technologies and products. Once established, PLM implementation can run long time. The lifecycle of large PLM implementations is way beyond 5 years. Large customers are preferring not to upgrade systems often since it introduces a significant cost. Result- large customers are trying to restructure operations differently – Volvo IT is one example.
Services are representing a significant chunk of revenues in today’s PLM business. According to latest researches made by analytical company CIMdata, services are representing 58.8% of cPDM (collaborative product data management) market
Services is a critical part of every PLM implementation, which is almost never can be done out-of-the box or using internal IT resources. Cloud PLM technologies can eliminate a need for hardware and related operational IT resources, but it cannot eliminate PLM implementation. Implementation, customization, upgrades – this is only a short list of services demanded by manufacturing companies.
All together, it made me think about evolution of a new form of implementations – PLM implementation as a service. In that new form specialized PLM implementation providers will provide implementation services and optimize resource, technology and maybe even licenses towards future needs of manufacturing companies.
What is my conclusion? We live in an era of business model transformation. The move from ownership to access can expand into different fields. It is everywhere – music, car, apartments, etc. PLM implementation services can be one of them. It will be interesting to see what impact PLM service arms will make on PLM software vendors. Just my thoughts…
Best, Oleg
