Enterprise PLM competition and musical chairs game

Enterprise PLM competition and musical chairs game


Engineering.com article Winners and Losers When Industry Giant Bosch Consolidates CAD and PLM shed some lights on the recent announcement of Bosch “to standardize” its PLM infrastructure and tools.

…industrial giant Bosch announced that the company’s Electrical Drives division decided to standardize main parts of its PLM arsenal in terms of CAx, PDM and tools for collaboration. Starting in summer 2016, software from Siemens PLM, NX (CAD) and Teamcenter (PLM/PDM) will become standard, thereby phasing out legacy solutions from, above all, Dassault Systèmes.

It might be not obvious, but CAD / PLM standardization in the case of Bosch means that giant manufacturing company with almost 375,000 employees is basically going down from 3 systems to two PLM systems (Siemens PLM and PTC), while only eliminated Dassault Systemes solutions.

Siemens PLM’s Teamcenter and NX will become the foundation for this platform within this particular division. However, PTC’s CREO (CAD) and Windchill (PLM/PDM) will remain an integral part of Bosch’s two-vendor strategy for its tool set across the enterprise, which seems to be a good idea in order to never become dependent on only one vendor.

The news made me think about future trajectories of PLM competition and some interesting aspects of “standardization” process in large manufacturing companies.

1. PLM replacements 

Let’s face the reality. All large manufacturing companies already have some PLM system in place. Every company is managing product lifecycle, but each company does it differently implementing variety of business practices and using different solutions. These solutions might be based on previous acquired PLM systems or mix of homegrown development and CAD/ PLM products.

Every large PLM deal is a sort of “replacement process”. I’m not talking about SME market where majority of product lifecycle management practices are using Excels or Google Spreadsheet as a foundation.

2. Large companies don’t like to rely on a single vendor

When it comes to IT strategic investment, large manufacturing companies don’t like to rely on a single vendor. While it is not an impossible thing to think about running multiple CAD systems for that purposes, to run multiple PLM backbones in a single company can lead to some problematic consequences.

Multiple PLM backbones is an outcome of historical fragmentation in large divisions or variety of mergers, acquisitions and other corporate transformations. Here is a conflict between the need to standardize on a single backbone and IT interest to reduce the risk and work with two PLM vendors at the same time.

3. Changes and transformations are long and expensive

PLM implementations are complex and expensive process. When it comes to changes, it becomes even more complicated. It brings variety of activities such as CAD data translations, legacy data cleansing, people training and features adjustments. The PLM replacements on the scale of Bosch is major IT activity and as we can learn from Daimler PLM replacement can be ongoing IT project for many years.

4. PLM musical chairs

The number of players in PLM industry is not large. When it comes to a major deals like Bosch and Daimler mentioned by Engineering.com article, the number of potential competitors is probably limited to 5-6 vendors. Taking into account unwillingness of companies to rely on a single vendor, it is usually a game when one of the vendors is eliminated.

5. PLM spreadsheet kingdom

Zillions of spreadsheet based solutions is a reality of many manufacturing organizations. If you think, it doesn’t happen with large manufacturing companies, think again. Excel is #1 PLM system and it used by many large manufacturing companies often in a combination with existing PLM systems. A potential competitive disruption is to tap into PLM spreadsheet kingdom and introduce a solution that can be cost effective and co-exist with top PLM vendors. Some companies are actively poaching into this space.

What is my conclusion? PLM market for large manufacturing companies is dominated by a small number of solutions. This is a very lucrative market for CAD and PLM vendors. Once you in the game and a manufacturing company is using your solution in production, it might take long time until you solution will replaced. The competition is fierce and complex. The technology is only one part of the competition. This is a segment of market where PLM companies should master their old school enterprise sales skills. Just my thoughts…

Best, Oleg


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