For years, one of the most important element of engineering software was to establish data ownership mechanism and lock data in the system. Vendors achieved it by getting control of CAD data files, locking data into propriety database, etc. The recipe for enterprise application was simple – take an enterprise business process, capture the data, lock in the application, provide reasonable well organized user interface and make it very complicated to extract and escape to another software. I know, this is kind of over simplification, but it a general schema of things.
Over the course of last few years, cloud software development have started to make a dent into traditional enterprise data systems. PLM vendors are admitting that cloud is blurring application boundaries. Enterprise servers are migrating to the cloud, web APIs are making data more accessible and new subscription business models are not locking users into applications with high entry cost of licenses. This is how I can summarize the first wave of enterprise cloud applications.
Salesforce.com was one of the first companies that was pioneering SaaS approach in CRM applications by creating “cloud system of records” managing customer data and related processes. Large number of Salesforce.com partners created a variety of SaaS applications leveraging cloud data management platform and infrastructure provided by Salesforce.com.
PLM vendors is pushing their platforms and application to the cloud, but keeping the same System of Records (SoR) paradigm. Although, it was a wining strategy for many of them in the past, the process is not going very well these days. The biggest advantage of cloud application – speed and agility is drowning into complexity of data integration and data migration.
So, what if we need to step from a traditional approach to build System of Records (SoR) and think about how leverage existing data sets together with applying new techniques of data analytic, big data combined with collaboration and user experience design? It can be a paradigm shift.
My attention was caught by Tech Crunch article – Why the next great SaaS company will look nothing like Salesforce. It confirms that engagement between people can become the next paradigm to build future enterprise systems. Here is an interesting passage:
Instead, they are “systems of engagement” (SoE), meaning apps that employees actually use to get their work done. For example, take Slack, which Forbes recently identified as the most valuable private cloud company. The data in Slack is either low value (“water-cooler” conversations) or already lives in existing systems of record. The same is true for many other fast-growing apps, like Intercom (customer interaction), Clari (sales), Culture Amp (employee feedback) and Front (shared inbox).
But most new applications use integration to gather, organize, and analyze data. They win the hearts of their users through great design. That’s no small challenge, given growing data sets, shrinking screen sizes, and ever shorter attention spans, which is why the concept of design has become a huge differentiator.
It works because it’s a win-win. Startups creating systems of engagement get users and revenue, by leveraging data in the systems of record. They also increase the data’s value, by using it more and adding to it. That makes the big software vendors happy, as (they believe) it increases their customer lock-in and helps them become more of a platform.
What is my conclusion? The paradigm change can spin the next wave of innovation in enterprise PLM software. The initial step was done by companies pioneering movement of enterprise servers from data centers to the cloud, optimizing IT budgets and changing business models. However, manufacturing companies have hard time to think about replacement of existing Systems of Record. An alternative to bring new engagement layer can be an interesting alternative to consider. Just my thoughts…
Best, Oleg
Want to learn more about PLM? Check out my new PLM Book website.
Disclaimer: I’m co-founder and CEO of openBoM developing cloud based bill of materials and inventory management tool for manufacturing companies, hardware startups and supply chain. My opinion can be unintentionally biased.
