Will PLM vendors find a way to monetize IoT?

IoT is a topic that raises many debates these days. Speaking to engineering and manufacturing IT people I can see a variety of opinion – from total ignorance to high level of excitement. The same can be said about vendors. Some of CAD / PLM vendors are in the position to “wait and see” and some PLM vendors are investing 100s million of dollars and turning around their software portfolios to align with potentially bright IoT future.

While I have no doubt about the importance of IoT and future of connected devices and whatever else we want to connect, the real question for me as PLM junkie is more specific – will IoT future affect what PLM products are about and will CAD / PLM vendors will be able to find a new source of revenues in a new “connected” world?

I was reading the following article on the plane this morning – How manufacturers can monetize IoT analytics. Check this out – I found information interesting. Analytics is a fascinating field. It is about turning data into insight and improve decision making. And data can be smart… The article brings an interesting diagram that can give you a perspective on automotive stake holders ecosystem.

Analytics, in general, can help manufacturers drive financial improvements through improved performance metrics. For instance, predictive analytics can optimize costs for manufacturers. Cost savings of 2% to 4% from a 50% penetration of IoT in manufacturing can deliver $500 billion in cost savings (assuming the global cost base of manufacturing at $25 trillion). Rio Tinto, a mining major, saves over $300 million by deploying “autonomous mining.” Similarly customers of contract manufacturer Flextronics are now positioned through IoT analytics and improved market visibility to quickly react to irregularities in supply chain components by performing real-time data correlation.

According to the same article, manufacturing industry is leading the investment into IoT solutions. And the following passage is in my view can give you a key element of the future success and the way PLM industry can come close to monetize IoT.

Getting the data/information right: Doing this requires manufacturers to first understand the kind of insights required by ecosystem stakeholders. An essential part of this is to clearly map all data elements in the network universe with the insights that are of potential use by stakeholders.

It made me think about possible trajectories of IoT PLM development.  What can be a low hanging fruit that will allow to PLM vendors to capture a significant portion of a future IoT value. Here is my guess… The potential key element in future IoT/PLM ecosystem is data about actual products. The data about what are products in the field, what are they built of, elements, figure out specific connection to component suppliers, regulation and changes over time. That information is heavily distributed and largely not available in a simple way that will allow to manufacturing companies to connect it to analytic tools.

PLM vendors can get into leading position because of their ability to capture existing product information, part numbers, suppliers, manufacturers, identify relationships, regulation and other related information. As-built information is largely not managed except of heavily regulated industries as of today. To capture that information, changes and intertwine the data with other data sources will provide a basis for future IoT monetization.

What is my conclusion? The interest of manufacturing companies to invest into IoT solution is significant. Manufacturers see a potential for cost saving and optimization. Some other industries in past created a significant value by turning online data into cost saving. Will manufacturers do it within time? I’m pretty sure they will. Will PLM vendors find a way to monetize IoT future? This is a good question to ask PLM architects. Most of existing systems are transactions and have very little connection to tracking massive amount of data within the time. It might require retooling and placing new data architectures in place. Just my thoughts…

Best, Oleg

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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