PLM “per-minute” and future pay-as-you-go models

While PLM vendors are still looking how to differentiate their strategies, PLM software is still crazy expensive. Manufacturing companies will never tell you they are searching for “cheap PLM”. Their usual message is about value and ROI. But… most of them will tell that cannot afford high spending on PLM. This is one of the reasons PLM adoption is not on the level PLM businesses are expecting. PLM cost is far from being affordable and therefore mass adoption of PLM has been delayed year after years.

Cloud PLM supposed to create a difference and turn PLM into more affordable, but it didn’t. Read my earlier blog here about PLM cost. Most of PLM implementations are still 6-figures price and even price tag is set per-month, it is usually comes with small letters saying “annual subscription required”. So, one million dollar question what can make PLM systems more affordable is still not answered.

CNBC article Google says it doesn’t need to get into a cloud price war with Amazon, Microsoft to win brings an interesting perspective on competition between major cloud services – Amazon, Microsoft, Google. Read the article and draw your opinion. It speaks about unique differentiation of Google cloud – price per minute.

“We don’t need to compete on price to be honest. We definitely compete on value more than price … but if you look at the products, (they) are hard to compare side by side,” Shaukat told CNBC. “We believe that our pricing models are much more friendly. So just simply by adopting the more flexible pricing models we have, things like billing by the minute rather than the hour, we think we can save a typical company 20 to 30 percent without having a unit price different to the competition.”

Another thing that caught my attention in the article is related to the “value of data” in what Google cloud platform is offering..

“I don’t think that looking at prices itself as opposed to the value being delivered to the customer is the right way to look at it.” Data is key. For Google, value means telling prospective and current customers that it is the best at data analytics, artificial intelligence (AI) and machine learning. Our skill set capability in data management, machine learning, is second to none and we think that will be one of the key adopters in cloud adoption,” Shaukat said.

It made me think about possible cloud PLM differentiation. What if PLM will switch from annual and even monthly subscription to price per-minute? Such service will become affordable for companies. Some people in organization might need PLM just for 10 min during the day and some of them can get to PLM once in a month. What will come in addition to that is focus on valuable data services. By doing it, PLM vendors can eliminate one of the biggest resistance of company to setup PLM infrastructure – licenses and IT cost. At the same time, PLM systems can focus on variety of data services relasted to product intelligence, decision support, design, etc.

What is my conclusion? PLM pay per-minute can be an interesting model to eliminate resistance and make platform adoption painless. Will existing PLM vendors will be able to make this shift? I don’t know. Most of PLM businesses build on monolithic infrastructure, enterprise accounts with long sales cycle, expensive implementations and complex business transformation cycle. At the same time, lot of manufacturing companies are undeserved and struggle to come with a reasonable ROI and resource allocation to make PLM dream come true. 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