PLM, product data and new business models

Unless you live under the rock for the last few weeks, you probably noticed a massive amount of emails telling you about updated privacy policy. It was a reaction of businesses on introduction of new European regulation – GDPR (General Data Protection Regulation). In general GDPR is supposed to protect customers from use of data about them, unless customers will give to companies and consent to do so in a very transparent and clean way.

GDRP raised lot of discussions about so called advertising business model in which companies are trading products (eg. software licenses) for use of data collected from free users and customers. While I believe. companies will continue to do what they do after asking to sign updated privacy statements, it raises a question about longevity and sustainability of so called ‘advertising’ models.

My attention was caught by an article written by Andrew Anagnost, CEO of Autodesk. Navigate here to read more – Customers Are People, Not Products: Here’s to the End of the Advertising Model. Read the article and draw your opinion.

Here is an interesting passage about subscription vs advertising models:

The alternative to the advertising model is the subscription model. Apple and Netflix’s philosophy is, you’re paying for their services, so you’re their customer—not their product. They do things that add value when you pay for a subscription, and it’s not about getting you to stay on their platforms longer. Yes, Netflix wants you to watch more movies, but it’s not trying to trick you into watching more movies.

It’s a different story with social-media companies such as Facebook because the ad model is incredibly lucrative—and chasing the money has the potential to cross ethical (and even legal) lines. Take, for example, the recent revelation that Facebook allowed misuse of the private data of 50 million users, which led to intense backlash and a possible congressional inquiry.

The irony is, people who just want to use Facebook to interact with a group of individuals might be happy to pay 10 dollars a month to never see another Facebook ad.

I exchanges messages with Andrew over Twitter in which Andrew Anagnost. He summarized the key element of a model allowing to use data and not to take it from customer. According to him, it is all about getting a clear consent in exchange of value

The answer makes total sense to me, but actually made me think again about my old blog about faltered licenses and new business models. Until now, nobody in PLM leveraged advertising or  “multi-phased” business models. However, the question of how (or if) PLM providers will be able to use a huge amount of data collected in PLM software is really interesting one.

The amount of information PLM companies can get from access this data is huge. It can give answers on many questions about product customer experience, usage, design, contractors, suppliers, parts, etc. This is a real goldmine that today is practically underutilized and undervalued.

So, here is the question I want to ask – what if future PLM business innovation is to acquire PLM data from customers and building a value on top of this information? By providing a clear consent companies can get access to the data and create a new business model leveraging data and building new type of business relationships between customers and services. It will be now interest of PLM vendors to make their product updated and included all needed features.

To change the balance of value in this model, can create a completely new way of doing business. Earlier examples of changes in business such as including of upgrade services combined with free licenses demonstrated that it can have a significant impact on business. Check my article – Aras and search for new business models. It describes how Aras is changing status quo by shaking business models of  PLM upgrades.

What is my conclusion? Business model is the hardest thing to change. You can rewrite the software, replace sales team, change architecture of the product. But business model is a very complex change.  PLM is an old fashion enterprise licensing models. To shake it and change the balance of forces can be an interesting PLM innovation for the next decade. 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.