Each product has its lifecycle going from phases of introduction, growth, maturity and decline. It applies to both sides of the table in PLM – manufacturing companies and PLM vendors. Today, I wan to talk more about PLM vendors.
SharePLM blog article ABC of Product Management by Sami Grönstrand made me think about competitiveness of PLM solutions and B2B market PLM software vendors are doing their businesses. The article nicely focus on two very important issues – competitiveness and value. Both are connected and changing within the time.
Competitiveness is about providing superior value to customers, winning deals over competition, AND sustaining higher profitability. It’s easy to win deals by dropping product prices, but without doing the same for the product cost, it will lead your company to perish. Establishing and sustaining competitive advantage requires much more — you can dive into the concept for example in the 1985 book by Michael E. Porter.
Diving one level deeper into competitiveness and profitability, we reach Customer Value, Price and Cost. Those three things are by far the most important things to decide about your product. What Customer Job you intend to solve, at what price do you plan to sell it and at which cost must you produce it.
No matter what your business is, your product must have a compelling value proposition spelled out in monetary terms. Especially in B-to-B markets, there are more than one person making the decision, hence the value proposition should be adapted for each decision maker so that it resonates with their interest profile. Crafting a Value Proposition is fine art, and something that the Product Manager must do in collaboration – with Sales, Marketing, Engineering, Manufacturing, Customer Services and so on.
But this is my favorite passage:
Today, the customer has an amazing amount of information available, and it is also important to provide it. Recent research suggests that customers are over halfway through the decision making before contacting the first time the company about the product!. This makes Sales and also Product Management more challenging than ever, and at the same time, more exciting than ever!
In my view, companies are much more over halfway through the decision making when they contacting PLM vendors.
For the last decade of PLM development, I can see how these two aspects (competitiveness and value) were converging into something less exciting. While adoption of PLM solution was growing, differentiation factors between PLM solutions were removed. Features & functions of a typical PLM system today are more or less the same.
The importance of value and competitiveness are emerging. Which one of PLM solution to choose? Most of differentiators between Teamcenter, Windchill and Enovia are related to CAD products. While PDM functions are almost standard, going beyond PDM is a complex decision for most of companies usually requires a substantial amount of different consulting and implementation services.
For smaller manufacturing companies, the value of PLM solution is always at question and comes together with a very high cost and complexity.
What is the solution? Going to back to value definitions and competitiveness. As much as it sounds simple, it is one of the most complex product definition exercises I can think about for PLM product managers theses days. Thinking out of the box, not to hide behind old PLM stigmas as single point of truth, competition with status quo and urgency of making a decision. This is very small, but important set of questions.
What is my conclusion? I think, PLM industry should come back to whiteboards to think about value and competitiveness. PLM vendors are stuck in status quo. Even the companies that are innovative in this domain are not providing enough reasons for customers to adopt new solutions. The fear of failure is significant and combined with a nice status quo nirvana creates a complex product data management landscape. Note for PLM product data management – you have a bigger problem to focus on rather then just saying product A is better than product B. Finding the answer comparing two PLM products is hard. 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.
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