How technology can disrupt the magic of PLM consulting

How technology can disrupt the magic of PLM consulting

TGIF. It is a time to think about an everlasting topic – debates about PLM complexity. I was happy to see that my PLM complex vs simple sparring blogging partner Jos Voksuil, put next portion of thoughts about why PLM will never be simple. Read the article and draw your opinion. What Jos is saying, in a nutshell, comes to three points:

1- Software vendors cry about how their new technology will kill the complexity.

2- Organizations are complex and messy; sharing of information is not natural.

3- To transform business you need to culture and strategy, then technology is here already.

I admit, at OpenBOM ( where I’m CEO and co-founder, we are looking at how to provide a simple solution for complex problems. Will it “kill” using Jos’ language? As an entrepreneur, I strongly believe in that. And as we know, when it “kills” everyone will support you. Until that very moment, the jury is out. As history demonstrated in the past, technology made significant shifts moving the needle from complex to simple. AutoCAD removed the need to use expensive and complex workstations and enabled CAD business on PC. Pro-Engineer simplified 3D modeling with first feature-based parametric modeler and Solidworks simplified PTC Pro-E by bringing 3D MCAD to Windows. SmarTeam – a  PDM software company Jos mentioned in his article provided an easy and flexible way (by the norms of 1996) to modify data models and integrate with CAD systems. Together with some other PDM companies founded in the 1990s, it eliminated a complex data structure management used by PDM systems before.

I think Jos captured the reality of manufacturing (and not only) organizations and as classic consulting PLM person pointed on a magic bullet – the strategy to be a foundation of success. Culture can eat strategy for breakfast, so by connecting these two, we have a perfect consulting money-burning machine. Not everything is well in the consulting business these days. Read recent CB Insight article – Killing Strategy: The Disruption Of Management Consulting shares some perspective on disruptive trends in consulting business.

From the 1960s through most of the 21st century, the strategy side was dominant. Today, the wide availability of tools that help companies collect and analyze huge amounts of data, on-demand domain experts, and previously “black-boxed” consulting resources and ex-consultants have taken a chunk out of the strategic value proposition of the big management consultancies.

A lot of the value that traditional management consultants have offered their clients has been similarly disrupted by technology. But as we’ve seen, consulting firms are nimble. It may help that they themselves invented the concept of “disruption.”

Of course, there’s no guarantee that consulting firms will survive forever in their current state. Every day, there are more ex-consultants ready to share their expertise. Every day, the tools that companies can use to form their strategy get better and more advanced. And every day, consulting firms need to prove that they can be relevant in this new world — and not simply the prestige name Fortune 500 CEOs hire to get the board off their back.

Jos Voskuil is a supporter and passionate advocate for a digital future. As much as I love the topic of digital transformation, it is slowly becoming a buzzword rather than practical technological and product innovation. There are a lot of great examples of digital transformation – the way we control our lives these days is different from what we had 10 years ago – thanks to numerous new digital technologies available online and via mobile devices.

However, when it comes to digital transformation in enterprise companies, the story is not as happy as in our personal lives. Digital Transformation is not about technology HBR’s article echos what Jos Voskuil sad in his article – Digital Transformation demands cultural change.

A recent survey of directors, CEOs, and senior executives found that digital transformation (DT) risk is their #1 concern in 2019. Yet 70% of all DT initiatives do not reach their goals. Of the $1.3 trillion that was spent on DT last year, it was estimated that $900 billion went to waste. Why do some DT efforts succeed and others fail? Fundamentally, it’s because most digital technologies provide possibilities for efficiency gains and customer intimacy. But if people lack the right mindset to change and the current organizational practices are flawed, DT will simply magnify those flaws.

So, how simplicity can help? The debates about simplicity are two-fold – one is related to technology that can eliminate complex and tedious tasks and second is about cultural changes and business transformations. Those are not mutually exclusive things. But these things are connected. Because powerful and simple products and technology can change people habits. Technology can make people smarter by giving them access to information. Sophisticated data analytics can replace consulting by suggesting an optimal strategy. Infinite history, unlimited storage and instant search (applied to the same email Jos mentioned) can improve organizational transparency.

My favorite lesson about transparency in business is a famous Google story about the disruption of advertising. The story was told by Ken Auletta’s book History of Google.

When Viacom President, Mel Karmazin, visited the Google HQ in 2003, it represented a meeting of two very different ways of doing business, in particular of making money from advertising. Karmazin was old school, having cut his teeth selling radio ads, pitching his way up to billion-dollar deals. The Google trinity — Larry, Eric and Sergey — spent hours trying to convince Karmazin how their algorithms could answer the adman’s dilemma: I know half of my advertising works, I just don’t know which half.

By the end of the meeting, Karmazin felt affronted that these upstarts thought they could tell him how to do his business … and yet … he must have sensed the zeitgeist of the Google vision when he uttered the great phrase: “You’re fucking with the magic!” (recounted in Googled by Ken Auletta). This became something of a catchphrase within Google, especially as they well and truly fucked the magic by posting ever more humungous quarterly profits based on their algorithm-based ad auction model.

What is my conclusion? In my view, digital transformation (DT) and strategizing about cultural change will not change PLM. You cannot change people. You can spend tons of money on consulting and people will be the same. You can ask what is an alternative? People need incentives and transparency to make a change.  We need to streamline organizational processes and make them connected to a business outcome. For most of the people, PLM is strongly associated with engineering, which is a cost center in a manufacturing company. By enabling efficient connection between cost center and profit center in a manufacturing company, new technologies can take PLM out of engineering space and connect it to the business. And this is a way for future PLM to fuck with the magic. Just my thoughts…

Best, Oleg

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.


Share This Post