Can PLM do ERP? How to Stop Monolithic Thinking…

Steve Porter’s article Best in Show- Can ERP Providers do PLM? is a throwback in the mood of thinking about ‘best of breed” vs “integrated systems”. As always, in a very elegant way, Steve took us to his final conclusion – you need PLM to do PLM. Then figure out how to integrate with ERP.

In the end, it just comes down to numbers. Leveraging applications from dedicated solution providers gives you more focused resources committed to offering a robust set of capabilities. The flexibility and freedom to respond to your companies needs is critical and being dependent on a single source is always risky. It does solve some issue and communication between PLM and ERP is a very important part of your business infrastructure. However, using this integration as the key decision criteria for PLM vendor selection seems like the “tail wagging the dog”. Best in show seems like the best approach. Selecting a solution that offers your company the most robust set of features versus compromising with a single vendor is the better path to success. There is no need to compromise when you can get the benefit of using applications that share a common platform yet are built by separate companies focused on their area of expertise.

The discussion of best of breed vs integration was very popular 10-20 years ago. Since that time, the diversity of PLM products have decreased to 10-15 systems, large PLM vendors are buying everything that capable to increase their portfolios and revenues if you’re a large manufacturing company, the choice of large systems is down to a handful.

Almost the same can be said about ERP. Those that have PLM functions are down to the top two systems – SAP and Oracle. Others ERPs are either OEM PLM systems (eg. Aras for Infor) or provide a very limited BOM management functions not compatible with anything that smells engineering and CAD.

So, for the question of ERP (PLM) vs PLM, the first group is technically represented by 2 systems – SAP and Oracle. The story of SAP PLM is interesting. While the system is comprehensive, I found it is often used as part of a broader SAP deployment for a company. So, SAP PLM is for SAP customers. Not much to decide about. Here is the elephant in the room – Oracle PLM. In fact, Oracle has at least four different PLM systems (some of them acquired and some of them are new development). So, simple answer on Stephen’s question is yes – ERP can do PLM. What is better Oracle PLM or other systems? You cannot answer this question without knowing the context of a specific company.

However, “Can ERP do PLM” question made me think about the opposite scenario. What if PLM vendors can expand to the ERP world? Does it make sense? What is involved? There are few examples in recent years of an increased PLM interest in manufacturing systems. Siemens PLM is actively increasing its coverage of manufacturing planning features. Dassault Systemes acquired IQMS. There are few other systems in the domain of mixing PLM and ERP functions. The scenario is very likely that we are going to see more ERP functions in PLM systems because customers are demanding integrated functions.

At the same time, PLM-ERP integrations are the same as 15-20 years ago, They are complex, expensive and never out of the box. It is part of basic PLM implementation for a large company, but it is always painful and often outsourced to a service company. And the elephant in the room is that on both sides (PLM and ERP), there is a little interest to improve the integration. Why so? In my view, it is because of conflicting business models. PLM and ERP are fundamentally focusing on how to lock data in the databases and sell more applications/functions to the company. Why the core model (such as PDM and MRP) of each system is usually protected, there are plenty of other domains each system can overlap.

What is my conclusion? Both traditional PLM and ERP fundamental business model is based on data ownership. Therefore, both ERP and PLM are interested in how to provide a maximum of functionality coverage and minimize the leakage of data outside. But I can see lights at the end of the tunnel of PLM-ERP debates. This situation changing with the introduction of new cloud products. Cloud products are more agile and providing much better infrastructure level comparing to 15-20 years old architectures, which makes many old impossible scenarios easy to implement and leaving monolithic PLM / ERP world in the dust to continue their struggle for data ownership and complex integration. 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.