What will drive cloud PLM adoption in the manufacturing industry?

Manufacturing companies are discovering cloud technologies. As much as it brings excitement, it also brings questions and challenges. Here is a quote from last year research made by CIMdata related to cloud adoption:

Cloud adoption clearly has benefits, but it also creates issues for organizations using it. Integrating cloud-based PLM offerings and enterprise systems topped the list at 45%, with security close behind at 43%. 65% of respondents either were already using cloud-based systems, or had budget to proceed, 72% within 12 months, and another 22% in 24 months. The research also included questions about information sources and decision-making processes across the adoption lifecycle.

In my view, cloud adoption also brings many questions and sometimes confusion. Cloud integration is one of them. Here is an example. The comment made by one of my readers earlier this week. Check my article and the comments Here is the passage.

Michael Wendenburg: Dear Oleg, first of all, PLM ERP integration is no that complicated any more and there is a number of companies out there that provide pretty good configurable “standard” integrations. PLM ERP integration will never be completely standard due to the different process requirements of every company and I do not see how a hybrid Cloud scenario with let’s say SAP S 4HANA in one cloud and PLM in another make things easier, especially when the application is multi tenent SaaS which for security reasons tend to offer very limited access to the data. As the Dräger responsible for PLM I recently talked to put it: SaaS and integration is actually a contradiction in term. Just my (and his) thoughts:-). Best, Michael

Vendors have a different opinion. Here is an example coming from cloud-based PLM vendor Propel. Navigate to Propel’s press release – Next-generation cloud-based multi-tenant Product Lifecycle Management (PLM) provider ramps sales, marketing, and professional services to fuel customer success and accelerate growth.

Propel is the only next-generation cloud-based multi-tenant solution that combines the functionality of product lifecycle management, product information management, and quality management into a single solution that helps companies get the right products to market faster. Its unique approach fosters greater collaboration across entire organizations and geographic locations, helping to manage the entire product lifecycle from concept-to-customer.

Propel is getting multi-tenancy from the data management platform used by Propel – salesforce.com. And Force.com is for many years one of the greatest examples of seamless and robust cloud integrations.

My own experience with cloud integrations at OpenBOM (disclaimer – I’m CEO and co-founder) also confirms that new web-based technologies provide significant differentiation in the way how easy systems can be integrated.

So, why there is a limitation in cloud integrations and data access. Here is the thing. The limitation in cloud integrations is usually happening with old enterprise software hosted on the cloud. While vendors are happy to report that the system is “cloud ready”, in fact just by placing the same 15-20 years old data management system on AWS won’t make it cloud. Old “integrations” usually using old fashion APIs or access SQL data directly by bypassing API calls. For these systems, SaaS and integration is usually a contradiction in terms. Native web and cloud applications are built with open web API in mind, using web infrastructure and can be easily integrated. Look on the eco-system of Salesforce or NetSuite. The number of cloud integrations in thriving. Check how many integrations are available for Slack. Take time to explore some cloud DevOps and monitoring tools. It is a different world and traditional enterprise software is just coming to discover it.

The analysts are out to watch the progress of the cloud adoption in manufacturing. The same press release from Propel is quoting Gartner saying that by the end of 2019, we will see 25% of all PLM implementations coming from cloud PLM solutions.

…The same year [2015] Gartner’s Marc Halpern and Janet Suleski in their research report “Predicts 2015: Digital Business Will Spawn a Renaissance in Product Design and PLM” (Gartner subscription required) stated — “By 2019, 25% of large, discrete manufacturers and formulated goods producers will use cloud-based product innovation platforms for product design and PLM.”

CIMdata cloud PLM research from 2018 is more conservative.

According to Mr. Stan Przybylinski, CIMdata’s Vice President, “Cloud-based enterprise applications are dominating other application domains, like customer relationship management (CRM), but have barely scratched the surface in supporting PLM. 80% of our respondents are using one or more cloud-based enterprise solutions, with 33% using Salesforce.com for CRM. Their PLM strategies are underpinned, for the most part, by legacy on-premise solutions, with 35% having implementations that are 5 to 10 years old, and another 22% over 10 years old. Only about 16% of our respondents were currently using cloud-based PLM solutions, but just about all of the cloud-based PLM solutions have some trial use within the respondents, which bodes well for future adoption and implementation.”

The debates made me think about what will play the key in the adoption of the clouod system? Will it be multi-tenancy, integrations or big mature PaaS services? Or maybe more features bundled, like Propel is suggesting by combing PLM, PIM, and QMS. Or maybe it is actually opposite- less features? Remember brutal 80/20 formula, similar to what Autodesk and Solidworks used in the past by providing 80% of desired functionality for 20% of the cost. The time will show, but the manufacturing industry is open for cloud technology experiments these days.

What is my conclusion? PLM industry and manufacturing companies are behind in their cloud adoption comparing to CRM and other enterprise applications. Timing is everything, so it sounds like the timing is coming just right for manufacturing companies to explore available engineering and manufacturing solutions developed for the cloud. 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.