PLM Data Commoditization

For the last several weeks, we had a few very interesting discussions about PLM standards. Manufacturing companies are demanding standards from PLM vendors. PLM vendors aren’t very much excited about investing in PLM standard development. The elephant in the room is existing PLM vendors business models entirely dependent on the ability to lock customer data and leverage it to deliver other applications and services. In addition to that, the industry is involved into a large amount of M&A activities,, which eventually leads to increased vertical platform integration and potential moves towards walled gardens of large PLM (industrial) platforms.

At the same time, the manufacturing industry is in the move towards even bigger demand for connectivity, collaboration, and manufacturing integration. Which demands a question about what should happen in engineering and manufacturing software world to support these demands.

So, we have three forces coming together – increased the competitiveness of platforms, demand for PLM standardization and increased connectivity in manufacturing. What will become a solution to solve these conflicting forces?

It made me think about cloud technology and data commoditization. You can ask “commoditization”? Is it the situation when innovation dies and price competition is coming in. Well, don’t jump to conclusion and stay with me.

Think about the product you plan to manufacture. It consists of many elements combined together. Multiple tools are used to create a requirement, design, manufacturing plan, purchasing. While companies can use different processes and tools, a certain data outcome can be common between tools and used for communication. Pulling these data records together aren’t necessarily exposing specific tools, but creates a collection of data that can be used to understand information about the product and how it was built. Such modeling process can lead to the creation of a data layer that can become a commodity layer. To make these things happen demands a certain level of openness, which can be achieved in two ways – (1) data format export; (2) API standards. The benefits of such a process of data commodity layers can be enormous.

How data commoditization is is it real? Is it something we can see happening soon.  I found a few interesting trends and pieces of evidence that there is a good chance to create a data commodity layer to serve a community of engineers, manufacturing contractors, suppliers, and customers.

Demand for data transparency and data regulation

Recent two decades demonstrated a huge interest in acquiring of data assets and turning them into profitable businesses. Communication between people, companies and products these days are producing huge trace of data that collected, analyzed and saved. But… also regulated and demanded to be transparent. Check the following article – Data Commoditization and Transparency. I found some of the facts and conclusions interesting.

Whether enforced by law or consciousness, transparency enables a more appropriate and balanced approach to data commoditization. This translates to improved trust between data subjects and companies as well as outcomes that are balanced and innovative. Further, it sets the groundwork for a solid long-term plan for tapping into our valuable data resource without exploiting it – or the data subjects. Assurances like these will let companies stand out from the crowd and retain customers as they innovate.

Public and privately accessible data services

Remember just two decades ago, it was nearly impossible to create your own website, otherwise, you were skilled in software engineering and programming. Fast forward in 2020 and we live in a different world where everyone can create his own web assets sitting on the sofa in your own living room. I think the next decade will show a demand to produce data assets that can be provided as a service online. Think about parts companies are buying, services companies are ordering, information about reliability, reviews and more. To consume such data, the data standards will be required and to sell it will become a driver to build and support them.

Data as business requirements

For many years in manufacturing, data was “by-product” and the outcome was a physical product. But this is changing. We are in the middle of “information age” and data is an attribute of the product that business cannot afford to let it go. Specifications, service requirements, brand characteristics, open sources code and sometimes even design. All these characteristics will be part of manufacturing competitiveness in the future. Companies will be demanding to provide these data assets and it will lead to standard development and commodity of these data assets.

Predictive analytics services

Currently, predictive analytics exists as a wish-list function in some systems. It relies on a combination of AI functions and human data analysis to make it actionable. Today predictive analytics is not something that available to the general public as a service. But the growing availability of computational capabilities will allow providing such services to even smaller manufacturing companies.

Cloud computing and data services

Last decade of cloud IT development created brought huge progress in developing online computational, data management and related IT services. Data protocols and APIs combined with services affordability are creating a perfect condition for systems managing data on-demand to serve manufacturing companies.

What is my conclusion? Data standardization is the critical process of bringing data into a common format that allows for collaborative research, large-scale analytics, and sharing of sophisticated tools and methodologies. However, to make it happen, a combination of customer demand and business models is required. This is not a one-step process. The transformation will happen over time but will lead to the formation of data commodity layer to serve a new information service for the manufacturing industry. 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.