Companies and businesses need to grow. If they don’t, businesses will die and investors won’t get their money back. According to CIMdata, the growth of PLM business was in the upper single-digit (9.4% for PLM and 8.6% for cPDM). You can check my blog from the last year – PLM Market: Growth with forecast for M&A. Soon, CIMdata will publish their industry report for 2019 and we will be able to compare the forecast and check the real numbers, Meantime, the question where PLM business can grow is the one most of people in the industry should be asking at the beginning of the year 2020 and also at the beginning of the decade.
My attention was captured by the Manufacturing Tomorrow article – 2020 PLM prediction. The article sharing some insights from the survey about what to expect from PLM business in 2020. Read the article and draw your conclusion.
To keep the context of the prediction – the article is written by Mark Reisig, Director of Product Marketing at Aras. The two predictions that stand out are about the failure of digital transformations and the expansion of PLM. Here are passages:
Prediction #1: Digital transformation failures worsen
Digital transformation efforts will continue to struggle with at least 60% failing in the new year. The vast majority will go well over budget investing in tech-driven processes and will have little to show for their efforts. Many established manufacturers in heavy industries underestimate their technical debt—the budget allocated to legacy systems and technology stacks. These organizations don’t understand what is needed to simplify their product ecosystem.
We’re not alone in our projection. Gartner projects digital transformation initiatives will take large traditional enterprises twice as long and cost twice as much as anticipated in 2020.
Prediction #5 PLM expands
As products expand to include more integrated systems, greater personalization, and more in-service changes, original equipment manufacturers (OEMs) are being forced to consider more partnerships, which we’ve already begun to see in the automotive industry. But the coordination of multiple disciplines, the growing need for simulation, dynamically changing supply chains and the need to manage as-running assets is causing the universe of PLM to expand.
I can see the logic. The last year we’ve seen huge investment in digital transformation projects. It felt like global enterprises invested significantly into digital transformation and PLM businesses made a shift to sell PLM as a digital transformation. Nothing wrong with that, the strategy was clear and straightforward.
Mark’s logic presented in the article connects digital transformation failure with old technologies used by companies and concludes that new technologies will solve the problem. This is a formula which worked in all technological ventures in the past. PLM should not be an exclusion from that. Nevertheless, I wanted to share some of my observations for the PLM industry and specifically about the situation in 2020.
1- People
PLM technology failure (especially in large companies) are more often comes from the people. Therefore, it was called “Politics Lifecycle Management” in the past. The PLM game in the organization is a power game between IT, business and end-users. On top of that, you have influencers and company divisions and group power defining the strategy. And finally, culture can eat strategy for breakfast, vision for lunch and stay hungry for the dinner destroying any PLM project. To sell PLM to a large company and made successful implementation is almost an art that involves many players.
2- Technology
Digital transformation failures will raise the question of what is the right technology. PLM vendors can find themselves in the middle of debates about SaaS PLM, cloud transformation and related trends. The large companies might be more concerned about control and less about the cost, but digital transformation is a broad initiative with IT taking often a lead and agenda in the decision process.
3- New PLM business models
There is a huge demand for new business models in PLM. The switch of CAD and PLM vendors to subscription-based business models combined with the historical record of overspending for PLM projects can put pressure on existing business models evolution and raise the question about the change.
4- Democratization of PLM technologies and SaaS PLM
The democratization of PLM technologies, SaaS PLM and future evolution of the new products and technology can open new markets and introduce new market niches to grow with less competition. My favorite theories here are coming from zero competition by Peter Thiel – competition is for losers. Here is my favorite passage:
“Tolstoy opens Anna Karenina by observing: “All happy families are alike; each unhappy family is unhappy in its own way.” Business is the opposite. All happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition.”
What is my conclusion? The year 2020 can be interesting. Digital transformation projects started in 2019 will demand some results and strategy changes. Will PLM companies be able to sell 15-20 years old product platforms under a new sauce of digital transformation remains unclear. These platforms are expensive and locked into traditional business models. In my view, we will see more questions about business models, alternative technologies to support the scale and subscription business and overall democratization of PLM projects. 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.
