It doesn’t matter what business you are in, the question about differentiation is coming up. We live in an extremely competitive world and the last thing business owners or stakeholders of the company wants is to become a commodity. Vendors are looking for differentiation and innovative technologies, new market opportunities, and ways to outperform other competitors. Famous investor Peter Thiel’s hypothesis is that you don’t want to be the first in the space (it might be too costly), but you certainly like to be the last one and to shut the door for competitors following you. Here is a quote from Peter Thiel about competition:
Customers won’t care about any particular technology unless it solves a particular problem in a superior way. And if you can’t monopolize a unique solution for a small market, you’ll be stuck with vicious competition.
Business software is hard for differentiation. Solving specific business problems or, especially supporting business processes can be tough when it comes to functional comparison. What to do if customers demand the same features? You need to be very creative in both technology and business models to support customers and to defend themselves from the competition. The history of competition between CAD, PDM, and PLM vendors gives us some ideas of what was used before and makes some predictions and the current status quo and what will be coming next.
One of the most interesting aspects of PLM software is an extremely long software lifecycle. I know PLM products that stopped being developed more than 10 years ago and still actively used by manufacturing companies. PLM software lives a long happy life and some customers even joke that once achieving a certain maturity and functional level, PLM is getting better over time.
The combination of a long software lifecycle and a standard set of customer requirements brings a set of very interesting questions about the development of differentiation strategies. Here are some examples of differentiation that were used by PLM vendor development in the past.
Flexibility
First PDM/PLM platforms were complex tools that were built with very little flexibility in mind. It requires a small army of IT people and developers to customize old PLM platforms. Some of them are still alive and continue to serve their customers by waiting for their retirement day. Modern PLM systems are focusing on flexibility as one of the most important differentiators. Each of these solutions had different sets of capabilities, but all of them were following the same “flexibility” playbook. In my memory, SmarTeam, MatrixOne, and later Aras came with a significant level of flexibility compared to other solutions at the same time.
Functional Expansion
The functional, business and other requirements were driving the development and innovation of CAD, PDM, and PLM software for many years. Businesses are moving forward, new business opportunities or needs are coming and they are moving to PLM system development. We’ve seen how product development was moving to electronics and software and it developed new niches and integrations for PLM products. These days system engineering and global product development are playing an even bigger role in the trajectory of future PLM development. PLM companies made substantial expansions by acquiring functionally complementary solutions. Check the history of DS, Siemens, PTC, and other main vendors and you will find examples of “functional acquisitions”.
Technology Platforms, Cloud and SaaS
Another aspect of differentiation is pure technology. New platforms, databases, languages, devices, communication systems, and other techs can help to support differentiation strategies to be cheaper, faster, simpler, or to evolve in the direction of everything else that the modern technological mind can bring to the table. Among these topics, you can see IoT (connectivity), global access (web, hosting), collaboration, visualizations, and other tech innovation. But, as Peter Thiel said, the technologies are only needed when it is capable to bring some superior differentiation. And this is how I’m coming to the recent development of cloud and multi-tenancy.
What is a big deal of multi-tenancy?
In many ways, multi-tenancy is not something new. Since the beginning of SaaS/cloud development, the tenancy model was one of the elements of software architecture. Tons of articles were written about pros and cons of each model, single-tenant vs multi-tenant. The company can prefer one of these architectures, but there is a moment when multi-tenancy is becoming a big deal. It is related to data architectures of the future and the ways vendors and companies will be thinking about data strategies.
Data is a new oil in a modern digital world. Therefore data assets of companies and their way companies are approaching to manage data, analytics, and to support collaboration between companies will make a big impact on what companies will be able to achieve. Data locked in a single-tenant PLM database might sound like a safe solution, but at the same time, it pretty much wasted when it comes to intelligence. Single-tenant solutions are one of the most significant inhibitors towards future manufacturing industry intelligence and multi-tenancy data play can change the trajectory. Back in the 1990s when Google started to crawl the available internet space, very few people turned their imagination to think about the future power of Google Digital Predator. The same happened with Amazon and abilities to collect information about our e-commerce habits. Similar things happened in other businesses. It is related to the “network” effect of global data platforms. Once established, these platforms were building an ultimate competency and ability to deliver an ultimate differentiation and sustainability against competition.
What is my conclusion?
PLM vendor landscape didn’t change much for the last 20-25 years. More or less the same companies with products delivering more or less predictable business functions with some correlation to technological trends, functional needs, communication, and business models. How to develop an ultimate manufacturing platform of the future? In my view, the change will come from the side of how companies are treating the data and developing their analytical and intelligence skills. The future differentiation of the system will be to predict the behavior rather than to react to some external events. It will take time, but it will ultimately start from the ability of PLM platforms to analyze and manage customer data, decision, interaction, and eventually predict next actions. To identify supply chain disruption, find a preferred component or predict product development or manufacturing delays. It might sound like a dream. But I can see it as a foundation of future intelligence. Just my thoughts…
Best, Oleg
Disclaimer: I’m co-founder and CEO of OpenBOM developing a digital network-based platform that manages product data and connects manufacturers, construction companies, and their supply chain networks. My opinion can be unintentionally biased.
