PLM vs ERP – Opportunities To Grow

I’d like to continue the series of articles about different aspects of PLM and ERP software, vendors, and business. In my previous two articles, I was sharing my thoughts about PLM vs ERP development trajectories. PLM and ERP enterprise software suites are powerful platforms with a large set of technologies and tools to support businesses, streamline information flow, and optimize business processes. If you missed my articles, please check them here.

PLM vs ERP – Tug of War
PLM vs ERP – Change The Battleground

In my article today, I want to share my thoughts about what will impact the future trajectories of both PLM and ERP vendors and also, how manufacturing companies can build their information and digital transformation strategies around these trends.

Between PLM Vision and Application Reality

PLM means different things and it very much depends on the context. It can be a technology, software vendor, or a vision and business strategy about how to organize product development, product data, lifecycle, and information flows. Each of these meanings is fine by itself. And I appreciate people commenting about PLM’s grand vision of a holistic business organization. I like them all. However, I’m interested to see how grand vision can be connected with the reality of software vendors’ competition, legacy data, and the politics of corporations deciding to use one or another software. This context usually brings many uncomfortable questions and possible ways to deal with them.

Money is King And Data Is Queen

There is a status quo in the market of PLM and ERP software. The status quo was practically not changed for the last 20 years, although some of the acquired PLM systems were retired over the course of this time period and some of PLM systems got a new life after the acquisitions. ERP vendors realized the opportunity and importance of a broader perspective on product development, engineering processes, and supply chain. Vendors on both sides PLM and ERP were buying everything they needed until now. From that standpoint money (or cash) is the king.

Where is the biggest future opportunity in product development and manufacturing? In my view, the data is the biggest opportunity. The demand to use information more intelligently and, most important, an opportunity to turn data into a business asset, will be driving the future development of PLM and ERP systems.

ERP Trajectories

PLM is not an option, but an important business function. I think most ERP vendors realized that PLM as a strategic approach must be part of their solution portfolios. It is demonstrated in multiple ERP company activities – acquisitions of PLM companies, technologies for visualizations, data management, development of new PLM functions, and many others. The functionality of these systems is either isolated or limited.

I can see how ERP companies can expand their reach and PLM functions by focusing on access to engineering data and improved data and lifecycle management. New SaaS products and advanced cloud technologies will simplify the integration of ERP functions into PLM. In addition to that, ERP companies can expand their reach to medium size companies by expanding their solutions to cover more engineering functions, which will allow them to come earlier into new manufacturing businesses.

PLM Trajectories

For a very long time, PLM solutions were locked and limited to engineering departments. It is still very often the case. However, CAD and PLM companies are expanding in multiple areas of modern manufacturing solutions such as additive manufacturing, Internet of Things, MES, and other technologies and products. CAD and PLM vendors are also making advanced development, adopting SaaS and cloud technologies to enable more connectivities and data analysis. PLM vendors are advancing in data management. Also, PLM vendors are looking into expansions beyond traditional PLM horizons and covering inventory and ERP functions.

How Manufacturing Companies Can Find The Right Path Between Vendors?

Although I’m focusing on vendors in this article, it is very important to say a few words about the manufacturing company’s perspectives. The challenge of manufacturing companies is to develop a strategy to support the business as well as to find an optimal path between a variety of vendors’ portfolios and solutions. ERP and PLM solutions are coming from different ages, technologies and often incompatible. The size matters as well. Not all solutions are compatible and integrations are not simple. Focus on how to organize seamless data handover and to streamline the process is the right approach.

What is my conclusion?

Data is going to be the best opportunity for both PLM and ERP vendors to grow. Acquiring vendors and technologies is still one of the easiest ways for all vendors to expand, but focusing on data can help both PLM and ERP companies to figure out a path to expand and co-exist. Despite all rationals to organize a harmonized integrated system, there is not much space for philanthropy in business and I’d expect fierce competition to expand their businesses and to redefine the competition rules between PLM and ERP domains. 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.