PLM vs ERP – How To Achieve Synergy?

I started my series of articles about PLM and ERP by speaking about PLM vs ERP Tug of War, continued about how PLM and ERP can change the battleground, and finally sharing my thoughts about PLM vs ERP growth opportunities. In these articles, I discovered what separates PLM and ERP vendors and also implementations, Today I’d like to turn around and speak about how PLM and ERP can achieve synergy.

Role and Function Separation

The things about the separation between PLM and ERP functions sometimes can be confusing. There is a clear separation between functions of engineering, manufacturing, and operations. Nobody will expect to manage CAD design in an ERP system or do procurement in PLM. However, there are functions that can be done in both systems – for example, you can manage the Bill of Materials in both PLM or ERP.

There are few interesting trends that I can see around PLM and ERP function separation – (1) the demand for integrated services; (2) system expansions; (3) SaaS apps and services. Customers are looking for ways to get systems integrated and it drives many decisions about what systems to use. On the other side, vendors are expanding and looking at how to provide new services and increase the value where the systems can be used. SaaS is a clear trend and usage of SaaS applications is increasing. It is an opportunity for vendors to be better, faster, cheaper, which brings us to the next topic of value proposition and cost.

Business Value + Cost + User Experience

While PLM vs ERP can be a battleground for vendors, for customers it is a question of business value and cost. It was mentioned by many readers and, in general, there is a consensus about companies selecting business applications. Business value, cost, and user experience are playing key roles in this process.

Usage of multiple systems is always a problem for companies because it requires the integration of data flows. When it is unavoidable, companies are using multiple applications. But when companies can see an opportunity to use a single application, the formula of value+cost+user experience can result in preferring a single system. The decision is not simple. New SaaS applications provide an easy way to get started and integrate, so SaaS has an opportunity to impact the decision process.

PLM and ERP Synergy

You always need two for tango. In this case, PLM and ERP can be combined, but the successful combination is the art of many factors combinations –  ease of data management, ease of integration, and user experience. I can see three main options to achieve PLM and ERP synergy:

1- Technological Advantages. New technologies, especially in the cloud and SaaS, bring new ways to integrate systems. Combined with modern data management, new PLM and ERP systems can give an easier way to perform data handover and, as a result, eliminate the problem of working in isolated environments. This is a work in progress for many vendors and the place to watch. SaaS applications will be changing the business landscape much faster than you can expect.

2-  Partnership. When it comes to established large businesses, a partnership can help to create synergy and change the battleground. My best example is the recent Siemens and SAP announcement about a partnership to use SAP applications together with the Siemens Teamcenter. While the jury is still out to watch the results, the partnership is a proven way to provide integration and a business foundation for both PLM and ERP systems to work together.

3- M&A (Mergers and Acquisitions). The demand for integrated functions and business applications is growing and, as I discussed in PLM vs ERP – change the battleground articles, vendors on both sides can decide to acquire companies to bring an expanded set of functions to both ERP and PLM domains. SaaS application technologies make it easier today compared to the old days when systems had to be installed and configured on-premise.

4- Custom Services & Integrations. This is a traditional and old-fashioned way to achieve synergy – build PLM and ERP system integrations. The integration can use existing technologies and APIs provided by applications and delivered by vendors or integration partners. Both PLM and ERP vendors are providing integrations and customers have to decide if the business value, cost, and experiences are on the level they need. In most cases, the main driver for integrations is to eliminate manual data entry and reduce the number of errors. A growing factor for integrations is data availability, which is becoming critical for many businesses.

What is my conclusion?
 
While both PLM and ERP vendors demand expansion and are interested in how to grow their businesses, for customers, PLM and ERP system synergy is extremely important to achieve the desired business functions that must be covered by both PLM and ERP applications. Data is a big factor in modern business, therefore companies will be looking at how to optimize their processes to leverage the data. In my view, the synergy between PLM and ERP functions will be actively developed and boundaries will be redefined as we are moving towards a data-oriented world away from silo thinking and separate applications. 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.