In the rapidly evolving digital landscape, the integration of Product Lifecycle Management (PLM) with Enterprise Resource Planning (ERP) systems is becoming increasingly crucial. My attention was caught by the article speaks about how Microsoft reinvents ERP into total enterprise integration. Here is what captured there.
Microsoft Dynamics 365’s recent advancements, particularly in AI and system integrations, illuminate a path forward for PLM developers. As Predrag Jakovljevic, a principal industry analyst at Technology Evaluation Centers, articulated to Computer Weekly in January 2024, there’s a burgeoning trend where ERP serves as a central system of record, enhanced by integrated tools that foster a more interconnected workforce, thereby acting as the system of action.
This integration and automation platform competition among ERP vendors, according to Jakovljevic, underscores the importance of consolidating data under a unified ERP platform rather than dispersing it across disparate storage solutions like Amazon S3. Microsoft’s cloud strategy, notably with Dynamics products, has seen a 21% revenue increase, positioning it alongside giants like SAP and Oracle in Gartner’s Magic Quadrant for cloud ERP for product-centric enterprises.
It made me think about how existing and future PLM software solutions and PLM systems can fit in the new reality of digital business processes and connect product data management, product lifecycle management and supply chain management to support a holistic product’s lifecycle. How a modern PLM system can easily integrate with digital product development process and production process.
In my blog today, I want to dig deeper into the dynamics between Product Lifecycle Management (PLM) and the emerging trends in Enterprise Resource Planning (ERP) systems, particularly through the lens of Microsoft’s innovations and broader digital ERP trends in 2024. This exploration offers a richer perspective on how PLM can adapt and thrive in the evolving technological landscape.
Product-Centric ERP: A Model for PLM
The definition and scope of cloud ERP for product-centric enterprises, as outlined by Gartner, provide a blueprint for PLM systems. The comprehensive coverage of enterprise processes—from supply chain planning to customer order intake—highlights the extensive capabilities required to support the lifecycle of a product. For PLM systems, this means integrating functionalities that go beyond design and manufacturing to include aspects like customer feedback, market trends, and post-sale support. The must-have capabilities for product-centric ERP systems, such as demand planning and product logistics management, reflect areas where PLM systems can expand their functionalities to offer a more rounded lifecycle management solution.
The Integration Imperative in ERP
Microsoft Dynamics 365 and its AI and integration vision represent a significant shift in how ERP systems are perceived and utilized within organizations. The evolution towards ERP acting as a central system of record, as discussed by Predrag Jakovljevic, underscores a strategic pivot towards integrated, holistic platforms that not only manage data but also empower a connected workforce. This shift towards a more unified system of action, where ERP integrates seamlessly with various tools and platforms, exemplifies the kind of ecosystem PLM systems need to aspire to. The success Microsoft has seen with its cloud offerings, boasting a 21% increase in revenue for Dynamics products, is a testament to the effectiveness of this strategy. This holistic approach is not just about improving efficiency but also about fostering innovation and adaptability in a rapidly changing digital environment.
ERP Trends to Watch in 2024
I capture two prominent trends in the development of ERP systems based on the following article – Cloud and Integration top ERP Trends in 2024 – integration, cloud and AI. The following two are extremely important to learn from PLM perspective: cloud migration and system of actions.
The Cloud Migration Continuum
The ongoing shift towards cloud ERP, driven by the allure of AI and the necessity for business process modernization, signals a clear direction for PLM systems. This transition is not just about moving to the cloud but also about how these cloud-based systems can leverage AI and other cutting-edge technologies to offer smarter, more efficient lifecycle management solutions. The emphasis on cloud applications and the development centered around these platforms indicate a move towards more agile, scalable, and innovative PLM solutions that can adapt to changing market demands and technological advancements.
Expanding the System of Action
The extension of ERP capabilities to include connected workforce applications marks a significant evolution in how these systems support organizational productivity and efficiency. For PLM, this suggests an opportunity to integrate tools that enhance collaboration, real-time decision-making, and frontline worker support into the product development and management processes. Microsoft’s use of HoloLens technology for Dynamics 365 Remote Assist and Guides exemplifies how augmented reality and other technologies can be leveraged to provide immediate, actionable support, transforming how products are designed, manufactured, and maintained.
Lessons for PLM from ERP Trends
Summarizing everything I learned, I want to outline three important lessons for PLM in 2024.
Lesson 1: Embrace Cloud Applications and Integration
The future of PLM lies in the cloud, emphasizing data connectivity and real-time access over merely hosting outdated tools. Autodesk’s initiatives hint at the possibilities, yet a significant portion of CAD/PLM providers lag, with unclear strategies for beyond mere hosting on cloud platforms.
The transition to cloud applications and the improvement of integrations are critical. PLM systems must prioritize cloud-based solutions that facilitate seamless data sharing and connectivity across the product lifecycle.
Lesson 2: Leverage Legacy Data and Files for AI and Decision Support
The engineering sector’s reliance on file-based systems necessitates a bridge to the cloud ecosystem to streamline lifecycle processes, a task traditionally managed by outdated PDM systems. The challenge lies in integrating these legacy systems into modern cloud infrastructures.
Connecting with a vast array of files and data located on-premises is crucial for productivity. PLM solutions must find ways to integrate and leverage existing data and systems, ensuring a smooth transition to cloud-based operations without losing the value embedded in legacy systems.
Building AI using data and facilitating connection of people to the data for better decision support is one of the most critical. In the same way ERP look at connecting workforce, PLM should be looking at connecting people with data via a software system for decision support.
Lesson 3: Foster Networks for Ecosystem Growth
The PLM industry’s hesitance towards openness and vertical integration has historically stifled expansion. The modern approach, exemplified by Autodesk’s platform strategy, shows promise in creating expansive, interconnected ecosystems.
Building open, multi-tenant architecture and expansive data networks is key to creating growing ecosystems. PLM vendors must embrace openness and collaboration, moving away from the traditional model of vertical integration to foster innovation and growth.
What is my conclusion?
The intersection of PLM and ERP trends in 2024 offers a rich landscape of opportunities and challenges for PLM developers. By learning from the successes of ERP systems like Microsoft Dynamics 365 and adapting to the evolving digital landscape, PLM systems can enhance their relevance, efficiency, and innovation. The path forward involves embracing cloud technologies, integrating legacy systems, and fostering open ecosystems to support the complex lifecycle of products in today’s fast-paced world.
The pressing need to modernize PLM strategies to align with current digital trends is evident. Despite significant advancements in cloud adoption among CAD/PLM vendors over the past decade, more efforts are required to keep pace with the rapid developments in ERP systems like Microsoft Dynamics 365. The lessons from ERP’s evolution towards cloud integration, system of action, and ecosystem growth offer valuable insights for PLM developers aiming to stay relevant in this dynamic environment.
Best, Oleg
Disclaimer: I’m co-founder and CEO of OpenBOM developing a digital-thread platform with cloud-native PDM & PLM capabilities to manage product data lifecycle and connect manufacturers, construction companies, and their supply chain networks. My opinion can be unintentionally biased.
