A blog by Oleg Shilovitsky
Information & Comments about Engineering and Manufacturing Software

PLM Business Model: From Seats to Outcomes – How To Leapfrog into the AI Era

PLM Business Model: From Seats to Outcomes – How To Leapfrog into the AI Era
Oleg
Oleg
5 July, 2025 | 4 min for reading

Here is a drama playing out in the PLM industry now. For decades, PLM companies have been selling software to engineering teams, dreaming about expanding it to the enterprise and transforming how companies work. The traditional business model is straightforward: lock product data in a PLM vault and sell licenses to access it.

In my article yesterday – The Future of PLM Ownership , I shared thoughts about how to change “PLM ownership” model and transforming PLM from “engineering vault” to “enterprise software”. PLM vendors were focusing on it for a long time dreaming how their PLMs will leapfrog to become enterprise tools. Industry have many examples of great PLM enterprise adoption, where by applying significant effort, PLM consultants together with a company “PLM Hero”, transformed the companies and led to PLM enterprise adoption.

This model kind of works for engineering. It enables PDM, manages revisions, and supports controlled processes. But outside engineering, it fails miserably. At best, vendors sell “view-only” seats or enable exporting data to Excel or ECM platforms. Even if you imagine that PLM could be sold to “every person” in a company, the total addressable market is still finite. Some vendors sell by “roles,” others by adding more services and products to the stack. Yet companies keep wanting to do more with less, shrinking their workforces, which makes traditional license expansion even harder.

The Limits of PLM’s Seats

PLM’s controlling behavior, focused on “data access” functions, is at the core of its limited adoption beyond engineering. While there is hope that new “business transformation” strategies will expand PLM into an enterprise function, let’s be honest: PLM vendors have tried to do this for the last 20 years with limited results. People are hard to change. You can improve processes incrementally, but true transformation remains elusive. It is more evolution than revolution.

But beyond that, the number of seats you can sell to a company is limited. And it is now amplified by a major trend – AI adoption.

The AI Wild West

We are now at the early stages of discovering how AI will transform software. It’s a Wild West moment, with companies testing how to adopt and sell new technologies. In my article Did PLM Miss the SaaS Trend and Can It Catch the AI Wave?, I wrote that PLM’s current role is like a “smart vault” stuck in engineering departments. Unstucking it requires rethinking PLM in two fundamental dimensions:

  1. Functions: Shift from controlling access to sharing knowledge.
  2. Licensing: Shift from bean-counting seats to value-counting outcomes.

Function Transformation: From File Vault to Product Knowledge Graph

Traditional PLM function is to control file version, empower engineering release with approvals and notifications. At best, enterprise BOM was created with multiple views (EBOM, MBOM, etc), but the examples of these implementation and each successful implementation is a fight between EBOM and MBOM teams.

The data management approach of PLM must change. From controlling files (documents) and revisions, and (sometimes) processes, modern data management foundation including graph and AI technologies will come to change the way value is created.

The next generation of PLM will be built on product knowledge graphs, creating new ways to collect information and build organizational knowledge. These architectures leverage polyglot data management with graph models as their foundation. The outcome is not measured by the number of users accessing the system, but by the value it delivers: insights, recommendations, automated actions, and decision support that create tangible business outcomes.

Rethinking Licensing: Selling Outcomes, Not Seats

This transformation opens the door for a new licensing model. Instead of selling seats, vendors can sell outcomes or tools to create outcomes. Here are some ideas for future PLM pricing based on:

  • Number of AI agents
  • Number of actions executed
  • Number of processes automated
  • Number of outcomes produced (projects, quotes, engineering change approvals, etc.)

Plaid recently published a great guide on AI agent monetization outlining these emerging models.

What is my conclusion?

PLM is stuck in engineering. Hosting 25 years old platforms using AWS, Azure, GCP, and private hosting with special security features is a temporarily vehicle to transform manufacturing companies from perpetual licenses to subscription. But… AI transformation is coming disrupting the way current seat based models work.

To change this, PLM will need to redefine its value creation paradigm: shift from data control to knowledge sharing and outcome creation. In addition to that, PLM will need to reinvent its licensing model from selling seats to selling outcomes and actions.

The transformation is coming. I’m curious what is your take on this.

Just my thoughts…

Best, Oleg

Disclaimer: I’m the co-founder and CEO of OpenBOM, a digital-thread platform providing cloud-native collaborative and integration services between engineering tools including PDM, PLM, and ERP capabilities. With extensive experience in federated CAD-PDM and PLM architecture, I’m advocates for agile, open product models and cloud technologies in manufacturing. My opinion can be unintentionally biased

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