questionaireThe last month I haven’t been able to publish much of my experiences as I have been in the middle of several PLM selection processes for various industries. Now in a quiet moment looking back, I understand it is difficult for a company to choose a PLM solution for the future.

I hope this post will generate some clarity and may lead to some further discussion with other experts in the audience. I wrote about the do’s and don’ts of PLM selection in 2010, and most of it is still actual; however, there is more. Some of the topics explained:

Do you really need PLM ?

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This is where it starts. PLM is not Haarlemerolie, an old Dutch medicine that was a cure for everything since the 17th century. The first step is that you need to know what you want to achieve and how you are aiming to achieve it. Just because a competitor has a PLM system installed, does not mean they use it properly or that your company should do it too. If you do not know why your company needs PLM, stop reading and start investigating.

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If you are still reading this, you are part of the happy few, as justifying the need for PLM is not easy. Numerous of companies have purchased a PLM system just because they think they needed PLM. Or there was someone convinced that this software would bring PLM.

Most of these cases there was the confusion with PDM. Simply stating: PDM is more a departmental tool (engineering – multidisciplinary) where PLM is a mix of software, infrastructure to connect all departments in a company and support the product through its entire lifecycle.

Implementing “real” PLM is a business change, as people have to start sharing data instead of pushing documents from department to department. And this business transformation is a journey. It is not a fun journey, nicely characterized in Ed Lopategui’s blog post, the PLM Trail.

Although I believe it is not always that dramatic, Ed set the expectations right. Be well prepared before you start.

Why do companies still want PLM, while it is so difficult to implement?

The main reason is to remain competitive. If margins are under pressure, you can try to be more efficient, get better and faster tools. But by working in the old way, you can only be a little better.

NoChangeMoving from a sequential, information pushing approach towards an on-line, global information sharing manner is a change in business processes. It is interaction between all stakeholders. Doing things different requires courage, understanding and trust you made the right choice. When it goes wrong, there are enough people around you to point fingers at why it went wrong – hindsight is so easy.

Doing nothing and becoming less and less competitive is easier (the boiling frog again) as in that case the outside world will be blamed, and there is nobody to point fingers at (although if you understand the issue you should make the organization aware the future is at stake)

Why is PLM so expensive?

Assuming you are still reading, and you and your management are aligned there is a need for PLM, a first investigation into possible solutions will reveal that PLM is not cheap.

No_roiWhen you calculate the overall investment required in PLM, the management often gets discouraged by the estimated costs. Yes, the benefits are much higher, but to realize these benefits, you need to have a clear understanding of your own business and a realistic idea how the future would look like. The benefits are not in efficiency. The main benefits come from capabilities that allow you to respond better and faster than by just optimizing your departments. I read a clarifying post recently, which is addressing this issue: Why PLM should be on every Executive’s agenda !

From my experience with PLM projects, it is surprising to learn that companies do not object to spend 5 to 20 times more money for an ERP implementation. It is related to the topic: management by results or management by means.

PLM is not expensive compared to other enterprise systems. It can become expensive (like ERP implementations) if you lose control. Software vendors have a business in selling software modules, like car resellers have a business in selling you all the comfort beyond the basics.

The same for implementation partners, they have a business in selling services to your company, and they need to find the balance between making money and delivering explainable value. Squeezing your implementation partner will cause a poor delivery. But giving them an open check means that, at a certain moment, someone will stand up and shutdown the money drain as the results are no longer justifiable. Often I meet companies in this stage, the spirit has gone. It is all about the balance between costs and benefits.

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This happens in all enterprise software projects, and the only cure is investing in your own people. Give your employees time and priority to work in a PLM project. People with knowledge of the business are essential, and you need IT resources to implement. Do not make the mistake to leave business uncommitted to the PLM implementation. Management and middle management does not take the time to understand PLM as they are too busy or not educated / interested.

Make business owners accountable for the PLM implementation – you will see stress (it is not their daily job – they are busy), but in the longer time you will see understanding and readiness of the organization to achieve the expected results.

We are the largest – why select the largest ?

marketleaderWhen your assignment is to select a new enterprise system, life could be easy for you. Select a product or service from the largest business and your career is saved. Nobody gets blamed for selecting the largest vendor, although if you work for a small mid-sized company, you might think twice.

Many vendors and implementers start their message with:
“…. Market leader in ABC, though leader in XYZ, recognized by 123”

The only thing you should learn from this message is that this company probably has delivered a trustworthy solution in the past. Looking at the past you get an impression of its readiness and robustness for the future. Many promising companies have been absorbed by the larger ones and disappeared. As Clayton Christensen wrote in The Innovators Dilemma:
“What goes up does not go down”.
Meaning these large companies focus on their largest clients and will focus less on the base of the business pyramid (where the majority is), making them vulnerable for disruptive innovation.
Related to this issue there is an interesting post (and its comments), written by Oleg Shilovitsky recently: How many PLM vendors disappear in disruption predicted by Gartner.

observationMy observation: the world of PLM is not in a moment of sudden disruption at this moment.

Still when selecting a PLM vendor it is essential to know if they have the scale to support you in the future and if they have the vision to guide you into the future.

The future of PLM is towards managing data in a connected manner, not necessary coming from a single database, not necessary using only structured data. If your PLM vendor or implementer is pushing you to realize document and file management, they are years late and not the best for your future.

PLM is a big elephant

PLM is considered as a big elephant, and I agree if you address everything in one shot that PLM can do. PLM has multiple directions to start from – I wrote about it: PLM at risk – it does not have a single job

PLM has a huge advantage compared to a transactional system like ERP and probably CRM. You can implement a PLM infrastructure and its functionality step by step in the organization, start with areas that are essential and produce clear benefits for the organization. That is the main reason that PLM implementations can take 2 – 3 years. You give the organization time to learn, to adapt and to extend.

We lose our flexibility ?

flexibleNobody in an organization likes to be pushed in a cooperate way of working, which by definition is not as enjoyable and as flexible as they way you currently work. It is still an area where PLM implementations can improve: provide the user with an environment that is not too rigid and does not feel like a rigid system. You seen this problem with old traditional large PLM implementations for example with automotive OEMs. For them, it is almost impossible to switch to a new PLM implementation as everything has been built and connected in such a proprietary way, almost impossible to move to more standard systems and technologies. Late PLM implementations should learn from these lessons learned.

PLM vendor A says PLM vendor B will be out of business

One of the things I personally dislike is FUD (Fear, Uncertainty and Doubt). It has become a common practice in politics and I have seen PLM vendors and implementers using the same tactics. The problem with FUD is that it works. Even if the message is not verifiable, the company looking for a PLM system might think there must be some truth in this statement.

imageMy recommendation to a company that gets involved in FUD during a PLM selection process, they should be worried about the company spreading the FUD. Apparently they have no stronger arguments to explain to you why they are the perfect solution; instead they tell you indirectly we are the less worst.

Is the future in the cloud ?

I think there are two different worlds. There is the world of smaller businesses that do not want to invest in an IT-infrastructure and will try anything that looks promising – often tools oriented. This is one of my generalizations of how US businesses work – sorry for that. They will start working with cloud based systems and not be scared by performance, scalability and security. As long all is easy and does not disturb the business too much.

cloudLarger organizations, especially with a domicile in Europe, are not embracing cloud solutions at this moment. They think more in private or on-premise environments. Less in cloud solutions as security of information is still an issue. The NSA revelations prove that there is no moral limit for information in the sake of security – combined with the fear of IP theft from Asia, I think European companies have a natural resistance for storing data outside of their control.

For sure you will see cloud advocates, primarily coming from the US, claiming this is the future (and they are right), but there is still work to do and confidence to be built.

Conclusion:

PLM selection often has a focus on checking hundreds of requirements coming from different departments. They want a dream system. I hope this post will convince you that there are so many other thoughts relevant to a PLM selection you should take into account. And yes you still need requirements (and a vision).

Your thoughts ?

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