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Last year, I read Clayton Christensen’s book “The Innovator’s dilemma – When New Technologies Cause Great Firms to Fail “. I was intrigued how his theory also applies to PLM and wrote about it in a blog posts last year.
Recently, I attended an HBR Webinar “Innovating over the Horizon: How to Survive Disruption and Thrive” , which raises serious implications for PLM. As presented by Clayton Christensen and Max Wessel, both professors in the Harvard Business School, I foresaw numerous consequences demanding attention.
I’d like to highlight some observations for you:
- Disruptive innovation will hit any domain – so also the PLM domain
- You are less impacted if your products/services are targeting a job to be done
- ERP has a well defined job – so not much discussion there
- PLM does not have a clear job – so vulnerable for disruption
- Will PLM disappear?
The above diagram explains it all. Often products come into the market with a performance below customer expectations. The product will improve in time, and at a certain moment it will reach that expectation level. Through sustaining innovation, the company keeps improving their product(s) to attract more customers, and start delivering more than a single customer is asking for.
This is for sure the case in PLM. All the PLM vendors are now able to deliver a lot of functionality around global collaboration, covering the whole product lifecycle. Companies that implement PLM, just implement a fraction of these capabilities and still have additional demands. Still the known PLM vendors nearly always win when a company is searching for a new PLM solution.
Disruption comes from other technologies and products. In the beginning, they are not even considered by companies in that product space as a possible solution. As these products improve in time at a certain moment, they reach that level of functionality and performance, a potential customer can use these products to address their demands.
At this stage, the disrupters will nearly always win the battle. The reason is that they are more close to what the customer wants than the incumbents. Their product performance and price point are most likely to be more attractive than the incumbents´ portfolio.
Translating this to PLM it would mean: “Do not look for PLM systems as they already provide too much functionality, way above the line of customer desire”
As a PLM consultant, I need to provide some second thoughts to keep my job. There is much more behind Prof. Christensen’s theory, and I recommend before agreeing with what I write, read his books ! And although there is a horizontal time axis where the disruptive technology comes in, it does not indicate it will be this year or next year.
If you are aware that disruption can kill your business, how likely is it that it will happen in your business and when?
Professor Christensen makes two key points:
- Disruption will always happen, but this does not mean it is going to be fast and totally overtaking the old products. It might be a slower process as expected and incomplete. Here, I was thinking about disruptive cloud technology, which came in fast on the consumer level, but will it reach the business level too, in the same manner that it overrules the classical PLM platforms ? I am not sure about that (yet)
- If your company’s value is on delivering products, instead of delivering means to get the job done for your customer, you are extremely vulnerable for disruption.
As companies are looking to get their job done in the most efficient manner, they will switch at any time to new solutions that provide a better way to get the job done, often with a better performance and at a lower price point.
ERP has a well defined job
I realized that this is one of the big differences between PLM and ERP. Why is there such a discussion around the need for PLM and I do not catch the same messages from the ERP domain ? Maybe because I am a PLM consultant?
ERP has a clear mission: “To get the job done – deliver a product as efficient and fast as possible to the customer”. ERP is an execution system. Although ERP vendors as well are delivering more than their individual customers ask for, the job is more clear defined.
PLM does not have a clear job
For PLM, it becomes fuzzy. What is the job that PLM does ? Here, we get a lot of different answers. Have a look at these definitions from some vendors
CIMdata calls PLM “the most effective investment you can make to achieve product leadership.” AMR Research says “Companies committed to time to value in product innovation certainly cannot succeed without a sound PLM foundation.”
Product Lifecycle Management, or PLM, is a driver of successful product development, and a strategic contributor to business value across the enterprise. PLM helps product manufacturers manage complex, cross-functional processes, coordinating the efforts of distributed teams to consistently and efficiently create the best possible products
For companies of any size, Autodesk PLM 360 helps to streamline your business processes for more efficient product development, improved profitability, and higher product quality.
I also reviewed the websites from the other PLM vendors, and I can confirm: None of them is talking in a clear way which job needs to be done. All PLM solutions are around technology and products.
Companies want to get the job done
And here I come back to the webinar’s conclusion. If you want to secure your future as a company, you need to focus on the job to be done. And even better, focus on the experience to do the job and the best integration of these experiences in a total framework. See the slide below:
My interpretation is that PLM has not even reached level 1. Still many companies are struggling to understand the fundamental need(s) for PLM.
Interesting to see is that Dassault Systemes in their messaging and approach is already targeting level 2 – the experiences. If potential customers will embrace the experience approach without passing level 1, is something to observe.
Will PLM disappear ?
In my December 2008 blog post PLM in 2050 and recently in The Innovator’s dilemma and PLM, I wrote that I believe PLM as it is currently defined, will disappear. Perhaps made redundant by a collection of disruptive technologies. Main reason is that PLM does not do a single, clear job.
One of these disruptive candidates to my opinion is Kenesto. They deliver “social business enterprise software to empower teams” as stated on their website. Kenesto is not considered as a competitor of classic PLM, starting on a different trajectory. For sure there will be more disruptive candidates aiming at different pieces of the PLM scope.
What do you think:
- Does PLM have too many jobs ?
- Will PLM survive disruption ?
Early this year Dassault Systèmes (DS) announced their future strategy called 3DExperience and it is only now after their two major events, the 3DExperience forums in the US and Europe, that the discussion has started around the meaning of 3DExperience.
In February, I thought 3DExperience was just a new marketing approach from DS to differentiate themselves from other vendors. A little more 3D, PLM has a bad connotation and as some of the newcomers redefined what is PLM, it made sense to be different again..
One of my fellow European bloggers, Yoann Maingon started a discussion with his provoking blog post: Different Marketing Strategies And Naming in PLM. Read the post and specially the comments from Jim Brown and Joe Barkai, who bring perspective to this post. In addition this post got traction in some closed LinkedIn PLM groups and it was interesting to observe that different interpretations of PLM created somehow the same feeling that I have with religion.
Stay with the book and the definition of PLM and complete your portfolio was the message. But which book and what is PLM ? Even if I would write the book: “The Truth about PLM”, who would consider my book as the authority.
We have learned from religion that concepts based on a book can lead to wars.
I am sure PLM will not go into that direction and it remains important not to focus on the definition of PLM, but at the end you want your customers (current and future) to be more efficient, more innovative and profitable. And in order to achieve that, you need to look at the whole process, starting with market interaction and delivery to the customer.
And for that there are many tasks to perform in a company. During your sales process, you need to make sure you address in the best manner the demands from the customer or market, so you can differentiate yourself from others. It can be based on your track record (best in class since 1845), your price (always the cheapest as you manage the process efficient) or your experience (the price and the good feeling it gives justifies the decision)
What has become clear in the past ten years is that we are in a global, changing market and specially traditional companies struggle to make a change which is future oriented. Customer loyalty was in the past based on the fact that you were in the same region, later the same country, but now everyone is shopping or sourcing around the world. Traditional markets and business are no longer secure.
So companies have to change and to my opinion one of the most important changes they have to go through is managing all information in their company (and from outside) in a shared manner. Products can no longer be defined without taking into account feedback and interaction from the market. Trends (positive or negative) related to your company or products need to be followed as they can kill or hype a product or your company.
To realize this change a company needs to start working different and this leads at then end to the need for different tools to support your changing processes. Here I see PLM systems coming into the picture. And here there are the two approaches: will you be selecting a single vendor with the richest PLM platform, or will you integrate a set of best in class applications. As we saw in the Tech4PD discussion there is no ultimate decision here.
I see the 3DExperience strategy from DS in this light. The classical scope of PLM tools and practices does not provide a base for the current and future markets. The solution is bigger than tools, it is the focus on the total experience (I could not find another name either).
It is a way to become attractive for your customers and not focus only on the product but also the way you can influence your potential customers to choose your product or service above others. DS call this the new era of 3DExperience, others will market it different.
In a consumer market we select products based on experience. Has anyone ever tried to justify the purchase of an iPad as an affordable device they need for their work ?
It is the experience.
There is one thing I dislike from the 3DEXperience approach. Blogging becomes expensive, as writing down the word 3DExperience – a mix of numbers and characters – slows down my efficiency. I prefer 3DE or3DX as the most efficient set of keystrokes related to a TLA.
To my opinion PLM is not dead at all for DS. They just market the bigger picture different to be different from the classical PLM platforms. All PLM vendors have their unique marketing approach. Companies need to define what is their next step to remain in business and they are afraid for the old PLM, due to the horror stories – complexity, expensive, etc.
Is it selling experiences or perhaps is it making sure a new generation of workers will be motivated to work for your company. It remains a mix of classical PLM functionality, but it is also big data, social media and more interactive and friendly interfaces which are expected.
Finally one observation from the 3DExperience forum in Brussels where I believe they could have done a better job. Usually when customers and prospects go to this kind of events, they want to hear that they have chosen the right software provider. So it should be a mix of assuring them they are not alone (many others have chosen our solutions) and excited by the future vision your vendor has. Here they message that all companies need to sell experiences in the future otherwise they will be a commodity created a bad mood. Fear does not push people to change, it paralyzes people.
Conclusion: Dassault Systemes new 3DExperiences is understandable as a way to introduce a bigger picture than PLM alone. If every company needs THE EXPERIENCE approach has to be seen. In addition I believe DS still needs to work on more understandable examples where the 3DE approach is a differentiator. For sure there is PLM inside