Last week I conducted another ENOVIA SmarTeam Express training, this time in the Coventry office from Dassault Systems. The conclusion from the audience was that the SmarTeam Engineering Express concept is a perfect entry PLM system for the mid-market. It show the general best practices of PLM for a mid-market from concept to manufacturing. Additionally is provides the company a flexible PLM platform to further grow and expand to directions that bring more benefits.
But here I want to stop, as you will start to believe it is a marketing speech. In a certain way it is marketing. Marketing is needed to influence people and companies to change their way of thinking. Without marketing we would never buy Personal Computers, mobile phones, MP3 players, certain drinks and more. We tend to forget why we need certain products and what the real benefits are. PLM is not at that level of market understanding yet.
For that reason I will give the 5 objections why not to implement PLM that I heard the most and comment on them.
The 5 reasons not to implement PLM I heard the most were:
- The costs for a PLM implementation are too high
- A PLM implementation takes too long
- We already have an ERP system
- Isn’t PLM the same as managing CAD files ?
- We are so busy, there is no time to have a PLM implementation in our company
In this post I will address the first reason. Others in upcoming posts.
Note: I use generalizations in this post as specific cases my vary – specially when talking about comparisons with ERP system.
1. The cost for a PLM implementation are too high.
This is the argument I heard the most. And indeed, if you accumulate the total costs of a PLM implementation after 2-3 years, you might get that impression. The main reason for this perception is the fact that often companies have suffered from an ERP implementation in the past. I do not want to blame the ERP companies for the high costs of implementation, as they were the first major business system implemented in manufacturing companies. There were many horror stories in the past, but now you can say ERP has become mature and processes to implement are clear too. For that reason ERP companies now can provide an estimated cost and ROI (Return On Investment) for manufacturing companies. I guess that manufacturing companies that have not invested in ERP the past 20 years, probably stopped to exists, so benefits for ERP are clear.
But at what costs ? PLM is not as mature as ERP. This means a PLM vendor cannot come to a manufacturing company, identify its main business process and apply a PLM template. The major reason for that is the fact that the PLM vision encompasses many different processes in a company, many of them currently not even identified in mid-market companies. This leads to the situation where PLM implementers together with their customers spend time to learn and pay the price for learning. Most of the learning has been done already by the big enterprises, now the mid-market companies need to understand what is relevant for them.
We know learning has it costs, and specially when external (paid) resources are involved, the costs might add up too high. In parallel the biggest mistake made to implement PLM is to consider it the same way ERP is implemented. A project team builds in a isolated environment a new ‘to be’ PLM environment, once and a while involving key users for their feedback. Then after 8 months – 1 year they role out the PLM implementation to the users as a ‘big boom’. As a logical reaction the users object to this radical change, which leads to compromises, and rework of some of the project deliverables. At the end after 2 years the company might have an acceptable PLM implementation, meanwhile having a bad taste of a failed and costly project. And the ROI still to come……
See the diagram below:
So how can we avoid these high costs ?
First of all the investment of a PLM is done because we believe there is a Return On Investment. Companies invest in order to improve their competitiveness and PLM is a main driver for manufacturing companies. So how can we assure ROI and lower the total costs ?
A first best practice is the phase a PLM implementation into small, digestible steps with a durations of 3 to 6 months. Each step will have its investment and its limited scope. The result will be that even after the first step, people can start working with the new system, experience the impact of the new PLM system and start bringing ROI as the benefits will start paying of.
These benefits plus the fact that the company and their users start to understand what a PLM system can bring for them and this leads to a clearer and lower cost of implementation for the next phases. The figure below gives an impression of how costs and ROI will work out in this situation.
The Express offerings from ENOVIA, SDE (SmarTeam Design Express) and SNE (SmarTeam Engineering Express) are exactly targeting this approach. Instead of imagining what PDM and PLM could do for a company. They allow the company to quickly start and experience and later grow to the optimized environment.
The management of the company should always keep their ultimate PLM vision in mind, still anticipating changes as business evolves. Each implementation phase should fit in the ultimate PLM vision and its implementation should be judged on bring ROI.
This is a main difference between PLM and ERP. An ERP implementation focuses on a specific logistical process to implement. This implementation cannot be done for 50 % and than later another 30 % and again another 10 % till the ultimate ERP vision has been reached. It must be done in one implementation as it targets the whole production process.
A PLM implementation however is an implementation of Best Practices all around Product IP and innovation. The world in which products are defined has changed drastically due to globalization, customer focus and changed technologies. This means that the way companies define and develop their products have to be flexible and changeable. PLM implementations require a step by step approach, every time improving those areas that bring the best ROI. Still the company needs to remain flexible in to anticipate for future changes, merges, acquisitions or even different business processes.
Conclusion: PLM systems are not costly in case of a phased implementation targeting immediate ROI per phase and flexibility in the future.