The past few weeks a had various moments to interrogate myself about the values for PLM and what would be the best way to address PLM for a mid-market company.
First I was in Copenhagen, attending the Microsoft Convergence event. A meeting where Dynamic customers, resellers and partners from all around Europe came together to learn the latest from Microsoft, to network with other partners and discuss their business processes.
Of course the focus from all of the 4000 attendees was around logistical processes, I was very curious to learn how manufacturing companies would describe their needs and where they feel the missing link – PLM.
But they did not feel it ……….
I believe this is one of the most challenging issues for mid-market companies. They have been investing in their ERP system and consider this as the company’s backbone. Their production and finance is dependent on it. Other departments, like sales and engineering provide somehow their inputs to the system, often Excel is here the information carrier. No PLM vision exist – or in case it exists – it is perfectly hidden.
I touched this topic in one of my previous post, called: “We do not need PLM, we already have ERP”
So why is PLM not yet adopted by mid-market companies and I raise this question mainly for those companies that obvious would benefit from PLM ?
I believe the major reason is the fact that often in mid-market companies there is no high-level strategy available analyzing where the company should be in 5 years from now and what are the challenges to overcome. Most of the companies I am currently working with want to implement something they call PLM, but often it is just PDM.
The big difference between PLM and PDM is that PLM requires the company to work different across departments, where PDM is considered more as an automated way to centralize product data, without changing the department responsibilities.
And now some generalizations
In addition mid-market CAD resellers try to explain their customers that PLM is only for big enterprises and that they just need PDM. This of course makes their sales beyond CAD easier, as touching cross-departmental processes requires different knowledge (which their resellers do not have), a different product (which they do not sell) and of course a longer sales cycle.
The same happens from the ERP side. ERP resellers consider what happens in the engineering department as a black box, where product data is generated and at the end a (configurable) Bill Of Materials. ERP vendors do not jump on PLM as extending the process to engineering requires different knowledge (which is not their domain) , a more extended product (which they do not have (yet))
Mid-market companies are of course influenced by these resellers of their core components and as mentioned before do not have the time and budget to take a strategic, holistic view where the company should be in 5 years. Usually their focus is on solving the pains they experience in their organization. For example we have too many databases and spreadsheets per department, let’s put them all in one central place – more an IT focus then a business focus.
So how to get the vision ?
Companies should ask themselves the following questions:
- what is the success of my company ?
- will I still be successful in 5 years from now if I keep on doing the same ?
- how does globalization affect me ? Risks but also challenges.
- how do I capture the knowledge of my (experienced) workforce before they retire ?
To answer these questions (and the above ones are only the most probing) it requires time and understanding to build a vision. Perhaps the economical downturn creates the opportunity or need to prepare for the future (survival).
And if you are working in a mid-market manufacturing company, chances are big that implementing PLM is a way to guarantee the company’s future and success. This has been proven in big enterprises and mid-market companies are not so different at the end.
Adapting business processes and connecting the whole product lifecycle are key activities. Beyond PDM and ERP it brings portfolio management (which product bring the real revenue) and innovation (New Product Introduction – how do we make sure we introduce a good product in the market).
Conclusion
PLM requires a company vision and strategy. Building the vision is something that PLM vendors, business consultants and others can assist you with. Each group has its own pro’s and con’s but at the end it is the vision that is needed before making the change – it requires first of all an investment in brain power – not in products
Interesting to read:
Stay with the business processes or change them ?
9 comments
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December 3, 2008 at 3:36 pm
Brian
Great post, my sentiments exactly. It reminded me of a press release I saw last week: http://tinyurl.com/6kd6ce
“Windchill ProductPoint benefits companies of all sizes, providing smaller companies with an ideal steppingstone into product lifecycle management (PLM) and giving larger companies with a SharePoint strategy the ability to extend their product development system to broader user communities.”
What do you think? Could this bridge the gap?
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December 3, 2008 at 5:19 pm
Yannis
Jos, I fully agree with this vision, but PLM represent a significant investment and it’s very hard to make those company the interest to invest to be successful in 5 years when they are struggling to close 2008.
On a previous note you were saying that it was a chance to adapt to new stakes of the market, and I agree again.
The real question I think is to help them to build that vision. I think that further that just ask questions, it is our role to assess the real business value and impact of PLM on the company. We need to build / use simple tools to show directly where and how the ROI will be.
I have seen quite a few from DS, MatrixOne, IBM, but none of them is directed specifically to the mid market.
Have a nice day!
Yannis
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December 3, 2008 at 7:57 pm
oleg
I don’t see how SMB customers invest in vision. TheyIn my view they invest in two directions: 1/ how to do impossible for their size (it comes on different levels – product, technology etc.; 2/how to implement tools that can do job they need (to develop on time, make new innovative products etc.)
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December 3, 2008 at 8:56 pm
josvoskuil
Brian, for sure Sharepoint narrows the gap between ‘classical’ PLM and basic content management. From acceptance point of view mid-market companies might feel attracted to utilize sharepoint based solutions.
Still I consider it like a intermediate solution as the main point I am trying to make is that people should start to work different – cross-departmental. And for that a process change is needed – which might be easier to implement sharepoint based instead of a full PLM system everywhere
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December 3, 2008 at 9:01 pm
josvoskuil
Oleg I am not so sure SMB customers won’t invest in vision. It depends on what the critical mass of companies believes and does to survive.
Interesting around this topic was the article i found today:
http://www.industryweek.com/ReadArticle.aspx?ArticleID=17902
not sure if it was based on recent research
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December 8, 2008 at 2:10 am
Yann
Mr Virtualduchman,
Thank you for all your articles reading them is always a great pleasure. However I do not share with you the conclusion you do based on your very interesting observation.
I have started to comment directly on this page but since my comment start to be longer than expected I have decided to move it else where :
http://yml-blog.blogspot.com/2008/12/what-if-smb-as-vision-for-plm-and-plm.html
This is not a rant against you but rather a different explanation of your observation.
Yann
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December 8, 2008 at 4:04 am
Hari Koduru
Jos,
How are you..Hope you are doing great. It was a very good article. I agree with all your points. I have also been thinking about these points since past few months. My thoughts are:
1. I believe that mid-market companies don’t innovate as much as the big enterprises do, this makes them think that, PLM is not for them. In fact supporting innovation is only some portion of the whole PLM which they need to understand.
2. Secondly, I believe the market needs to understand clearly that, PLM is complementary to ERP system. While ERP is a transactional system which is at the end of the process, PLM is its supporting structure that feeds into it. If ERP is the back-bone of a corporation, PLM is the meat. None of the ERP system address the whole spectrum of the inter-process mechanisms starting from “Project / Program Managemet”, Finance, Life-Cycle Process Management, Life-Cycle Data Management, Corporate/Industry Process Management (FAA, Hazmat, Auditing etc..), Production and finally colloboration in a systematic approach. ERP addresses major business processes, PLM takes them along with the core value of the company which is their product.
3. Thirdly, I believe one of the reasons for this behavior is that there has been years of research in the Universities/Corporations all over the world on the main-stream process of a Company (General Mgmt, Finance, Sales, Support / Maintenance, HR , SRM, CRM etc etc)..But, the companies need to be understand that, PLM brings a clear value which focuses on their product which is their core of the business and brings in all their main-stream process together and this generates tremendous value to the whole company.
4. Finally, I also believe that, because of this vast spectrum of the PLM, it is always very hard to decide on which business process a company should focus on first to realize the quick ROI of PLM Implementation. Never the less packaging of the PLM solution is also a great challenge for PLM vendors because of vast variety of practices in the industry in general. This continues to my point above.
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December 14, 2008 at 2:39 pm
Chris Williams
You must be kidding. Reading this post makes me feel like you are saying “your target customer” is stupid. Is this what you are saying?
To say a mid-market company does not innovate is nothing but crazy. In order for a mid-market company to exist they had to innovate something, and to survive they must continue this process. Those in politics understand this and use this to fuel the economy. Lack of innovation cannot be tagged to any one type of company, but you need to wonder if this is part of the US auto mess. I would say these guys are in trouble partly due to a fear of change (which is another word for innovation).
Maybe the problem with your customers is they just don’t value what you are pitching…
Chris I am not saying mid-market companies are stupid. What I am trying to say many of the customers I am working with – and most of them are in West-Europe – often have a long history and they exist because they have a core product or technology that they really understand since 100 years. Maybe this is different in the US – i cannot judge this.
Inside these companies you see the whole battle between conservatism (we always did it this way – therefore we are successful this way) and opportunities to change. For me innovation has a strong correlation with change.
For me the US auto mess is not because the mid-market does not innovate – it is about the OEMs that work like dinosaurs disconnected from the reality or too slow to react.
I am touching this briefly in my latest post.
Jos
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December 27, 2008 at 11:46 am
Anubhav
http://infosysblogs.com/oracle/2008/12/need_for_expansion_of_product.html#more
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