I am writing this week’s post on my way to a customer to finalize an implementation and in parallel describing the Return On Investment of this project. But before that, I would like to have a short note about my previous post ‘Free PLM software does not help companies“.
The reason I wrote this post was because I wanted to assure that companies do not believe that ROI for implementing PLM is based on the software costs. PLM implementations are a combination of software, business skills and the company culture. Specially in the current economical situation, I wanted to make clear that these factors are not overlooked. Also I did not want to say Open Source PLM is bad, I made my points on the messaging, however in functionality and usage I do not see a big difference between other types of PLM systems. I got some interesting comments on this post and I advise all of you, who have read the post to go through the comments to get a broader perspective. Once I have had some more opportunity to investigate this area deeper, I will come with a more in-depth post on this topic.
To PLM or Not To PLM
But now back to: To PLM or Not To PLM, where I wrote in a first post on this topic that before judging the costs and ROI of PLM, we should start analyzing our current processes and situation and use this as a baseline to guesstimate the PLM benefits.
The first PLM phase to analyze is the concept phase, where new ideas are picked up (or not). Actually this is the phase where we define the future of the company. The economical recession in a way forces companies to rethink their strategy and fortunately all of the competition is in a similar position. downturn means less activities, the company might be in the position to allocate time to address these analysis for PLM ROI. Instead of making people redundant, use these people to work on a new and optimized product strategy.
The basic questions to ask about the concept phase:
- Do we know where our products are currently in their lifecycle ?
Measure: quantity, sales trends, margin
Analyze: is our portfolio healthy ?
- How do customer rate our products ?
Measure: market share, market awareness, customer satisfaction, quality, field issues
Analyze: will customers keep on buying from us ?
- Where are we different from the competition ?
Measure: where do we win/ where do we loose and compare per quarter ?
Analyze: how can we improve the success ratio ?
- In case of bidding
Measure: how many bids do we handle per quarter and with which effort
Analyze: What is the win percentage and how to influence this ?
- Who are our customers ?
Measure: does the 80-20 rule apply – does 80 % of the revenue come from 20 % of the customers ?
Analyze: What is the trend specially in relation to the current market situation
- Where does innovation come from ?
Measure: the amount of new ideas, the source (people, customers) and the ones that reach it to the portfolio
Analyze: Do we have a guarantee for innovation ?
- How do we strive for climate neutral products – sustainable development ?
Measure: the amount of energy used to build the products but also to recycle and what remains
Analyze: How can we change our products and production process ?
- How do we capture our company’s IP due to the aging workforce in most of the countries
Measure: How many people with the specific knowledge will retire in 5 – 10 years ?
Analyze: Where and how can I assure this knowledge remains in the company ?
For many of the above questions you might say that you know how to conduct your business as you are doing most of these activities and even more. However the question you should ask yourself also is: How long does it take to answer these questions and to react on these trends ?
Because all the above topics are positively influenced by PLM – here it the PLM ROI !
Project and Portfolio Management, company wide workflow process allow the company to measure, to run analysis and to have information within hours (or worse case in days), where in a company where every department and discipline has their own environment, the effort to collect this information becomes huge and not natural. And as it will take a lot of time to collect the information, people tend to react on their guts or intuition, which might be wrong if you are among the wrong people or if the world changes in a way never seen before.
Additional capturing product and process knowledge allows companies to contain their IP. And just to make this point clear: Product knowledge is not only CAD and Bills of Materials. It is all collected information: issues during design, during production, coming from field services, best practices used and more. The challenge anyway for every PLM system is to provide an environment, user-friendly enough for all users, to start managing their total product IP in a single environment.
PLM as a total approach brings a lot of value and control in the concept phase, the phase where the company’s future is merely defined. And it is obvious that the future should be green and sustainable. Use the current downturn to shape the future – the questions in this post and your analysis should be the base.