I am writing this post as i come across this question on a regular base, and as a response on a recent post from Jim Brown. I addressed this topic already in previous posts in the past, for your convenience i have put all relevant links I considered at the bottom of this post.
I believe the question is hard to answers if asked this way. It all depends on where is your point of gravity. You can divide the PLM providers in different groups.
- PLM vendors with a focus pure on PLM – their major business is in providing the majority of the PLM related tasks, independent of a certain CAD or ERP package, but interfaces usually through a generic approach with these applications. Matrix One (now integrated in Dassault’s ENOVIA offering), Aras (Open Source), Arena (On-line) are examples of this type of PLM providers.
- PLM vendors coming from their CAD environment, initially manage their 3D CAD data and extending these capabilities to other authoring tools. ENOVIA VPLM and SmarTeam (main CAD system managed CATIA) are Dassault’s solutions, Siemens UGS (main CAD system managed NX) and PTC (main CAD system managed Pro/E) are examples of this type of providers
- ERP vendors who extended their offering with PLM functionality – either by developing PLM functionality themselves (SAP) or by acquisitions of PLM functionality (Oracle / BaaN)
- and there is still a vendor that does not do PLM, but calls it digital prototyping
As each of these PLM providers has their customers and market share – interesting to read is CIMDATA’s overview of the PLM market. What you see there is that it is hard for the independent PLM vendors to be ranked in the top 5. Also the biggest independent PLM vendor in the past, Matrix One, had a hard time to compete against the CAD or ERP based vendors. Why ??
I believe because the major reason lies in the fact that companies want to keep their IT-infrastructure as simple as possible. Buying a PLM system from the current major CAD vendor or from the current major ERP vendor keeps their situation manageable. Why deal with a third vendor that has to integrate with their CAD and ERP software ?
This would lead to a statement that there are only two type of major PLM providers: CAD based or ERP based. And here I am back to the initial question: Can ERP vendors provide PLM ?
Here I believe there is a major difference in the approach of PLM. Yes, both types of companies can provide PLM functionality but they offer it in a different way. It is like Ferrari and Volkswagen provide cars, but are they addressing the same audience ?
Some years ago I had a conversation with a SAP country manager about PLM. It was in the time that SAP did not recognize PLM yet as a business approach required in addition to ERP. He told me that SAP was managing all the company’s data and processes and that it was just a matter of time before also companies would recognize that engineers working with their CAD systems are nothing else but resources in the whole process. “Designers believe they are artists and cannot be managed but we will show them we can” . Here you see the focus is not on creating the environment for innovation or new products, but on managing existing processes as efficient in a certain way.
To generalize ERP vendors talk PLM but practice efficiency and neglect the fact that innovation and creativity are not manageable (sorry for the generalization but it make things more clear)
CAD based PLM vendors focus a lot on the product creation process. Supporting companies to design and develop new products, mainly in the virtual world. They do not try to manage the development process like a production process but work with mile stones to assure progress and managing quality and risk (NPI – new product introduction). Only when the product definition is mature and complete it will be handed over to ERP to produce the products where needed. Did you ever wonder why CAD based PLM vendors do not expand into ERP ?
And here lies the the difference I believe. If you choose for a CAD based PLM vendor, your company is focusing on innovation, creating new products, when you choose for an ERP based PLM system you will focus on efficiency and process management. Ask the ERP vendor to which level PLM is integrated in their company – is there a person responsible for PLM in the top management ? Technically you can integrate a full portfolio of products, but understanding and making PLM a part of the strategy is the decisive question for the future.
Conclusion
Yes, ERP vendors can provide PLM functionality and as a company you should decide where is your business focus.
If your focus on efficiency and not on innovation ERP providers can offer a total solution.
If your company focuses on new and better products, I believe that your focus should be on CAD based PLM vendors as they offer the best environment for innovation support and capturing design knowledge.
And be critical – as before you know the front falls off
PLM and ERP previous posts:
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April 20, 2009 at 12:57 am
olegshilovitsky
Jos, I wonder how possible to organize unified process for organization? What approach customers need to take? PLM? ERP based PLM? Some other alternatives? My additional observation is that environment in every organization is pretty siloed. There are multiple design tools and not always come from single (even PLM) provider. What best practices you can recommend to keep all following unified organizational processes?
Thanks – Oleg.
PS. Last week on COFES I discovered new differentiation between PLM and not PLM (you called it DP, but this is actually Autodesk). http://plmtwine.com/2009/04/17/cofes-2009-plm-vs-not-plm/
Oleg hi, in my post PLM in 2050 I wrote that probably at that time PLM does not exist anymore. We will focus on business processes. Also the term ERP will no longer exist at that time. At the end you want to build as a company an infrastructure (or hook into an infrastructure) that allows you to access and process data from a single truth. Compare it to audio systems. Most people like a small integrated system that combines tuner, amplifier, CD as small as possible, but if you have a special interest in music you might buy individual components that work together to optimize your use case. I see the same for business processes: the small mini-tower for mid-market companies – no extra functions/features – only core scenarios and the option to build your process with optimized tools per disicipline (CRM/PLM/ERP/CAD/..)
Best regards
Jos
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April 20, 2009 at 7:38 pm
Tom Gill
Hi Jos,
Do you see any ERP vendors besides SAP and Oracle that are putting efforts into PLM?
Best Regards
Tom
Tom hi, if you look at the top 5 of ERP vendors (it is already hard to find out who are the real top 5) , I would recognize Microsoft Dynamics and Infor (formerly SSA). Who is number 5 i would not know. Looking at the top 4, you see that only SAP started with their PLM module from scratch, where the other three bought existing PLM systems, that could not survive independently anymore. One note on Microsoft, it will be interesting to see if they develop the PLM vision further or that they leave it for the moment to PLM vendors to come with Microsoft based PLM solutions.
Best regards
Jos
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April 23, 2009 at 2:20 pm
Tom Gill
Hi Jos,
Thanks for the list.
Apparently there was some discussion at cofes about Microsoft, Sharepoint, and PLM. Deelip had some interesting comments on his blog.
http://www.deelip.com/2009/04/cofes-2009-day-3.html
I remember Carol Bartz stating many years ago that software vendors live in fear of Microsoft targeting their market. Is PLM in Microsoft’s sights now? Time will tell.
Tom
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April 27, 2009 at 4:46 pm
Jim Brown
Jos,
Excellent post, and thank you for your comments on my blog.
There were some other good comments back on my blog, and anybody interesting can follow Jos’ link above to add your thoughts.
More importantly, I am not sure that there is as simple of an answer as we would all like. If you are “x” then you need “Y”. There are really a number of different elements at play here:
– Transactional Support (Execution)
– Planning
– Administration
– Product Innovation
– Engineering
– NPD
I will probably upset some by splitting “Product Innovation” from “Engineering,” and others by splitting it from “NPD.” For simplicity, I will leave it this way, but recognize that they are all under an umbrella of “Innovation” that spans all of them. Different companies have different needs. For most, the result is a need for ERP and PLM. But they also need more than just that, they need support for the aspects above. Some fall into engineering and design (or “digital prototyping”). Some fall into product development (which is inherently multi-party and touches the supply chain). Some fall into the front end of innovation, which touches the customer community. All of these should ideally be supported by one system (or as Jos says one infrastructure, I agree with the long term vision). And I am sure I have missed something in my haste to post this thought. The point is hat today, most companies can’t find a standalone PLM system that handles all of their innovation needs, let alone an integrated one that is already a part of their ERP system. So they make trade-offs. And trade-offs that are very difficult to make, and individualized to a specific company.
So what is the answer (in my opinion)?
ERP and PLM
– Possibly by one vendor (the ERP vendor)
– Possibly by two vendors (the ERP vendor + a standalone PLM)
– Likely from more than two vendors (ERP + PLM + other PLM-related tools)
– Even more likely, all of the previous plus custom solutions
The net takeaway? The decision is not clear cut, and we have a long way to go as an industry before it will be an easy choice. I am planning some further research in this area, I am sure Jos will share it with you when it comes out (with his perspectives, which I always respect and appreciate).
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April 27, 2009 at 4:47 pm
Jim Brown
And at the risk of taking up any more space on Jos’ blog –
Jos, thanks for the laugh with the video, I hadn’t seen that one and I promptly shared it on Facebook. Excellent!
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May 7, 2009 at 3:44 pm
Can ERP vendors do PLM ? « Jos Voskuil's Weblog — ERPSCOUT
[…] See the original post: Can ERP vendors do PLM ? « Jos Voskuil's Weblog […]
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May 20, 2009 at 6:29 pm
Ilan Madjar
Hi Josh,
It is a very interesting article. In addition to integrate items and vendors’ related data and processes between PLM-ERP, I have also worked with customers who consider the ERP to be the master as far as purchasing and finance goes. In scenarios where outsourcing manufacturing (design in house) or outsourcing design (design review is sometimes required in house), the legal(contractual) related documents should reside in ERP for legal purposes while the design is done in PLM. Sharing documents between PLM-ERP and maintaining tractability can be a pain. What is your take on this topic?
Ilan hi, I would draw the border based on the characteristics of a PLM system and ERP system. Is it related to Product / Engineering knowledge, I would store it into PLM. Is it related to transactions (which can be contracts / financial agreements /etc) I would consider them as ERP based).
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