This week I was reading a management article completely unrelated to PLM, but very applicable for PLM. The article stated that one of the basics of capitalism is innovation through crisis. Never let a crisis pass by without using it for your benefits was the message.
As we are currently in the middle of the economical downturn (according to the optimists or pessimists – we still have to figure out who is right), this is the moment for the management to decide. Do we try to sit still till it does not hurt anymore , or are we making strategic changes that will for sure demolish some holy houses but from the other hand will create a more lean and stronger organization after the change ?
Examples of IBM and GM were given from the nineties. IBM made the change from a hardware company towards a software company, where GM kept on doing the same with even bigger SUVs’. We know the results…….
Does it prove anything ?
For sure there are many companies that haven’t survived the nineties as they were not successful in their transformation, although they really tried. So where is the relation to PLM ?
I believe that the problem of implementing PLM, and specially in mid-market companies is the fact that there is no ambition for change when things are going relatively well. In one of my old posts I referred to the story of the boiling frog.
This happens when an organization is slipping down slowly and it is hard for the management to change and define and sell internally another strategy. Jobs and people are kept in place as long as affordable and only natural evolvement (an aging workforce) or mergers are drivers for a change.
Now with this crisis it is different. Everyone realizes (or should realize) that going on the same manner with the same people is not good for survival (unless you are in one of the few industries that benefit from the crisis – apparently the fast food industry I read)
In times of a crisis, first of all the management is challenged to come with a survival plan and in most cases this time they can get support from their employees as there is always the threat of lay offs if people are not creative or flexible for change. Secondly, employees will be also more flexible to save their jobs and the company (usually in this order)
Therefore this is the ideal moment to implement PLM in phased approach. For a successful PLM implementation you need employees, who are open minded to change the way they work, plus you need internal resources that have time to work with the implementer to fine tune the PLM system.
This moment exists now and by implementing PLM in a phased approach, each phase will bring ROI, perhaps even before the end of the crisis as you can start with the low hanging fruits and start to collect the benefits.
In parallel there is the discussion around free open source software or dumping software for free by some PLM providers in order to stay in the market. I think here as a customer you should always realize that every company, also software providers, need to survive the crisis and will look for income in another way – services / maintenance / additional software.
So my conclusion this time:
I never realized that both capitalism and PLM were striving for innovation. They have a crisis in common – For capitalism it is a must to push innovation for PLM it is an enabler for innovation
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September 1, 2009 at 12:38 pm
Steve Calvert
So, you’re saying that since IBM changed their model and GM didn’t that it’s somehow an indication that Capitalism didn’t work for one and did for another?
Capitalism: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decisions rather than by state control, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.
IBM couldn’t make it in a market selling PC’s so they switched their model and GM kept building what the masses wanted, big cars. The only way PLM companies will make it is to show the ROI to these CAD companies and make sure they can back it up. If the market wants PLM or some other three letter name, then it will happen.
BTW, I didn’t and don’t like any bail-out of any company using tax money. I beleive that the market is the key and that people and companies will have to adjust if they want to stay in business.
Steve hi, thanks for your response.
First of all I believe there is a change in interpretation. The trigger was the article I read where I realized you need a crisis to get a change. IBM probably realized this better in the nineties where GM like the boiling frog was not aware of it. I understand there is no capitalism without crisis, because as soon as people become comfortable the urge to change and to adapt is gone.
This is the same in the PLM world. When companies have their CAD system and ERP system in place, they are pretty comfortable – everything seems to be managed.
What is missing is the different approach that PLM promotes to change the whole product lifecycle. This requires people to change the way they work. ERP is not longer the source for the item definition, etc etc. See most of my posts on these topics.
I agree the market does not understand or want PLM as a product as it is more a business approach, that hooks in into all disciplines and it will be hard to implement it separate. The fact that there is PLM ROI I consider proven based on my personal experiences but also based on analysts reports like CIMdata and Aberdeen.
I hope things are more clear now.
Best regards
Jos
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September 1, 2009 at 10:15 pm
Oleg Shilovitsky
Jos, Great topic! It’s very interesting association and I’m sure it comes only after relaxing holidays… :). What is your view on technology role in PLM strive to innovation. Generally, innovation hype cycle is moving from technology/product to business model and service. Where do you think PLM is today? Is it still in technology hype or PLM need to look for alternative business models and service arrangement to keep innovate?
Thanks, Oleg
Oleg hi, often I am telling as a joke that around PLM nothing has changed the past 15 years. Many of the core concepts are still the same. But what has changed is the impact of available technology, which allow the collaboration concepts to change. Also PLM becomes more and more an integrated business concept for a company, not as a stand-alone product. This for sure creates a way for various business models and concepts to develop – service oriented, embedded in other environments, etc. I believe.
Looking backwards is easy to see what has happened, looking forward is more risky but for sure the trend of a services oriented solution is clear. I do not believe so much in unique software anymore, it is the quick and easy access to knowledge they need people are looking for – where and how has to be seen ….
Best regards
Jos
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September 3, 2009 at 7:22 pm
Steve Calvert
Jos, as I told Oleg before, most people outside the Engineering world will never except a CAD tool making decisions that would noramlly be made by Oracle or SAP or some other high end ERM/MRP system. This is the problem PLM vendors will face, both now and in the future.
Sorry to seem to jump at you, I was listening to my favorite pro-capitalist at the time…
Steve
Thanks Steve and I agree that the change in thinking is the challenge. Although I also believe specially in the DS environment, the expanding beyond CAD – virtual manufacturing, supplier collaboration beyond CAD exchange, bidding and service – brings areas where PLM brings company wide benefits outside ERP
And regarding capitalism no problem – also there are different camps 😉
Best regards
Jos
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