A month ago I attended PI Berlin 2017 and discussed how digital transformation should affect PLM. You can find the presentation here on Slideshare. One of the conclusions of my presentation was that PLM is the forgotten domain in digital transformation, which lead to the tweet below from Nick Leeder from SKF.
I am from the generation who believes answering complex issues through tweets is not a best practice. Therefore, I dedicate this post to answer Nick’s question.
A digital enterprise is the next ultimate dream after the paperless office. Where the paperless office was focusing on transforming paper-based information into electronic information, there was not a mind-shift in the way people could work. Of course, when information became available in an electronic format, you could easily centralize it and store in places accessible to many others. Centralizing and controlling electronic information is what we did in the previous century with document management, PDM, and classical PLM. An example: your airline ticket now provided as a PDF-file – electronic, not digital.
This process is not a digital transformation
Digital Transformation means that information is broken down into granular information objects that can be stored in a database in the context of other information objects. As they have a status and/or relation to other information objects, in a certain combination they bring, in real-time, relevant information to a user. The big difference with electronic information is that the content does not need a person to format, translate or pre-process the data. An example: your boarding app, showing the flight, the departure time, the gate all in real-time. If there is a change, you are immediately updated.
Digital Transformation for an enterprise
In a digital enterprise, information needs to be available as granular information objects related to each other providing the end-to-end continuity of data. End-to-end continuity does not mean that all data is stored in a single environment. The solution can be based on digital platforms working together potentially enriched by “micro-services” to cover specific gaps the digital platforms do not deliver.
ERP systems by nature have been designed to be digital. Logistical information, financial information, part information for scheduling, etc., all is managed in database tables, to allow algorithms and calculations to take place in real-time. Documents are generated to store snapshots of information (a schedule / a report), or there are pointers to documents that should contain digital, unmanaged information, like contracts, drawings, models. Therefore, the digital transformation does not impact ERP so much.
Customer connected platforms are a typical new domain for manufacturers, as this is where the digital transformation takes place in business. Connecting either to your products in the field or connecting to your consumers in the market have been the typical business changes almost every manufacturer is implementing, thanks to IoT and thanks to global connectivity. As this part of the business is new for a company, there is no legacy to deal with and therefore exciting to present to the outside world and the management.
The problem of legacy
And here comes the problem why companies try to neglect their PLM environments. There is so much legacy data, stored in documents (electronic formats) that cannot be used in a digital PLM environment. Old PLM quality processes were about validating documents, the container of information, not about the individual information objects inside the document. And when information changes, there is no guarantee the document is going to be updated, due to economic reasons (time & resources)
To give an example. A year ago I wrote a post: The Impact of Non-Intelligent Part Numbers where I explained in a digitally connected enterprise part numbers no longer need to have a meaning. As long as they are unique throughout the enterprise, automation will take care PLM, and ERP are connected. In one of the comments to this post, a reader mentioned that they were implementing now non-intelligent numbers in their company and the ERP consultant recommended to renumber all the old part numbers to have a clean start. From the ERP point of view, no issue. The consultant probably never had learned about the fact that part numbers are used in drawings, instructions, spare part manuals, which are all documents in the engineering domain. Renumbering them would be a waste of resources and money, just to have a “pure” part number. In the world of PLM, you have to deal with legacy.
The need for business transformation
Companies currently do not fully recognize that the old way of working in PLM, based on a document-driven approach, is not compatible with a modern data-driven approach. The old approach makes documents the formal decision carrier for product information. Documents are reviewed and approved and once approved stored. When information is changing, documents are most of the time not updated due to the cost of maintaining all these versions of documents in the context of the related products. Documents lock information and do not guarantee the information inside the document remains actual.
In a data-driven environment, we work in a much more granular manner, directly with the data. Working data-driven reduces the need for people in the organization to collect and transform information into documents for further communication.
As both approached do not match in a single business process or a single PLM system, the challenge for companies is to decide how to keep the old environment available and meanwhile introducing the new data-driven approach for PLM. Customizing this upon your old PLM environment would be a problem for the future as customizations are hard to maintain, in particular, if these are the customizations that need to support the future.
Building everything in a new environment, designed for a data-driven approach, will also be a guarantee for failure. The old data, stored in documents, does not have the granular quality a data-driven environment needs.
Combined with the fact that different people will be needed to support old or new businesses, the topic of solving PLM for the future is not an easy one.
And when things are not easy, it is hard to find the right support for changes. Management usually does not spend enough time to understand the big picture; politics come into play.
Unfortunately, it’s usually safer and better for one’s career to cut costs a little further than to try to hit the rare innovation homerun
Quote from Political Realities of PLM-Implementation Projects in Engineering.com
Why PLM is the forgotten domain in digital transformation is quite understandable, although it requires more than a tweet to picture the full story. Understanding the reasons is the first step, making PLM part of the digital transformation is the main challenge – who has the energy and power to lead?