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At this moment I am finalizing my session for PDT2016 where I will talk about the importance of accurate data. Earlier this year I wrote a post about that theme: The importance of accurate data. Act now!
My PDT session will be elaborating on this post, with a focus on why and how we need this change in day-to-day business happen. So if you are interested in a longer story and much more interesting topics to learn and discuss, come to Paris on 9 and 10 November.
Dreaming is free
Recently I found a cartoon on LinkedIn and shared it with my contacts, illustrating the optimistic view companies have when they are aiming to find the best solution for their business, going through an RFI phase, the RFP phase, and ultimately negotiation the final deal with the PLM solution provider or vendor. See the image below:
All credits to the author – I found this image here
The above cartoon gives a humoristic view of the (PLM) sales process (often true). In addition, I want to share a less optimistic view related to PLM implementations after the deal has been closed. Based on the PLM projects if have been coaching in the past, the majority of these projects became in stress mode once the stakeholders involved only focused on the software, the functions and features and centralizing data. Implementing the software without a business transformation caused a lot of discomfort.
Users started to complain that the system did not allow them to do their day-to-day work in the same way. And they were right! They should have a new day-to-day work in the future, with different priorities based on the new PLM infrastructure.
This cultural change (and business change) was often not considered as the PLM system was implemented from an IT-perspective, not with a business perspective.
Over time, a better understanding of PLM and the fact that vendors and implementers have improved their portfolio and implementation skills, classical PLM implementations are now less disruptive.
A classical PLM implementation can be done quickly is because the system most of the time does not change the roles and responsibilities of people. Everyone remains working in his/her own silo. The difference: we store information in a central place so it can be found. And this approach would have worked if the world was not changing.
The digital enterprise transformation.
With the upcoming digitization and globalization of the market, enterprises are forced to adapt their business to become more customer-driven. This will have an impact on how PLM needs to be implemented. I wrote about this topic in my post: From a linear world to fast and circular. The modern digital enterprise has new roles and responsibilities and will eliminate roles and responsibilities that can be automated through a data-driven, rule-based approach. Therefore implementing PLM in a modern approach should be related (driven) by a business transformation and not the other way around!
In the past two years, I have explained this story to all levels inside various organizations. And nobody disagreed. Redefining the processes, redefining roles was the priority. And we need a team to help people to make this change – these people are change management experts. The benefits diagram from Gartner as shown below was well understood, and most companies agreed the ambition should be to the top curve, in any case, stay above the red curve
But often reality relates to the first cartoon. In the majority of the implementations I have seen the past two years, the company did not want to invest in change management, defining the new process and new roles first for an optimum flow of information. They spent the entire budget on software and implementation services. With a minimum of staff, the technology was implemented based on existing processes – no change management at all. Disappointing, as short-term thinking destroyed the long-term vision and benefits were not as large as they had been dreaming.
Without changing business processes and cultural change management, the PLM team will fight against the organization, instead of surfing on the wave of new business opportunities and business growth.
If your company is planning to implement modern PLM which implicit requires a business transformation, make sure cultural change management is part of your plan and budget. It will bring the real ROI. Depending on your company´s legacy, if a business transformation is a mission impossible, it is sometimes easier to start a new business unit with new processes, new roles and potentially new people. Otherwise, the benefits will remain (too) low from your PLM implementation.
I am curious to learn your experience related to (the lack) of change management – how to include it into the real scope – your thoughts ?
As a reaction to this post, Oleg Shilovitsky wrote a related blog post: PLM and the death spiral of cultural change. See my response below to this post as it will contribute to the understanding of this post
Oleg, thanks for contributing to the theme of cultural change. Your post illustrates that my post was not clear enough, or perhaps too short. I do not believe PLM is that difficult because of technology, I would even claim that technology is a the bottom of my list of priorities. Not stating it is not important, but meaning that when you are converging with a company to a vision for PLM, you probably know the kind of technologies you are going to use.
The highest priority to my opinion is currently the business transformation companies need to go through in order to adapt their business to remain relevant in a digital world. The transformation will require companies to implement PLM in a different manner, less silo-oriented, more focus on value flows starting from the customer.
Working different means cultural change and a company needs to allocate time, budget and energy to that. The PLM implementation is supporting the cultural change not driving the cultural change.
And this is the biggest mistake I have seen everywhere. Management decides to implement a new PLM as the driver for cultural change, instead of the result of cultural change. And they reason this is done, is most of the time due to budget thinking as cultural change is ways more complex and expensive than a PLM implementation.
Image and article related to the article “The Onrushing Wave” in the Economist Jan 18th, 2014
When PLM is discussed at management level, often the goal is to increase efficiency, which translates into doing the same with fewer people. And it is the translation that is creating worries inside the company. The PLM system is going to cut down the amount of jobs in our company.
The result: People, who fear their job is at risk, will make sure PLM will fail and become blockers. These people will be the ones defending the “good old way of working” and create a mood of complexity for the new PLM system.
I wrote some time ago a post about PLM and Blockers
At the end there is frustration at all levels in the company and PLM systems are to blame.
How to address the fear for disappearing jobs block a PLM implementation?
First of all if you implement PLM now, do not target efficiency only. There is a digital revolution ongoing, radically changing standard businesses and markets. The picture at the top says it all. If you are still not convinced, read the “old” article from the Economist or more related to PLM, I just read this article from Accenture consulting talking about Digital PLM. I liked the opening sentence from that article:
“It’s time to adopt a digital model for product lifecycle management – or get left behind.”
The digital revolution forces companies to become extremely flexible and agile. Business models can rapidly change. Where perhaps your company was the market leader, a few years you can be in trouble, due to the decoupling of products and services in a different business model. There are a few places where you do not have to worry (yet). If you are in a governmental type of business (no competition – you are the only preferred supplier) the less worried you might be for the upcoming digital revolution. Other types of companies need to make a strategic plan.
Making a strategic plan
The strategic plan starts at the board level and has, of course, elements of efficiency. However, the major strategic discussion should be: “How will we differentiate our company in the future and stay in business and profitable”. This cannot be by competing on price only. It requires you can excite your future customers and who these customers are might not be clear yet either.
Different business models can give the company a better position in the market. The current trend in competitive markets is that the value does not come from selling products. Selling services or operation capacity (OPEX instead of CAPEX) are currently upcoming new business models and they need constant anticipation to what happens in the market or at your potential customer base.
Digitalization of information and being able to work with real-time information, instead of information hidden in documents, handled by document controllers, creates the opportunity to change. For example the potential of “The Internet of Everything” is huge.
At the board level, you need the vision where the company should be in the next 5 to 10 years. It will not bubble up automatically in an organization. And when talking about PLM, it should be digital PLM.
It is not easy to communicate the above if you have not lived through the whole process in your mind. Management needs to be able to explain the vision and its impact on the organization in such a way that it empowers people instead of making them afraid of change. We all know the examples of charismatic CEOs, like Steve Jobs, who could energize a company and its customers. However, it is clear that not every CEO is like Steve Jobs.
Once you are able to communicate the vision, it will be logical that the organization needs new processes and in modern digital processes create different responsibilities and need different management styles.
When you start implementing PLM in a modern approach (digital PLM according to Accenture) there will be jobs disappearing. There is no need to be secretive about that; it is a result of the vision that should be known to everyone in the company.
Disappearing jobs are:
- jobs where people are processing data (from one format to the other) and checking follow-up processes (from on Excel to the other). If your daily job is collecting data and filling spreadsheets with data your job is at risk. In a digital environment, the data will be real-time available and can be filtered and presented in automatic reports or dashboards.
- Jobs where team managers have the major task to decide on priorities for the team and fight with other discipline team managers on priorities. In a digital environment, empowered employees will understand conflicting activities and they will be able to discuss and decide immediately with the relevant people. No need for an intermediate layer of people handling escalations only. It is true that this modern approach requires a different management style and people who can deal with being empowered. In general, empowered people feel more motivated that employees who are just doing what their managers tell them to do. The business change from hierarchical and siloed organizations towards networked organizations is critical and challenging – all depending on trust and the right change management.
- The classical fire-fighters. At first glance they are considered as crucial as they solve all the issues with great energy, do not run away when work needs to be done and make it happen. From the management perspective, these people are blocking change as they flourish from the chaos and do not fix or prevent new issues coming up.
For all other people in the company, digital PLM should bring relief – see the Gartner quote below.
Digital business jobs imply spending less time in searching for information. Less work in a reactive mode as information in the right context in real-time will be available. End to end visibility of information combined with transparency will lead to higher performance and motivation. It requires changing behaviors, motivation must come from the inspiration of the management and the understanding that your company is becoming more flexible and more competitive than before. And for that reasons keeping you in business and providing you an interesting place to work.
Conclusion: Do not use PLM to improve efficiency only and ROI discussions. There is a strategic need to be ready and stay in business for the future. Modern PLM is an enabler, however, requires a vision, inspiring communication and a path for employees to be empowered.
I am curious about your opinion – will this happen to your company / industry?
Two weeks ago I got this message from WordPress, reminding me that I started blogging about PLM on May 22nd in 2008. During some of my spare time during weekends, I began to read my old posts again and started to fix links that have been disappearing.
Initially when I started blogging, I wanted to educate mid-market companies about PLM. A sentence with a lot of ambiguities. How do you define the mid-market and how do you define PLM are already a good start for a boring discussion. And as I do not want to go into a discussion, here are my “definitions”
Warning: This is a long post, full of generalizations and a conclusion.
PLM and Mid-market
The mid-market companies can be characterized as having a low-level of staff for IT and strategic thinking. Mid-market companies are do-ers and most of the time they are good in their domain based on their IP and flexibility to deliver this to their customer base. I did not meet mid-market companies with a 5-year and beyond business vision. Mid-market companies buy systems. They bought an ERP system 25-30 years ago (the biggest trauma at that time). They renewed their ERP system for the Y2K problem/fear and they switched from drawing board towards a 2D CAD system. Later they bought a 3D CAD system, introducing the need for a PDM system to manage all data.
PLM is for me a vision, a business approach supported by an IT-infrastructure that allows companies to share and discover and connect product related information through the whole lifecycle. PLM enables companies to react earlier and better in the go-to-market process. Better by involving customer inputs and experience from the start in the concept and design phases. Earlier thanks to sharing and involving other disciplines/suppliers before crucial decisions are made, reducing the amount of iterations and the higher costs of late changes.
Seven years ago I believed that a packaged solution, combined with a pre-configured environment and standard processes would be the answer for mid-market companies. The same thought currently PLM vendors have with a cloud-based solution. Take it, us it as it is and enjoy.
Here I have changed my opinion in the past seven years. Mid-market companies consider PLM as a more complex extension of PDM and still consider ERP (and what comes with that system) as the primary system in the enterprise. PLM in mid-market companies is often seen as an engineering tool.
LESSON 1 for me:
The benefits of PLM are not well-understood by the mid-market
To read more:
Globalization and Education
In the past seven years, globalization became an important factor for all type of companies. Companies started offshoring labor intensive work to low-labor-cost countries introducing the need for sharing product data outside their local and controlled premises. Also, acquisitions by larger enterprises and by some of the dominant mid-market companies, these acquisitions introduced a new area of rethinking. Acquisitions introduced discussions about: what are real best practices for our organization? How can we remain flexible, meanwhile adapt and converge our business processes to be future ready?
Here I saw two major trends in the mid-market:
Lack of (PLM) Education
To understand and implement the value of PLM, you need to have skills and understanding of more than just a vendor-specific PLM system. You need to understand the basics of change processes (Engineering Change Request, Engineering Change Order, Manufacturing Change Order and more). And you need to understand the characteristics of a CAD document structure, a (multidisciplinary) EBOM, the MBOM (generic and/or plant specific) and the related Bill of Processes. This education does not exist in many countries and people are (mis-)guided by their PLM/ERP vendor, explaining why their system is the only system that can do the job.
Interesting enough the most read posts on my blog are about the MBOM, the ETO, BTO and CTO processes. This illustrates there is a need for a proper, vendor-independent and global accepted terminology for PLM
Some educational posts:
Bill of Materials for Dummies – ETO ranked #1
ECR/ECO for Dummies ranked #2
BOM for Dummies – CTO ranked #4
BOM for Dummies: BOM and CAD ranked #7
The dominance of ERP
As ERP systems were introduced long before PLM (and PDM), these systems are often considered by the management of a mid-market company as the core. All the other tools should be (preferably) seen as an extension of ERP and if possible, let´s implement ERP vendor´s functionality to support PLM – the Swiss knife approach – one tool for everything. This approach is understandable as at the board level there are no PLM discussions. Companies want to keep their “Let´s do it”-spirit and not reshuffle or reorganize their company, according to modern insights of sharing. Strangely enough, you see in many businesses the initiative to standardize on a single ERP system first, instead of standardizing on a single PLM approach first. PLM can bring the global benefits of product portfolio management and IP-sharing, where ERP is much more about local execution.
PLM is not understood at the board level, still considered as a tool
Some post related to PLM and ERP
Where is the MBOM ? ranked #3
The human factor
A lot of the reasons why PLM has the challenge to become successful have to do with its broad scope. PLM has an unclear definition and most important, PLM forces people to share data and work outside their comfort zones. Nobody likes to share by default. Sharing makes day-to-day life more complicated, sharing might create visibility on what you actually contribute or fix. In many of my posts, I described these issues from various viewpoints: the human brain, the innovators dilemma, the way the older generation (my generation) is raised and used to work. Combined with the fact that many initial PLM/PDM implementations have created so many legacies, the need to change has become a risk. In the discussion and selection of PLM I have seen many times that in the end a company decides to keep the old status quo (with new tools) instead of really having the guts to move toward the future. Often this was a result of investors not understanding (and willing to see) the long term benefits of PLM.
PLM requires a long-term vision and understanding, which most of the time does not fit current executive understanding (lack of education/time to educate) and priority (shareholders)
Many recent posts are about the human factor:
The digital transformation
The final and most significant upcoming change is the fact that we are entering a complete new era: From linear and predictable towards fast and iterative, meaning that classical ways we push products to the market will become obsolete. The traditional approach was based on lessons learned from mechanical products after the second world-war. Now through globalization and the importance of embedded software in our products, companies need to deliver and adapt products faster than the classical delivery process as their customers have higher expectations and a much larger range to choose from. The result from this global competitiveness is that companies will change from delivering products towards a more-and-more customer related business model (continuous upgrades/services). This requires companies to revisit their business and organization, which will be extremely difficult. Business wise and human change require new IT concepts – platform? / cloud services? / Big data?
Older enterprises, mid-market and large enterprises will be extremely challenged to make this change in the upcoming 10 years. It will be a matter of survival and I believe the Innovator´s Dilemma applies here the most.
The digital transformation is apparent as a trend for young companies and strategic consultants. This message is not yet understood at the board level of many businesses.
Some recent post related to this fast upcoming trend:
ROI (Return On Investment)
I also wrote about ROI – a difficult topic to address as in most discussions related to ROI, companies are talking about the costs of the implementation, not about the tremendous larger impact a new business approach or model can have, once enabled through PLM. Most PLM ROI discussions are related to efficiency and quality gains, which are significant and relevant. However these benefits are relative small and not comparable with the ability to change your business (model) to become more customer centric and stay in business.
Some of the ROI posts:
A (too) long post this time however perhaps a good post to mark 7 years of blogging and use it as a reference for the topics I briefly touched here. PLM has many aspects. You can do the further reading through the links.
From the statistics it is clear that the education part scores the best – see rankings. For future post, let me know by creating a comment what you are looking for in this blog: PLM Mid-Market, Education, PLM and ERP, Business Change, ROI, Digitalization, or …??
Also I have to remain customer centric – thanks for reading and providing your feedback
Three weeks ago there was the Product Innovation conference in Düsseldorf. In my earlier post (here) I described what I experienced during this event. Now, after all the information is somehow digested, here a more high-level post, describing the visible change in business and how it relates to PLM. Trying to describe this change in non-academic wording but in images. Therefore, I described the upcoming change in the title: from linear to circular and fast.
Let me explain this image step by step
In the middle of the previous century, we were thinking linear in education and in business. Everything had a predictable path and manufacturing companies were pushing their products to the market. First local, later in time, more global. Still the delivery process was pretty linear:
This linear approach is reflected in how organizations are structured, how they are aligned to the different steps of the product development and manufacturing process. Below a slide I used at the end of the nineties to describe the situation and the pain; lack of visibility what happens overall.
It is discouraging to see that this situation still exists in many companies.
At the end of the nineties, early 2000, PLM was introduced, conceptually managing the whole lifecycle. In reality, it was mainly a more tight connection between design and manufacturing preparation, pushing data into ERP. The main purpose was managing the collaboration between different design disciplines and dispersed teams.
Jim Brown (Tech-Clarity) wrote at that time a white paper, which is still valid for many businesses, describing the complementary roles of PLM and ERP. See the picture below:
Jim introduced the circle and the arrow. PLM: a circle with iterations, interacting with ERP: the arrow for execution. Here visual it became already clear an arrow does not have the same behavior as a circle. The 100 % linearity in business was gone.
Let´s have a closer look at the PLM circle
This is how PLM is deployed in most organizations:
Information is pushed in the ERP system as disconnected information, no longer managed and connected to its design intent.
Next, the ERP system is most of the time not well-equipped for managing after sales and services content. Another disconnect comes up.
Yes, spare parts could be ordered through ERP, but issues appearing at the customer base are not stored in ERP, often stored in a separate system again (if stored beyond email).
The result is that when working in the concept phase, there is no information available for R&D to have a good understanding of how the market or customers work with their product. So how good will it be? Check in your company how well your R&D is connected with the field?
And then the change started …
This could have stayed reality for a long time if there were not a huge business change upcoming. The world becomes digital and connected. As a result, local inefficiencies or regional underperformance will be replaced by better-performing companies. The Darwin principle. And most likely the better performing companies are coming from the emerging markets as there they do not suffer from the historical processes and “knowledge of the past”. They can step into the digital world much faster.
In parallel with these fast growing emerging markets, we discovered that we have to reconsider the ways we use our natural resources to guarantee a future for next generations. Instead of spilling resources to deliver our products, there is a need to reuse materials and resources, introducing a new circle: the circular economy.
The circular economy can have an impact on how companies bring products to the market. Instead of buying products (CAPEX) more and more organizations (and modern people) start using products or services in a rental model (OPEX). No capital investment anymore, pay as you go for usage or capacity.
The digital and connected world can have a huge impact on the products or services available in the near future. You are probably familiar with the buzz around “The Internet of Things” or “Smart and Connected”.
No longer are products depending on mechanical behavior only, more and more products are relying on electrical components with adaptive behavior through software. Devices that connect with their environment report back information to the manufacturer. This allows companies to understand what happens with their products in the field and how to react on that.
Remember the first PLM circle?
Now we can create continuity of data !
Combine the circular economy, the digital and connected world and you will discover everything can go much faster. A crucial inhibitor is how companies can reorganize themselves around this faster changing, circular approach. Companies need to understand and react to market trends in the fastest and adequate way. The future will be probably about lower volumes of the same products, higher variability towards the market and most likely more and more combining products with services (the Experience Model). This requires a flexible organization and most likely a new business model which will differ from the sequential, hierarchical organizations that we know at this moment.
The future business model ?
The flexibility in products and services will more and more come from embedded software or supported by software services. Software services will be more and more cloud based, to avoid IT-complexity and give scalability.
Software development and integration with products and services are already a challenge for classical mechanical companies. They are struggling to transform their mechanical-oriented design process towards support for software. In the long-term, the software design process could become the primary process, which would mean a change from (sequential – streamlined) lean towards (iterative – SCRUM) agile.
Once again, we see the linear process becoming challenged by the circular iterations.
This might be the end of lean organizations, potentially having to mix with agile conepts..
If it was a coincidence or not, I cannot judge, however during the PI Conference I learned about W.L. Gore & Associates, with their unique business model supporting this more dynamic future. No need to have a massive organization re-org to align the business, as the business is all the time aligning itself through its employees.
Last weekend, I discovered Semco Partners in the newspaper and I am sure there are more companies organizing themselves to become reactive instead of linear – for sure in high-tech world.
Linearity is disappearing in business, it is all about reactive, multidisciplinary teams within organizations in order to support customers and their fast changing demands.
Fast reactions need new business organizations models (flexible, non-hierarchical) and new IT-support models (business information platforms – no longer PLM/ERP system thinking)
What do you think ? The end of linear ?
I have talked enough about platforms recently. Still if you want to read more about it:
Engineering.com: Prod. Innovation Platform PlugnPlay in next generation PLM
Gartner: Product Innovation Platforms
VirtualDutchman: Platform, Backbone, Service Bus or BI
A PLM-twisted mind never rests. Not even during these Xmas seasonal holidays, when everything else comes to rest. The dark Christmas days, here in the Netherlands, are the days to share with your family and with others who need your support. For a short time, we focus on being kind, charity and what matters for humanity.
Back to our purpose you might say. This year Pope Francis brought this message very aptly to his cardinals – read it here if you have not heard about it yet.
Next my PLM-twisted mind started ringing all kind of Xmas bells. The pope is talking about PLM! Instead of focusing on your business silo, your personal kingdom, we have to focus on what is the original purpose of our company, not of the individual person. Forget politics, back to the mission !
Then I realized there is a paradox within PLM. PLM is a must-have or must-do in a capitalistic world as through PLM companies can become be more competitive than others, win market share and become the market leader.
Nothing social. It is the base for survival in this global world. When your company is not funded by the government, you have to be competitive to survive. Your business needs to make enough money to keep on innovating and stay in business. This is why companies need PLM..
The paradox however is that effective PLM implementations are all based on the concept of sharing. Sharing data in the early ideation phases, through crowd-sourcing, open innovation, internal sharing with partners and potential customers. Next the development, delivery and maintenance phases of the lifecycle are all performing in an ideal way if information is shared and flowing across the value chain without being locked in silos. The current hype of IoT (Internet of Things) is about sharing data.
So to be a successful, profitable company, inside your business you need to go back to the roots of sharing (data). Interesting paradox isn’t it?
Therefore, I wish you all to have a PLM Pope in your company who will explain the mission and break down the holy houses. You need a PLM pope in your company to make sure it gets implemented successful.
I wish you all a happy and successful 2015
with a lot of sharing
p.s. Should I see a shrink for my PLM-twisted brain?
Business is changing and becoming digital as you might have noticed. If you haven´t noticed it, you might be disconnected from the world or work in a stable silo. A little bit simplified and provocative otherwise you would not read further.
The change towards digital also has its effect on how PLM is evolving. Initially considered as an extension of PDM, managing engineering data, slowly evolving to an infrastructure to support the whole product lifecycle.
The benefits from a real PLM infrastructure are extremely high as it allows people to work smarter, identify issues earlier and change from being reactive towards proactive. In some industries, this change in working is they only way to stay in business. Others with still enough margin will not act.
Note: I am talking about a PLM infrastructure as I do not believe in a single PLM system anymore. For me PLM is supported through a collection of services across the whole product lifecycle, many potentially in one system or platform.
Changing from an engineering-centric system towards an infrastructure across the departmental silos is the biggest challenge for PLM. PLM vendors and ERP vendors with a PLM offering are trying provide this infrastructure and mainly fight against Excel. As an Excel file can easy pass the border from one department to the other. No vision needed for Excel.
A PLM infrastructure however requires a vision. A company has to look at its core business processes and decide on which information flows through the organization or even better their whole value chain.
Building this vision, understanding this vision and then being able to explain the vision is a challenge for all companies. Where sometime even management says
“Why do we need to have a vision, just fix the problem”
also people working in departments are not looking forward to change their daily routines because they need to share information. Here you here statements like
“Why people feel the need to look at the big picture. I want to have my work done.”
So if current businesses do not change, will there be a change?
Here I see the digital world combined with search-based applications coming up. Search based applications allow companies to index their silos and external sources and get an understanding of the amount of data there exists. And from these results learn that there is a lot of duplicated data or invalid information at different places.
This awareness might create the understanding that if instead of having hundred thousands of Excels in the organization, it would be better to have the data inside a database, uniquely stored and connected to other relevant information.
Next if you want to understand it in a more down-to-earth manner it is important to listen and talk with your peers from other companies, other industries. This is currently happening all around the world and I invite you to participate.
Here is a list of events that I am attending or planned to attend but too far away:
Here I will participate as a panel member in the discussion around the concept of zero files. Here we want to explain and discuss to the audience what a data-centric approach means for an organization. Also, customers will share their experiences. This conference is focusing on the ENOVIA community – you can still register here
Here I will speak about the PLM future (based on data) and what PLM should deliver for the future generations. This conference is much broader and addresses all PLM related topics in a broader perspective
Relative new in the Nordics Infuseit, a PLM consultancy company, is able to attract an audience that wants to work on understanding the PLM future. Instead of listening to presenters, here you are challenged to to discuss and contribute to build a common opinion. I will be there too.
Conclusion: It is time to prepare yourself for the change – it is happening and be educated an investment that will be rewarding for your company
What do you think – Is data-centric a dream ?
In my previous post, I talked about the unstoppable trend towards digital information and knowledge based on data becoming the new business paradigm.
Building knowledge based on information extracted from data, instead of working with documents and people, who need to manipulate these documents.
Moreover, the reasons to move towards a digital data-oriented approach are the immense business benefits it can bring to an organization. Having online visibility on information in context of other information from different stakeholders allows companies to be more proactive.
A proactive company will react faster to the market or customer. This will reduce waste and resources (materials / people) and therefore in the end be more competitive. This is all described in my first post, with relevant links to various global references.
In this post, I want to describe in an example what the differences are between a document-oriented and a data-oriented approach and how it affects people and business. This might give you an impression of the expected business benefits.
The ultimate goal behind a data-oriented approach is to have a single version of the truth for a product, project or plant. This can be realized by treating information as data elements in various connected database, where on demand reports or dashboards can be created based on actual information, instead of documents generated by duplicating data in new systems and locations. Digital data will provide paperless processes accessible almost anywhere around the world.
As an example, I will explain the difference between document-centric and data-centric when dealing with specifications.
Everyone knows the challenge with specifications. Most of the time in printed documents describing how a product or service should work from the client point of view. There are two principles behind specifications:
- Complexity. The more complex product or service is, the bigger chance that specifications are not complete or hundred percent understood, leading to an iterative change process. The challenge here is to manage the change and the consistency of the full specifications.
- Industry and margins. In a repetitive business, for example, the automotive or other mass consumer products, products can be quiet complex and once sold hard to maintain and repair. In a competitive business, an error in the field can consume a lot of the expected profit. In the construction industry, where most of the time single projects are executed by a chain of disciplines, the industry (still) accepts the costs overrun and the high costs of fixing issues in the field, instead of being clearer upfront during the design and planning.
Let’s stay with the example in the middle of complexity and industry volume. In color the various stages of the process.
The document based specification – 1
When the document based specification arrives, the company has to get an understanding of the content. The project manager has a first read through the document (100+ pages) and decides to send the document (it is a pdf) to sales, engineering, legal and planning. Engineering decides to distribute the document internally to mechanical, electrical and quality (for compliance).
The project manager stresses everyone on a weekly base to deliver the responses and tries to understand if the answers will come in time. There are some meetings needed with the stakeholders as the whole understanding needs to be consistent. Based on several iterations a response is compiled.
The data-oriented approach – 1
When the document based specification arrives, the project leader first stores the document as a reference in the PLM system and extracts all the customer requirements as data elements in the system. While extracting the requirements, the projects manager groups them into digital folders (functional / non-functional, contractual, regulations, etc.) and assigns them to the relevant stakeholders, who get notified by the system. Each of the persons assigned, again the engineering manager has distributed the discipline specific requirements internally.
The project manager watches the progress of the requirements analyses which are around a virtual model. There is still a need for meetings with the stakeholders to agree on the solution approach. Everything is stored and visible online in the system. This visibility has helped some of the stakeholders to be better-aligned upfront. In the end, the response is generated and converted to the customer’s format.
Not much benefit for step 1
If you compare the two approaches, there is mainly one person happy: the project manager. Instead of spending time to collect the status of all information, direct visibility on the response helps him/her to prioritize of focus where attention is needed, instead of discovering it on a weekly base.
There is some small benefit from the virtual model as other stakeholders can have a better understanding of the actual progress.
However, for the rest, all stakeholders are complaining. It is difficult to work. (Fl)Excel was much easier. Moreover, thinking about a virtual model takes time as we are not used working in this way. Typically something for aerospace you might think.
And now the benefits come – step 2
The customer has placed the order, and the project has started. The design has started, and people start to discover discrepancies or ambiguous demands that need to be negotiated with the customer. Is it part of the project and if not, should it become part of the project and at which costs (for whom)
The document oriented approach – 2
Several engineers are now discussing with the counterparts at the customer the detailed interpretation of the requirements, either through face-to-face meetings or emails. Changes are collected and sent to the project manager, who tries to understand what has changed and how to merge it in an on-going specification document. To avoid many revisions, he/she tries to update the document on a bi-weekly base, send it to the internal stakeholders for review and with their feedback generates a specification document for the customer that supposed to cover the latest agreements.
Unfortunate not all changes have reached the document as some of the stakeholders were busy and forgot to include some of the changes agreed with the customer as they were in a lost email. Also, a previous change of a requirement was overwritten as an update from quality used the old data. Finally, some design solutions were changed, which raised the costs. And not sure if the product with all its changes will be compliant after delivery. However, luckily nobody noticed so far, not even the customer
The data-oriented approach – 2
Thanks to the virtual model and the relations between all the requirements, any change in a requirement gets notified in the system. When a requirement is further clarified, it is updated in the system. When a requirement needs to be changed, it is clear what the impact of this change is. A change workflow assures that decisions are made visible and approved. Potentially changes that lead to more work were quoted to the customer for acceptance. Luckily the compliancy engineer noted that the change of materials used would lead to a compliancy issue. On a bi-weekly base, the project manager generates an agreed specification for the customer based on the data in the system.
Benefits are growing.
The project manager remains the happiest person and is even happier as less discussion is needed about who changed what and why. Alternatively, discussions about changes that should exist and cannot be found. The time saved by the project manager could be used to collaborate even better with the teams (without annoying them) or perhaps a second project to manage in parallel.
Other stakeholders start to enjoy the data-oriented approach too. Less ambiguity on their side too, fewer iterations because changes were not apparent. As all information is related to the virtual model online, the actual status is clear when making a decision. Less fixing afterwards and luckily still project meeting between the stakeholders to synchronize. The PLM system does not eliminate communication; it provides a reliable baseline of the truth. No need (and option) to look in your archives.
At this stage, benefits start to become clear. Fewer iterations and better decisions will have an impact on the costs and project stress. Still a complaint from the engineers might be that they need to do too much upfront thinking although some years later they might discover that this will be their main job. Fixing issues from the past have diminished.
And then the ultimate benefits
Now the project has reached the physical state. It is manufactured or under commissioning.
The document oriented approach – 3
In the document oriented approach, many issues might pop-up because they have not been considered in the early phase, or they got lost during document exchanges. Does the product work as specified? Is the building certified as specified?
The customer is king and for manufacturing companies this might lead to product recalls or launch delays. In the construction world, people in the field, will fix the issues by using skilled resources and creating a waste of materials and/or resources.
Data handover to the owner is a nightmare for a the project-centric delivery. Several people have been searching for documents, specifications and emails to build and compile the required documents for handover.
The data-oriented approach – 3
In the data-centric approach, the behavior of the physical product works as expected as most of the issues have been solved in the virtual model. When testing the product it works as specified as the specifying requirements have always been linked to the product. Moreover, they have been agreed and approved by the relevant stakeholders. Where relevant, the customer has paid for the extra work specified.
The handover process was not so stressful as before with the document-oriented approach. As the required information was known and specified upfront related to the requirements, the maturity process of the virtual model assured this data exists in the system. Now the as-built information matches the as-specified information. What a relief.
It is clear that the significant benefits can be found in step 3. I wrote the comparison in an extreme manner, knowing that reality lies in the middle. Excellent people can comprehend and fix more upfront because of their experience. Building the ultimate virtual model is not yet an easy achievement either.
The savings in materials and required resources are significant in a data-oriented approach. The time savings and the quality enhancements might change your company into a market-leader. The cost savings achieved through a pro-active approach will make your margin growing (unless competition does the same) and enable you to innovate.
One final remark on business change
However, if you change to a data-centric approach, it will be a though change process and therefore once implemented you will leave competitors behind that keep on hanging on the past.
My holidays are over. After reading and cycling a lot, it is time to focus again on business and future. Those of you who have followed my blog the past year must have noticed that I have been talking on a regular base about business moving to a data-oriented approach instead of a document / file-based approach. I wrote an introduction to this topic at the beginning of this year: Did you notice PLM has been changing?
This year I have had many discussions around this topic with companies acting in various industries; manufacturing, construction, oil & gas, nuclear and general EPC-driven companies. There was some commonality in all these discussions:
- PLUS: Everyone believes it is a beautiful story and it makes sense
- MINUS: Almost nobody wants to act upon it as it is an enormous business change and to change the way a company works you need C-level understanding
- PLUS: Everyone thinks the concept is clear to them
- MINUS: Few understand what it means to work data-oriented and what the impact on their business would be
Therefore, what I will try to do in the upcoming blog posts (two-three-four ??) is to address the two negative observations and how to make them more precise.
What is data / information / knowledge?
Data for me is a collection of small artifacts (numbers, characters, lines, sound bits, …) which have no meaning at all. This could be bundled together as a book, a paper drawing, a letter but also bundled together as a digital format like an eBook, a CAD file, an email and even transmission bytes of a network / internet provider can be considered as data.
Data becomes significant once provided in the context of each other or in the context of other data. At that time, we start calling it information. For that reason, a book or a drawing provides information as the data has been structured in such a manner to become meaningful. The data sent through the network cable only becomes information when it is filtered and stripped from the irrelevant parts.
Information is used to make decisions based on knowledge. Knowledge is the interpretation of information, which combined in a particular way, helps us to make decisions. And the more decisions we make and the more information we have about the results of these decisions, either by us or other, it will increase our knowledge.
Data and big data
Now we have some feeling about data, information and knowledge. For academics, there is room to discuss and enhance the definition. I will leave it by this simple definition.
Big data is the term for all digital data that is too large to handle in a single data management system, but available and searchable through various technologies. Data can come from any source around the world as through the internet an infrastructure exists to filter and search for particular data.
By analyzing and connecting the data coming from these various sources, you can generate information (placing the data in context) and build knowledge. As it is an IT-driven activity, this can be done in the background and give almost actual data to any person. This is a big difference with information handling in the old way, where people have to collect and connect manual the data.
The power of big data applies to many business areas. If you know how your customers are thinking and associating their needs to your products, you can make them better and more targeted to your potential market. Or, if you know how your products are behaving in the field during operation (Internet of Things) you can provide additional services, instant feedback and be more proactive. Plus the field data once analyzed provide actual knowledge helping you to make better products or offer more accurate services.
Wasn’t there big data before?
Yes, before the big data era there was also a lot of information available. This information could be stored in “analogue” formats ( microfiche, paper, clay tablets, papyrus) or in digital formats, better known as files or collections of files (doc, pdf, CAD-files, ZIP….).
Note the difference. Here I am speaking about information as the data is contained in these formats.
You have to open or be in front of information container first, before seeing the data. In the digital world, this is often called document management, content management. The challenge of these information containers is that you need to change the whole container version once you modify one single piece of data inside it. And each information container holds duplicated information from a data element. Therefore, it is hard to manage a “single version of the truth” approach.
And here comes the data-oriented approach
The future is about storing all these pieces of data inside connected data environments, instead of storing a lot of data inside a (versioned) information container (a file / a document).
Managing these data elements in the context of each other allow people to build information from any viewpoint – project oriented, product oriented, manufacturing oriented, service oriented, etc.
The data remains unique, therefore supporting much closer the single version of the truth approach. Personally I consider the single version of the truth as a utopia, however reducing the amount of duplicated data by having a data-oriented approach will bring a lot more efficiency.
In my next post, I will describe an example of a data-oriented approach and how it impacts business, both from the efficiency point of view and from the business transformation point of view. As the data-oriented approach can have immense benefits . However, they do not come easy. You will have to work different.
Some more details
An important point to discuss is that this data-oriented approach requires a dictionary, describing the primary data elements used in a certain industry. The example below demonstrates a high-level scheme for a plant engineering environment.
Data standards exist in almost any industry or they are emerging and crucial for the longevity and usage of the data. I will touch it briefly in one of the upcoming posts, however, for those interested in this topic in relation to PLM, I recommend attending the upcoming PDT Europe. If you look at the agenda there is a place to learn and discuss a lot about the future of PLM.
I hope to see you there.
In my previous post, I wrote about the different ways you could look at Service Lifecycle Management (SLM), which, I believe, should be part of the full PLM vision. The fact that this does not happen is probably because companies buy applications to solve issues instead of implementing a consistent company wide vision (When and Where to start is the challenge). Oleg Shilovitsky just referred one more time to this phenomena – Why PLM is stuck in PDM.
I believe PLM as the enterprise information backbone for product information. I will discuss the logical flow of data that might be required in a PLM data model, to support SLM. Of course all should be interpreted in the context of the kind of business your company is in.
This post is probably not the easiest to digest as it assumes you are somehow aware and familiar with the issues relevant for the ETO (Engineering To Order) /EPC (Engineering Procurement Construction) /BTO (Build To Order) business
A collection of systems or a single device
The first significant differentiation I want to make is between managing an installation or a single device as I will focus only on installations.
An installation can be a collection of systems, subsystems, equipment and/or components, typically implemented by companies that deliver end-to-end solutions to their customers. A system can be an oil rig, a processing production line (food, packages, …), a plant (processing chemicals, nuclear materials), where maintenance and service can be performed on individual components providing full traceability.
Most of the time a customer specific solution is delivered to a customer, either direct or through installation / construction partners. This is the domain I will focus on.
I will not focus on the other option for a single device (or system) with a unique serial number that needs to be maintained and serviced as a single entity. For example a car, a computer device. Usually a product for mass consumption, not to be traced individually.
In order to support SLM at the end of the PLM lifecycle, we will see a particular data model is required which has dependencies on the early design phases.
Let´s go through the lifecycle stages and identify the different data types.
The concept / sales phase
In the concept/sales phase the company needs to have a template structure to collect and process all the information shared and managed during their customer interaction.
In the implementations that I guided, this was often a kind of folder structure grouping information into a system view (what do we need), a delivery view (how and when can we deliver), a services view (who does what ) and a contractual view (cost, budget, time constraints). Most of these folders had initially relations to documents. However the system view was often already based on typical system objects representing the major systems, subsystems and components with metadata.
In the diagram, the colors represent various data types often standard available in a rich PLM data model. Although it can be simplified by going back to the old folder/document approach shared on a server, you will recognize the functional grouping of the information and its related documents, which can be further detailed into individual requirements if needed and affordable. In addition, a first conceptual system structure can already exist with links to potential solutions (generic EBOMs) that have been developed before. A PLM system provides the ideal infrastructure to store and manage all data in context of each other.
The Design phase
Before the design phase starts, there is an agreement around the solution to be delivered. In that situation, an as-sold system structure will be leading for the project delivery, and later this evolved structure will be the reference structure for the as-maintained and as-services environment.
A typical environment at this stage will support a work breakdown structure (WBS), a system breakdown structure (SBS) and a product breakdown structure (PBS). In cases where the location of the systems and subsystems are relevant for the solution, a geographical breakdown structure (GBS) can be used. This last method is often used in shipbuilding (sections / compartments) and plant design (areas / buildings / levels) and is relevant for any company that needs to combine systems and equipment in shared locations.
The benefit of having the system breakdown structure is that it manages the relations between all systems and subsystems. Potentially when a subsystem will be delivered by a supplier this environment supports the relationship to the supplier and the tracking of the delivery related to the full system / project.
Note: the system breakdown structure typically uses a hierarchical tag numbering system as the primary id for system elements. In a PLM environment, the system breakdown elements should be data objects, providing the metadata describing the performance of the element, including the mandatory attributes that are required for exchange with MRO (Maintenance Repair Overhaul) systems.
Working with a system breakdown structure is common for plant design or a asset maintenance project and this approach will be very beneficial for companies delivering process lines, infrastructure projects and other solutions that need to be delivered as a collection of systems and equipment.
The delivery phase
During the delivery phase, the system breakdown structure supports the delivery of each component in detail. In the example below you can see the relation between the tag number, the generic part number and the serial number of a component.
The example below demonstrates the situation where two motors (same item – same datasheet) is implemented at two positions in a subsystem with a different tag number, a unique serial number and unique test certificates per motor.
The benefit of a system breakdown structure here is that it supports the delivery of unique information per component that needs to be delivered and verified on-site. Each system element becomes traceable.
The maintenance phase
For the maintenance phase the system breakdown structure (or a geographical breakdown structure) could be the place holder to follow up the development of an installation at a customer site.
Imagine that, in the previous example, the motor with tag number S1.2-M2 appears to be under dimensioned and needs to be replaced by a more powerful one. The situation after implementing this change would look like the following picture:
Through the relationships with the BOM items (not all are shown in the diagram), there is the possibility to perform a where-used query and identify other customers with a similar motor at that system position. Perhaps a case for preventive maintenance?
Note: the diagram also demonstrates that the system breakdown structure elements should have their own lifecycle in order to support changes through time (and provide traceability).
From my experience, this is a significant differentiator PLM systems can bring in relation to an MRO system. MRO and ERP (Enterprise Resource Planning)systems are designed to work with the latest and actual data only. Bringing in versioning of assets and traceability towards the initial design intent is almost impossible to achieve for these systems (unless you invest in a heavy customized system).
In this post and my previous post, I tried to explain the value of having at least a system breakdown structure as part of the overall PLM data model. This structure supports the early concept phase and connects data from the delivery phase to the maintenance phase.
Where my mission in the past 8 years was teaching non-classical PLM industries the benefits of PLM technology and best practices, in this situation you might say it is where classical BTO companies can learn from best practices from the process and oil & gas industry.
Note: Oleg just published a new blog post: PLM Best Practices and Henry Ford Mass Production System where he claims PLM vendors, Service partners and consultants like to sell Best Practices and still during implementation discover mass customization needs to be made to become customer specific, therefore, the age of Best Practices is over.
I agree with that conclusion, as I do not believe in an Out-Of-The-Box approach, to lead a business change.
Still Best Practices are needed to explain to a company what could be done and in that context without starting from a blank sheet.
Therefore I have been sharing this Best Practice (for free)