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I realized that time is flying when you are busy, and I promised to publish the conclusion from my previous post: More on who decides for plm in a mid market company. In my two previous posts, I described the difficulties companies have to select the right PLM system. So far I discussed the two extremes, the silent approach where a possible bottom up approach was discussed and as the opposite where an ‘academical’ approach was followed.
Now it is time to get the answers on the academical approach.
These were the questions to be answered in the previous post:
- How much time has passed since the management decided PLM was good for their organization?
- How independent is the consultancy firm?
- Did they consider open source PLM as a solution?
- What was the ranking of the PLM vendors?
How much time has passed since the management decided PLM was good for their organization?
The whole process of selecting a PLM system often takes more than one or two years, starting from the first activities till the final conclusion to start. I believe this is unavoidable, as especially in mid-market companies the business values that PLM can bring are not always discussed and realized on the strategic level.
However, I believe the recent years PLM has been recognized by analysts, by software vendors and many young companies as a necessity for innovation and in the long term remaining competitive. And this is not only in the classical domains where PLM started – automotive / aero / industrial equipment. PLM value is everywhere in different industries, even apparel for example.
For companies that are now in the decision process, I believe 2009 and early 2010 are the years to decide, because a recovery of the economy might put back the focus on execution and not on strategy and they might miss the management focus for PLM. And as I wrote in a previous post, companies who made the best pit stop will benefit upmost.
For companies still in doubt: It is now or never
How independent is the consultancy firm?
It is clear that real independent consultancy firms do not exist – even if a consultant wants to be independent, there are three challenges to meet:
- How can a consultant evaluate or judge PLM systems they have not seen?
- How much experience does the consultant have in your business?
- How much work is there required in the project for the consultant?
As you can imagine, reviewing the above challenges, you will realize that consultants usually specialize in systems, where their expertise it required – as they also want to make a living. Consultants cannot afford to be an academic institute, as coming back to the previous point, all consultancy work at the end will be paid by the customer.
So to conclude on this point, if you want to be cost-effective, a company should do already a pre-selection based on systems and possible implementation partners, that fit naturally to their type of business and then evaluate how consultancy can be achieved.
What you will find out is that the major ‘expensive’ packages have loads of consultants to offer en the more and more you go into a mid-market environment, consultants become rare. For software from PLM vendors you will usually find a reseller network with people close to your offices that can support you. For Open Source software you will need to find the consultancy services through their software delivery program.
Anyway remember: 50 % of the success of a PLM implementation is based on the right implementation approach and partner not on the PLM functions and features.
Did they consider open source PLM as a solution?
No, because the consultant was not familiar with it, and discouraged the company to look at it. In general Open Source PLM, like PLM On-Demand are interesting trends to follow and should not be neglected. However the focus and approach for this type of solutions is different. I will not generalize at this moment as also I have no clear picture where Open Source PLM or PLM on Demand would be a big differentiator. I will try to evaluate and report it in future posts.
Comments from Open Source PLM Vendors or On Demand PLM Vendors are welcome to complete the PLM selection approach.
What was the ranking of the PLM vendors?
Ranking was done by the management, the selection team and the design department. These were the results plus their major comment:
Management
1. The slide show PLM provider – they liked the business pitch
2. The CAD supplier with PLM features and gadgets – good guys – we know them
3. The PLM provider who showed everything – too much handling of data – too complex
Selection Team
1. The PLM Provider who showed everything – they really did it
2. The CAD supplier with PLM features and gadgets– we understand where they are going
3. The slide show PLM provider – do they really have a solution?
The Designers
1. The CAD supplier with PLM features and gadgets– he knows what we want
2. The slide show PLM provider– could be a good solution too
3. The PLM Provider who showed everything – too complex, it will limit our productivity
As the management had the final vote, they decided for the slide show PLM Provider, as they felt most comfortable with them.
The reason to drop the CAD supplier was that they were too afraid this provider does not know all about PLM. Both management and users felt the PLM provider that showed everything was too complex, this opposite to the project team where the members were very familiar with PLM capabilities after two years investigation and many demos and trade shows.
Conclusion: Selecting PLM, even in an academical manner is a subjective process. As in general the customer does not exactly knows what he needs and often the PLM provider shows too much in detail, the real journey starts at implementation time. And in this stage you need an experienced implementation partner who can match and communicate the expectations
Two weeks ago I was writing about the Silent PLM approach. What I showed in that post that often the PLM vision as a complete vision does not exist in all layers of the organization.
Often the management in is not aware of where and how PLM can have an impact. In the Silent Management approach, one or more visionary people believe they can introduce PLM by starting it in their department, and from there grow and extend the impact of PLM. As I concluded, this approach usually fails in most of the cases as when the decisive step comes to extend PLM to other departments and to change current processes, this is the point where is mostly gets stuck.
Other departments and the management do not see how this engineering / CAD extension could benefit for them and the whole organization. Why not extending our ERP system as this already exists ? And here a stand still will come up until a push comes. The push can come from the top or from the outside world. From my experience more then half of the companies that started this silent PLM approach got stuck where they are ……..
So this time another approach, called the academical approach. And again a disclaimer, I am generalizing and putting some points a little more in the extreme to demonstrate the difference between the approaches. Any similarity with the real world is pure coincidence
Approach 2: Academical PLM
Inside our mid-market company ACCPY, the management has understood that PLM will bring a lot of benefits and in case they were not aware of it, they have learned from analyst reports, from blogs and from their network that PLM should bring a lot benefit for them.
So the management decides to prepare and educate themselves and they start a PLM taskforce inside ACCPY to collect and digest all the information. The team has enthusiastic members from all departments and starts buying some books and reports on PLM. In addition they visit some PLM events all around the country and sometimes around the continent. These visits lead to contact with PLM Vendors who also start to educate why their PLM is the one fitting ACCPY the best. After one or two years of education they are theoretical skilled and know to differentiate between EDM, PDM, cPDM and even they learn to understand the difference between PDM and ERP.
As a conclusion of their learning stage the PLM taskforce presents to the management a firm report, explaining what is PLM and how ACCPY can benefit from it plus recommendations how to proceed.
The management is happy with the result, that what they thought two year ago was really valid and agrees with the report and recommendations. Now the selection of the PLM system needs to be done and who will be the implementation partner. Although all PLM vendors have been knocking on their door already to explain the benefits and implementation approach from their solution, ACCPY decides to hire an ‘independent’ PLM consultancy firm to assist with the selection of the solution.
The consultancy firm starts with interviewing the key members of ACCPY, in order to understand the major processes and the needs per department. A month later they present to the management a PLM Vendor Selection Procedure, where in 15 pages the PLM Vendor has to explain and confirm requirement per requirement, the implementation approach and give a budget estimate.
This RFQ will be sent to 5 PLM vendors which were already in touch with ACCPY since the PLM research started. Also the consultancy firm brought in a company which they new very well. It takes a few weeks for the consultancy firm to compile the RFQ and two months later the responses are there.
From the received proposals three PLM vendors are invited to benchmark their system and company based on a business case developed by the consultancy firm together ACCPY.
PLM Vendor 1
The first PLM vendor gives a standard demo of the system and explains that the business case is well known to them and therefore instead of showing it, they give a whole set of screenshots and references. The attendees had a good feeling with this vendor
PLM Vendor 2
The second PLM vendor tries to follow exactly the business case as defined. The attendees liked the fact that all was demonstrated so well, however the PLM system seems to be rather too complex and giving a lot of overhead to the engineers, according to their impression.
PLM Vendor 3
The third PLM vendor was already known to the company as they were also providing the 3D CAD system. In their presentation they explained how well they knew ACCPY already and that the business case was too artificial. They demonstrated some gadgets of their PLM system which none of the competing vendors could do, thanks to their tight integration with the CAD system. The attendees were impressed, however a few days later, they were asking themselves, why were those gadgets needed ? None of the other vendors talked about it and it was also not part of the RFQ.
So now it was time for the consultancy firm together with the task force to process all the information and to determine the final score. On product features they had a nice comparison – only hard to tell what was most important. On usage it was more difficult, as they got three different approaches during the benchmark, so the scores for this section was rather artificial. Also the financial part seemed to be hard to compare but at least it gave an indication.
As it is an academical approach, my post for this week ends here. We need to give the ACCPY task force together with the consultancy firm some time to build a justification for their choice and next week we will discover how this story ended. Meanwhile ask yourself:
- how much time has passed since the management decided PLM was good for their organization ?
- how independent is the consultancy firm ?
- did they consider open source PLM as a solution ?
- what was the ranking of the PLM vendors ?
- read the book Blink the power of thinking without thinking about intuition
Conclusion (so far): Academical PLM takes time and it would be unfair to explain it all in one post.
So next week the real conclusion.
This week I realized that, although I believe the benefits of PLM are more and more accepted in mid-market companies, the decision how to start and where to start with PLM is often not clear. I recognize several approaches which I will describe in this and some upcoming posts.
All persons in this post are fiction and in case you recognize these persons in your company, it is pure coincidence. Instead of talking about approaches,I was tempted to call it strategies, but when you read my observation you will realize the word strategy would not fit.
Approach 1: The silent PLM
Inside our company, often there is an engineer or an engineering manager, who got caught by the PxM virus. The PxM virus is a modern virus, which makes you a believer that PDM or PLM will bring your company a lot of benefits. Documents and proof points of the severe impact exist all around the world. However nobody has gotten infected so far in this company. Everyone is working the way they worked since many years and life is secure and predictable.
Now this infected engineer is getting exited and dreams about the introduction of PLM in his company and how he will become the hero of the company and gets a big promotion. Unfortunate for him in this kind of business there are no big bonuses to collect, so the honor of promotion is already a big achievement.
So the first thing this engineer does is chatting with his peers and friends to find out where PxM has been implemented successful and he studies some success stories which he learned from his network.
Now the challenge starts.
He goes to the management and shows a nice PowerPoint, explaining why the company needs PxM and what are the expected benefits, based on reference stories. The management has no real clue what he is talking about, but it looks promising and they allow him to select a PxM system for his department and to start a pilot.
The engineer already knows which PxM system to choose. The one, recommended by the friendly reseller, who sold them their 3D CAD system (which is a success) and worked hard with him to finalize the slides. As requested by the management he had to invite two other PxM vendors to make an objective selection and at the end an impressive comparison matrix is shown to the management why system A has been chosen.
Now the implementation starts and step 1 is very successful. The document management part around the CAD system goes smoothly and everyone in the engineering department starts to be happy.
Following this successful implementation there are two options:
- the engineer does not get promoted and the implementation ends. It will remain a silent document management implementation and the dream is put aside.
- the engineer gets promoted and continues to push his vision as now he has a broader audience to spread the PxM virus. We will follow this story line…….
The engineer gets promoted and continues to push his vision
This is the best that can happen and the engineer, who now became the head of engineering, starts to express his vision to his fellow managers, explaining the advantages of PLM. Notice, he is now talking about PLM as the scope has been extended beyond product data management, involving other disciplines in the organization.
And here the head of engineering discovers that his fellow managers are also infected by a virus. Not the PxM virus, but one of them has already for many years the ERP virus. And as the ERP virus addresses the operational and financial tasks in the organization, the management trusts him. The sales and marketing department seems to be infected by CRM, but currently they caught a social disease, which made them push for all kind of communities. The management either likes it (as their kids are also on Facebook) or dislikes it, because they believe work is a serious business and being on internet all day is considered gaming.
So the head of engineering realizes that he has some freedom within his department, but the other departments and the management have their own priorities. And PLM is not on their list. Together with the friendly CAD reseller, who meanwhile was promoted to be Senior PLM Consultant, they work on a perfect PLM environment within the engineering department and they believe their success will show off in the upcoming years.
And then the crisis came and the company had to cut budgets. To be continued in (hopefully) 1 or 2 years
Conclusion: The silent PLM approach has a huge chance to fail as there is no corporate vision and management push to get PLM implemented. PLM should be addressed top-down. As in many mid-market companies there was also no strategically partner, who could assist the management to build a vision and to set priorities.
Next week:
approach 2: Academical PLM
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
I am not sure if it depending on the holiday season but apparently from my side at this moment things have gone quiet. Customers are either on holiday or delaying their PLM processes due to holidays or economical downturn. For that reason some unstructured thoughts
How PLM is Nokia ?
Two weeks ago I wrote a post about the problems found with the introduction of the new N97 phone from Nokia – see How PLM is NOKIA. As a victim of their NPI process I am still trying to understand their business reasons to be quiet in their responses. From the NOKIA forum, at this moment already 14 pages of discussion, there is no response from NOKIA, see GPS is cutting out on my N97. It is clear that NOKIA is following the discussion as the moderator has removed some posts, but no positive response from NOKIA’s side. Personally I believe a missed opportunity.
Interesting to see that NOKIA avoids to communicate around this problem. I can imagine keeping the problem silent at least does not alert people not using the GPS, from the other side, in times of crisis customer loyalty is probably something that assists a company in hard times.
PLM lesson learned: the costs of fixing problems once your product is in the field is dramatically higher as compared to the cost made during engineering. Did they do virtual testing ? Did they have a prototype phase ? Or was the product dumped into the market to compete with the iPhone ?
An interesting case to follow – anyone from NOKIA to comment ?
PLM Market Forecast Revised Downward.
V or a W-shape?
Another surprise was the report coming out from CIMdata where they mention that the initial growth expectation for PLM needs to be adjusted – see PLM Market Forecast Revised Downward.
In March, the research house had predicted 3.8% year-over-year growth in 2009 and 6.3% compound annual growth over the next five years — which would have pushed the market to $36 billion in revenue in 2013. Stating in a mid-year report released this week that “the global economic situation has been even more severe than anticipated,” the PLM consulting and research firm said it circled back to include data from the first half of 2009 in its figuring.
CIMdata revised its forecast for the PLM software market in 2009 and beyond, saying it now expects a decline of 2.1% in 2009 from 2008 revenue levels and a 3.5% compound annual growth rate from 2009 to 2013, to just under $31 billion in 2013. The company estimated the 2009 market at $25 billion.
The article contains some more interesting details, as it is also mentions virtual manufacturing, which I believe is one of the key benefits of PLM. I see it as one of the competitive advantages many companies should pursue to cut costs even though it requires an investment and change of work ( real PLM implementation)
This brought me to the good (or relative good) news. According to the first optimistic signs we have had our worst point of the recession and things can only go better – this are the V-shape believers. After the downturn we will continue as before.
The more pessimistic analysts say we are in a W-shaped recession. Although things are getting better, we will fall back again and recover later, perhaps in 2010.
Both might be right, but what I see is that either end of 2009 or end of 2010 the estimates are that PLM is back in focus. Will this be business as usual or did companies take the opportunity to modernize themselves towards PLM ? The CIMdata reports suggest the opposite, in my post Economical Crisis and PLM – YES WE CAN I tried to explain that investing now in PLM brings an advantage for the future. Companies that now do not look or investigate in PLM might come in a more difficult situation when the economical growth starts again. As the focus will be than on the old business, the chance for management attention and focus on PLM might become too low. Companies that currently invest in PLM take obviously more risk at this time, but will already reap the benefits faster
PLM, PLM 2.0 or a new PLM ?
Another interesting and ongoing discussion is the discussion where PLM is heading. Where in mid-market companies the discussion often is around the need for PLM beyond CAD data management and ERP, others are already visionary talking about the new PLM, which is based on people, social networking and communities. Look at Vuuch and discussions on PLMTwine and Tech-Clarity. Main question here how will people change, will it be the new workforce that naturally replaces the old workforce and while replacing introduces new ways of PLM or will it be a concept driven from the big enterprises as a new wave of PLM ? I believe this will become more clear when the economy picks up again and companies might have the bandwidth again for some experiments in this area.
Meanwhile I stay on my island
For many years NOKIA has been my favorite phone brand. I grew up with with their phones – every two years a new subscription and enjoying the new stuff. Although to be fare, 10 years ago a phone was just there to make phone calls and send SMS messages.
My previous and last successful phone was the N95, which had the nice feature that beside the fact it was a telephone, you could do a lot more with this apparatus, making pictures, listening to stereo music from decent built-in speakers and my favorite, an accurate GPS using for it navigation and sports.
For my job this was the perfect phone. The GPS brought me all around the globe, to places I did not know they exist, but the GPS brought me there. Every time I rented a navigation license for a week when i was in South Africa, the US, Greece or Asia and it worked – and the man or lady spoke my language.
As as I have seen NOKIA presentations on several PLM events like the ECF in Paris, i was sure that beside the nice features of various phones type, there are managing their portfolio well and everyone in the audience was always impressed by the short go-to-market time for a mobile phone and how competitive this market is and how NOKIA addressed these challenges. Other phone manufactures do no feel jealous (yet), as so far, I never had the drive to switch to another mobile phone manufacturer.
Yes, I was tempted when I saw the iPhone coming up and for sure, I would have switched to it, if Nokia had not announced the N97. For me the logical next phone as:
- I am loyal to the brand
- the N97 is the logical extension of the N95
- it counters all the remarks from my friends that have an iphone
Of course the announcement was in time and the availability was a little later as expected. But this is what you accept as a loyal customer. The grass might be greener elsewhere, but as long as you feel you have a “communication partner” you will feel comfortable and not jump over (the worst nightmare for any competitor – happy customers)
But then it happened:
Two weeks ago, I got my new 97 and immediately after going through the new gadgets and look-and-feel, I decided this phone was worth waiting. Specially the combination of touch screen and keyboard pleased me a lot. Then I decided to drive from the Netherlands to Paris and used my GPS.
This was the biggest disaster so far.
Even in situations that there was only the highway, the GPS was trying to snap to roads 200 meters to the left or right and my fear became right, once in a dense area as Paris you have no clue where you were driving.
But I am a loyal customer so I go to the NOKIA support forum and to my satisfaction, I found already 4 pages of remarks from other people experiencing the same – not being alone helps. Here the NOKIA community was working well, suggestions and remarks from others lead to at least a better understanding of the issue but not to a solution.
Here I was surprised to see the absence of Nokia technical experts, who could assist the audience in the right direction. And some of the local NOKIA helpdesk responses were even worse – see quote from the forum below:
And what are Nokias’ thoughts on all this??? It would appear nothing, unless they do not read this feedback. Having said that, on one occasion I contacted Nokia “support” they blamed it on the satellites, and the fact they are owned by the USA government, and Nokia have no control on them!!!! Honest, that is EXACTLY what I was told. Dohhhh (A “knee jerk” response from a body which SHOULD be supporting their product(s).
So I went to a NOKIA care center, where the latest available phone software was loaded. I had an interesting of-the-record discussion there with one of the specialists. He mentioned that this kind of issues became more and more standard not only for NOKIA.
Due to time-to-market pressure, phone suppliers bring their products on the market, almost untested. It is the first wave of gadget chasers who detect all the bugs and then in the longer term, the telephone will come with a stable fix almost at End-Of-Life of the phone.
I agreed that this was an interesting strategy and I have seen other companies doing the same, only difference: They mention to their gadget chasers: “Note is is a preliminary version, our official release date is xx – xx – 2009”
Meanwhile the new installed software version improved some of the features, still the GPS is unacceptable. In parallel the amount of pages on the Nokia support forum has grown to 7+ and people, like me, getting more and more frustrated from the lack of response from Nokia. They keep silent ……..
So now coming back to my question: How PLM is NOKIA ?
On of the major benefits of PLM is being more focused on customer inputs and feedback, allowing you to make better products. I know the whole PLM infrastructure is in place at NOKIA, but there is no response:
It is all about connecting people
To my understanding none of the people exposing their GPS problem have been able to get an useful answer. Is it because there is no answer ? Making mistakes is not dramatic but as Confucius said: “A man who has committed a mistake and doesn’t correct it, is committing another mistake”.
So I am waiting for the Nokia response to create a solution path – and yes for the competition the door gets open
Below in this YouTube video you can see how it was tested 🙂
Last week was a week of transition. As I wrote in my previous post, I finalized a traditional PLM 1.0 project ( I will come back on this term ‘traditional’ PLM 1.0) and now probably because of the sunny days and some interesting articles I read (each word goes to a different article), I am reflecting what it means to think about the new trends: WEB 2.0 or even PLM 2.0
In this post I will try to explain the developments I have seen so far in the mid-market and from there project what might happen.
In the 80’s there was no PDM or PLM in the mid-market. This was the time most companies were moving away from the drawing board towards CAD. Most of the CAD was 2D and at that time in the mid-market AutoCAD was the dominant CAD software.
At that time I was working for the biggest AutoCAD distributor in the Netherlands (picture on the left). This was the golden age for hardware and software resellers – margins were high and there was little or none IT-knowledge inside mid-market companies. In order to keep the high margin we provided a free helpdesk for our customers to differentiate from others. It was an interesting time. Prospects came to our demo room to plot a drawing of A0 format and to discuss the quality of the lines and the hatching as compared to handmade drawings. There was always the discussion if CAD was more productive and must of us agreed that benefits only came when rework or changes were needed. In parallel we offered a training course for the heads of a design department how they learned to understand if their designers were productive. They were used to observe the behavior of the draftsman and the minor bar on the drawing board and from there they understood if someone was productive. We were talking about the new digital generation that would replace the people at the drawing board.
Are there still drawing boards ? Is there still free support as the margins are high ? This was 20 years ago.
Then slowly 3D CAD was introduced for the mid-market, initially only on Unix boxes, but with the introduction of Microsoft Windows it became achievable – SolidWorks for sure was leading in this area. Hardware became already more a commodity so the customer relation changed from free support to paid support, which required quality and knowledge. At that time in my company, we also saw the first demands for what customers called an “engineering database”. In the 2D world it was all about drawing management, now with 3D the focus was on managing the whole product. Initially called EDM (Engineering Data Management), later evolving in Product Data Management. The term PDM was not known at that time and I remember one of our customers visiting us with a sample of 13 reports – drawing list, spare part list, manufacturing BOM, etc. He told us: “I need a system that can generate these reports for me at anytime”. The solution: we implemented a PDM system for this customer. At the end of the nineties 3D was introduced in the mid-market combined with PDM. We were talking about the new generation of people that thinks in 3D which would replace the people who still worked in 2D
Are we still working with 2D ? Do we still look for support on hard- and software ? This was 10 years ago.
Then came the era of connectivity, initially through the first internet wave, leading to terms as cPDM and ultimately PLM. Instead of focusing on productivity in a single department, the intention was to focus on collaboration between departments, development teams and to address the whole product lifecycle. Specially Dassault Systems extended this concept by focusing on the process and virtualization: test and build your product virtually before you spend any money on prototypes. Autodesk does the same in different words, they call it Digital Prototyping and they try to avoid talking about the processes as here we touch the most sensitive point in mid-market companies: touching or changing processes – ‘classical PLM 1.0. And this is also what I read between the lines of Jim Brown’s post Is innovation or product pipeline killing profitability ? As long as we do not change our product development process but focus still on doing the same with better tools, the real innovation will not come. We are now talking about the global collaboration generation that has to learn to work together and replaces the people who are not changing their processes.
Are we still solving our departmental problems only ? Can we survive keep on doing the same ? This is now !
And meanwhile mid-market companies are learning to understand and digest the above, we already see the new wave coming. WEB 2.0 – social networking – social collaboration – PLM 2.0 – communities and more. Instead of companies working on their own data, the future is to work in communities, live data, cross-company with employees, who are focused as a team to bring a result, we do not send so much emails anymore, we chat, we twitter, we …….. and more. In addition as we will see the trend that teams have members from all around the world, the question comes up: What is the standard communication language ? German (past) , English (present), Chinese (future) ? Here I am a big fan and believer of the Dassault vision that 3D becomes the global language for communication as the people participating do not come from the same educational background anymore – so it easier to see what you mean. Meanwhile the futurists are all the time talking about the aging workforce (a lot of people plan to retire), but if you read back, you will notice every ten years we are talking about an aging workforce. Every time there was a new generation picking up the new capabilities and challenging the next generation.
Are we in 2020 a global, 3D twittering world ? What is each individual’s added value ? What are companies doing to anticipate to the above trends ? It looks like it is going to happen and the current economical downturn allows us to anticipate even earlier till the next pit stop.
A thought I take with me on the summer holidays.
(Yes, in Europe we still have holidays that are so long you have time to think about work –
you can find me on the island below in August)
The last month I have been working with Aerosud Aviation in South Africa to finalize and conclude on ROI and the lessons learned around their PLM implementation, which started in May 2007. I was lucky to be involved in the initial scoping of the project in 2007 and assisted the local Value Added Reseller together with the team from Dassault Systèmes UK team in a step by step project towards PLM.
When I met the people in Aerosud the first time in 2007, I noticed it was a young company, with open-minded people, everyone trying to improve their daily activities per department. There was the need for PLM as some of their major customers required Aerosud to have a PLM system in place. Also Configuration Management was mentioned many times in the interviews and what I learned that time: Excel was the tool for configuration management.
Based on the initial interviews a plan needed to be developed in which steps to implement PLM. The following three major points were the guidance for the implementation:
- The company was thinking documents and understanding documents especially Excel
- The company had no clear understanding of what PLM would mean for them as real awareness was not inside the company. Customers like Boeing and Airbus talked about the importance of PLM, but how this could impact Aerosud as a company was no commonly clear
- People in the company had a major focus on their department and there was no availability of a overarching group of people leading the implementation
You could say you will see the above points in many smaller and medium-sized companies. I wrote about it also in one of my previous posts: Where does PLM start beyond document management ?
The project phases
The good news for Aerosud was that their PLM Champion was an expert in CATIA and was familiar with writing macros in Visual Basic plus the fact that everyone in the company was open for using the system as standard as possible – no demands for special behavior of the system: “because we do this already for 100 years”
The last phrase you hear a lot in ancient Europe
The choice was to start with implementing ENOVIA SmarTeam Design Express and to focus in two phases around design data management (phase 1) and the usage of design data by other users (phase 2)
The plan was that each phase would take maximum 2-3 months and we would give the users the time to digest and change their habits towards the standards in the system. In reality it took almost a year, not due to technical or conceptual issues, but this was the maximum pace we could have with the amount of time and available resources. The good news after these two phases was that the first bullet was much clearer understood – the difference between having a system with a single version of the truth or Excel management.
In the summer of 2008 (our summer – as it was winter in South Africa) there was a management workshop in Aerosud and here after three days of discussion the position of PLM became clear. One year ago this would not have been possible, now people had seen ENOVIA SmarTeam and they could imagine what benefits the system could further bring. This addressed the second bullet I mentioned before. Although this workshop was not scheduled upfront, looking back now I see this was a crucial point to get understanding for the next PLM steps.
The next PLM steps were extending to a real Item-centric data model, because if you want to do PLM you need to work around Bill of Materials and all related information to the items in the Bill of Material. At the end this gives you configuration management without chasing Excels.
Again the next steps were divided in two phases with again a scope of 2 – 3 months. The implementation would be based on the ENOVIA SmarTeam Engineering Express methodology which came as a logic extension of the current implementation, without having to change the database or existing data model.
In the first phase we had awareness sessions for BOM (discussing EBOM / MBOM / Effectivity, etc) plus in parallel we introduced the item as place holder for the information. Not longer folders or projects as the base.
Introduction of the item was conceptual not a big issue and the major activities in this phase were focused on connection legacy data or current data from projects to the items. Data coming from various sources (directories, legacy databases) plus NC data became connected and visible in the single version of truth.
In the second phase of moving to PLM the focus was on EBOM and MBOM. Initially assuring that from the designer point of view the CATIA design and EBOM were connected as smoothly as possible, trying to avoid a lot of administrative overhead on the designer (sometimes unavoidable – see my previous post: Where is my ROI, Mr. Voskuil)
After having implemented a streamlined CATIA – EBOM connection, the focus moved to the MBOM. For me this is the differentiator for companies if they implement PLM or just Product Data Management). Implementing the MBOM requires a culture change and this is the place where the ERP people need to see the benefits instead of the threats . Luckily in Aerosud the manufacturing engineers were working in their Excels initially and not in the ERP system – which happens a lot in older companies.
For that reason the concept of MBOM in PLM was much better understood. Now Aerosud is experiencing these capabilities and once they become obvious for everyone the third bullet will be addressed: people start to work in processes cross-departmental instead of optimizing their department with a specific tool.
As this activity will continue, I also conducted with the Aerosud management and PLM implementation team an ROI assessment. Estimates about the experienced and projected benefits were kept low and on the realistic side. The result was that the outcome for the ROI period was approx 27 months, almost the same time as the whole project had as throughput time. This proved again the statement about a phased PLM approach. payback of project comes in parallel with the implementation and will ultimately fund the next steps.
End of July I will be holding a webinar with more details about this implementation for the Dassault VAR Community. I will be happy to expand this information for a wider audience afterwards, as I believe the project is representative for many mid-market companies that struggle to find the place where PLM fits ….. and brings ROI
Let me know if you are interested in this follow up and I will collect the inputs for a follow up.
Again three busy weeks and I envy my colleagues who had the time to write a blog post on a regular base.
Two major topics kept me busy:
- explaining the complete PLM scenario from concept (initial BOM), through CAD, through EBOM and MBOM to a final shipped product. I will come back on this topic in future posts as it even goes beyond my old post: Where is the MBOM. To be more detailed in the future
- analyzing ROI and predicting ROI for various PLM implementations. And this is the topic I want to share 2 experiences with you, and I am curious for feedback or other viewpoints
Where is my ROI, Mister Voskuil?
Some years ago I supervised a PLM implementation and I only was involved after the company had already implemented their 3D CAD software (SolidWorks) after years of 2D AutoCAD. The reason for my visit was that the technical manager was a good guy in monitoring the productivity of his engineering department.
And then he showed me some statistics. Working with AutoCAD 2D was defined as the baseline. Implementing SolidWorks brought initially a drop in their drawing output (pay attention to the wording) but after 6 – 9 month the started to be more efficient with SolidWorks and at that time the output was rated at 120 % (or sometimes even more due to more and enhanced product modeling)
Then came the SmarTeam implementation and again the output of the engineering department dropped and going down to 70 % and after a year effort of the SmarTeam implementing VAR, they were still not happy as output was below 100 % still.
Conclusion from their side: There is no ROI on implementing PLM
In the following discussion, we discovered that the working methods of the engineers had changed. Less freedom in adding data, incomplete information as the integration with SolidWorks enforced a more strict methodology to the CAD users (who of course complained). The effect of the changed working procedures was however that downstream tasks should have been eliminated. In production preparation 4 people were in the past completing, checking the engineering BOM coming from the design department. They fixed the mistakes and then typed them all in another order into their ERP system for production.
It appeared that those 4 people had a much easier job – first of all, they did not complain. Data was immediately on release of the design sent to the ERP system – no manual interaction – and there they could pick-up the EBOM and adapt it for production. There was less search work to do – as the designer already provided validated input plus there were no typos anymore. Amazingly these 4 people never complained to their management that they could do more, they kept on having their ‘busy’ days.
Morale 1: Measuring ROI in a single department (often a mid-market characteristic) does not give you a good understanding of PLM benefits. PLM once implemented correct, affects the whole organization
We know there is ROI, but where is it ?
As you noticed, a less confronting customer, as we all feel being involved in a successful PLM implementation going in the right direction. Yes, perhaps a little to slow, but the advantage is that people start to see the benefits of a ‘single version of the truth’ – we haven’t reached the advanced scenarios yet as I mentioned in the top.
But now we tried to measure, as I also wrote in previous posts, if you had your organization under control before PLM, in that case, you would be able to measure the impact – after 6 months / after 12 months / after 2 years?
It is like climate change, statistics demonstrate there is a trend and I believe we have an impact on this planet. Still, skeptics (luckily less and less) explain to us that it is just a normal climate variation, and after 10 – 50 years we will have a new ice age. Not sure if these people are optimists or …….. it just does not fit in their lives
But PLM is somehow the same, we see it has an impact, we measure and try to explain, especially in the mid-market companies, skeptics is a natural survival mechanism as you cannot risk to be too optimistic. (This is how startup’
So in our situation, we started to fill in spreadsheets which brought huge benefits. Imagine searching goes much faster – let’s say instead of 1 hour per day we need only 10 minutes per day per employee. We have 120 people per day searching for data, does it mean we can do it with 20 people instead? Or what would these people do in the remaining 50 minutes per hour?
Right, they will find other work to do – less stress, more time to chat with colleagues, have a coffee and above all, they won’t complain. People are flexible in filling their day and if the company is lucky some of the ambitious people might fill their day with innovation or other relevant improvements.
Morale 2: Even if there is an indisputable ROI on a PLM implementation, the management should analyze what should be the impact on the organization. Invest more in creativity/engineering instead of quality assurance? In the mid-market, this might be perceived as a bad sign – as the quality is key. But how much money would we make on a high-quality product that no-body buys anymore?
Conclusion: With these two anecdotes I tried to share my ROI struggle which is still following PLM. I am looking forward to more anecdotes or inputs on the soft side of ROI. Be welcomed to join the discussion
The past few weeks I have been busy in an area which I believe is crucial for understanding PLM. I had meetings, web meetings with prospects, with implementers and existing customers – of course all in the mid-market. And the generalized key question on the table was: “
Yes, we understand document management, and yes, CAD management is understandable to us, but why do you need to work with the BOM further down the product lifecycle, as this is ERP, isn’t it ?
I realized several topics play a role here:
- Mid-market companies usually do not think top-down in their approach. As an example: they will not look at their whole organization’s business processes and then try to map all the activities cross departments, cross suppliers, etc. Usually they are looking per department to optimize the way they are working.
Classical enterprise PLM implementations are designed to go top-down. Describe the as-is situation, describe the the to-be situation and then transform the company to meet the to-be situation. Decisions are pushed to the people in the company as the to-be situation seems to be clear. Many of the classical PLM implementers still believe in this approach – and the risk / challenge is always that the to-be situation was not well understood, or that at the time we reach the to-be situation the environment of the company has changed and another to-be is needed. - Mid-market companies understand a central storage for documents brings a lot of benefits. Most companies realize that all this departmental archives of documents and files create too much overhead and a higher quality risk. Finding the absolute right file for a certain product release might be a quest and of course each of the departments claims that their solution fits exactly their needs. This is what I believe the main driver behind the success of SharePoint. As Microsoft Office is used as a common document authoring tool among all departments, why not use the Office Document Management tool as our common backbone ? PLM and ERP vendors might say we also manage documents, but usually these documents are managed in a structured manner – related to revisions of a product or to a product order. Usually an infrastructure to manage unstructured documents does not exist in ERP systems.
- Mid-market companies do not understand the value of managing the BOM outside ERP. As I mentioned, everyone understands documents, but items seem to be the domain of an ERP system. Understandable as ERP was often the first IT-system implemented. As mid-market companies usually do not have a holistic view, items will remain to be managed there (“as we invested so much in the first implementation the management will say – no other source for items !!!”)
And here i believe is the crucial go-no/go point for a PLM implementation. Once the company starts to understand that the definition of items is not done in the ERP system, but is a result of the work done in the engineering department, only then the value of managing the BOM outside ERP become apparent. And here is the catch 22, we already manage our documents in environments without items (BOM’s) (SharePoint / CAD Documents management) – so no place for PLM ?
So what to do as a mid-market company ?
It is hard to understand the full picture (because of the above points), can you trust the selling PLM partner ?(we have been promised easy implementations in the past with other IT-systems too) and at the end you do not believe the value PLM can bring (as you cannot imagine and digest the impact of PLM to your company)
And just when thinking about this – three articles came to my attention as they all address this topic, somehow from a different perspective:
- An upcoming white paper written by TechClarity on ENOVIA SmarTeam Express solutions
- A blog post written by Jim Brown (TechClarity) on the TeamCenter Express solution
- A blog post written by Oleg Shilovitsky (PLMtwine): PLM action plan for dummies
The first two posts deal with a packaged approach for mid-market companies, allowing them to implement PLM faster and with a faster ROI. As Jim (and many others are stating – in an economical down turn you cannot focus on efficiency only (the ERP slogan). It is innovation – better and more customer oriented and attractive products – brings much higher revenue as compared to doing more of the same more efficient.
Oleg focuses on the steps to implement PLM and I agree with most of the statements there. It needs to be gradual and implementing the business processes comes as the last phase.
There is one difference I see in my approach compared to what Jim and Oleg are writing. Both believe that PLM brings value (and i support this statement 100 % based on experiences with customers I have worked).
However the missing point to be addressed is the lack of understanding (and often also trust) of companies talking with a PLM vendor and committing to PLM. I tried to explain these points in the above 3 statements. As long as those points are not addressed, each stepped approach will lead to the question: “When are we really going to do PLM instead of CAD Document management or enhanced ERP ? “
My experiences with guiding successful PLM implementations are the following:
- Start with basic document management and CAD data management. It aligns with the understanding of companies that a centralized and secure repository for documents brings ROI. This step introduces to the company that a company wide approach of data management brings value (and ROI). Some basic processes might be introduced here already- basic document approval as required by all quality systems.
- Once basic CAD and Document Management are introduced, the company will realize that it is missing ‘place holders’ to hook the information. If you work in a document management system only, the system implementer will say: Use projects to collect your product data and use folders to collect your item related data. A PLM vendor would say; Now you are ready to introduce Items in your system, as they are the logical place holders for information. Here PLM starts to be introduced.
- Once understood that the item is a needed place holder to manage development data, the understanding for managing items in a structure becomes clear. Here we introduce the EBOM and as Items also contain logistical data, this is the first point to start connecting PLM and ERP to work with a shared ‘place holder’ but with different focus on characteristics.
- Once the Engineering BOM is understood, the discussion starts around the MBOM. Who is responsible for defining how a product is manufactured ? PLM believes this is part of their duty, ERP vendors will say, we own the item historically ,so we manage the MBOM. As a 100 % PLM believer, I think it should be in PLM as it is not part of the execution but part of the product definition (See the post I wrote on this topic: Where is the MBOM).
At the end the defined MBOM can be pushed to ERP once required. - Once you are able to manage and centralize all data related to product development and definition, a company becomes ready to guarantee the quality and flow of the data, by implementing company wide engineering change and development processes. Much in line with Oleg’s PLM action plan.
I have supported implementations of the above approach in several mid-market companies and key success factors were:
- the company understanding PLM brings benefits but also understands it will take a time to realize this vision.
Management vision and support were always there. - a PLM system that allows you to start simple with centralizing documents and keeping things understandable but also allows you to scale up to a PDM system and finally supporting the whole PLM vision once accepted and understood .
Think Top-Down – Implement Bottom-Up - an implementer who understands that in the mid-market a push of concepts will bring rejections from the end-users, and where listening to the end-users only, it will result in an unguided system. The implementation partner needs to say No at the right time and to push for Yes when needed.
The implementer is 50 % of the success !
Conclusion: A management vision, a scalable PLM system and an experienced implementation partner are needed to bring the innovation to survive in the long term – document management and ERP alone will not bring this unique value. The phased approach allows a company with digestible steps to grow to their ‘to-be’ situation – as building trust and understanding is still required in the mid-market of PLM
See also: ENOVIA SmarTeam Express
Jos Voskuil's Weblog 
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