A PLM success story with ROI

July 12, 2009 in ENOVIA, MBOM, Observations, PDM, PLM, ROI on PLM, SmarTeam, SMB | Tags: , , , , | 3 comments

observation 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.

planningWhen 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:

  1. The company was thinking documents and understanding documents especially Excel
  2. 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
  3. 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

riaan 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.

businesssystem 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)

ebom_mbom

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.

phased implementation 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.

 

 

shout_left 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.

Where is my PLM Return On Investment (ROI) ?

June 15, 2009 in Observations, PLM, ROI on PLM | Tags: , , , | 8 comments

observation 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:

  1. 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
  2. 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?

No_roi 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.

point

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.

quietIt 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 ?

search 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’

quiet2 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

Where does PLM start beyond document management ?

May 22, 2009 in ENOVIA, ERP, Innovation, MBOM, Observations, PLM, ROI on PLM, SMB | Tags: , , , , | 4 comments

observation 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: “

 

question

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 ?

point 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:

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:stepped

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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:coop

  • 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 !

expressConclusion:  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

To PLM or Not to PLM – measuring the development phase

May 3, 2009 in PDM, PLM, ROI on PLM, SMB | Tags: , , , | Leave a comment

observation It is time to continue with my posts about ROI and the need for measuring. I described in previous posts the concept phase and planning phase and will touch in this post the development phase.
But before doing so, there are two points I want to share before.

Queen’s Day in the Netherlands 2009

First as a Dutchman (although many times virtual) I enjoy April 30,  as a special day, as it is our Queen’s Day.
People around the world celebrate the 1st of May, we Dutch celebrate Queen’s Day the day before.

It is a celebration of the people, with free flee markets, concerts and activities all around the country and at some special locations our royal family contributes to the atmosphere by participating amongst us. We celebrate this day not because the Dutch are so royalty minded, it is also a good excuse to celebrate our existence together, and there is always the discussion if a president of the country would bring more to the country as compared to the royal family.

This year Queens Day however became the blackest Queens Day ever. A lunatic apparently decided to make a statement and tried to drive his car into the bus with the royal family. However to get there he drove through the cheering crowd – 7 people died, including the driver because of this attempt. It makes you realize that in the modern society innocence is gone and that life is not as obvious as it is.

Hopefully Queen’s Day will be again a day of the people celebrating , with respect to the victims, still  we should not change our lives because we fear.

Concurrent Engineering around the BOM

idea Next point, back to PLM again, I read an interesting discussing on two blogs regarding the need for the BOM – For me the shared and consolidated BOM, is the major object (placeholder / entry point) for a company to share developed data, so it is an interesting discussion.

Read these posts at: vuuch.com and plwtwine.com – they give points to consider, and I support the observation that although we try to do concurrent engineering already for many years, I haven’t seen many successful implementations, mainly due to the human behavior. Classically PDM and PLM require the BOM for collaboration and we might stay with this concept for a long time. Knowing the mid-market, I believe alternative solutions have to come up as a boom embraced by everyone  (and conquer the market within a few years) or we will stick to what we know and what we are doing – changing habits and culture is hard. For the moment I stick to the current situation.

To PLM or Not to PLM – Measuring the development phase

So what happens in the development phase.> We have a concept and a plan and now we need to develop or change the product. In the past this was much easier. Companies worked mainly locally and around a single discipline. Now product development has the typical challenges of collaboration between different locations (many times around the globe), different disciplines (mechanical, electrical, software), integrate suppliers (as we focus on core competence) and meanwhile comply to (local) regulations. A lot of activities in parallel that should run coordinated to a single goal, the developed product. The phase where a lot of data is created and need to be shared among along the enterprise.

So the most important questions related to the development phase are:

  • How many review cycles does a product introduction require in general?
    Measure: time spent on getting a joined status on development and plan next detailed steps
    Analyze: Can we improve the quality of the status information to better plan next steps
  • How much time does it take to prepare a product status review
    Measure: the amount of time and people spent to collect information to make a status review
    Analyze: Can this process of collecting data be shortened and (semi-) automated
  • How do we make sure we select the right parts and solutions for a certain function / system ?
    Measure: The amount of changes during  the development phase or after this phase 
    Analyze: Why were these changes needed ? Missing information, obsolete/redundant parts, failed solutions ?
  • How do we make sure our products comply to local regulations
    Measure: At which state of the development process compliance is checked and how it affects development / go to market time.
    Analyze: Can we verify compliance earlier than current  – and how
  • How much effort does it take to communicate around an engineering change
    Measure    : What does it take to communicate and implement a change during the development phase. How much time, many resources are involved around this communication process (and how reliable is it)
    Analyze: Can we improve by doing things different ?  Implementing processes, push technology, ….?

Most of the above points focus on facilitating (global) processes  and making information available anywhere needed. This brings me to my previous post, where I talked about Can ERP vendors do PLM ?  The ERP vendors that do PLM, will claim they are addressing these points in their PLM offering too.  The major difference however is that (and I am generalizing) ERP based systems score low on usability as their systems are not planned to work from within an application (CAD or Office for example) . This is the major difference with PLM systems, closely related to CAD systems. Through their CAD integrations, the PLM environment will be embedded in the day-to-day user / design environment (immersive is the term).

An immersive integration has the benefit that collecting data is much more natural and the chance of having more accurate data available all the time is higher. So most of the point mentioned above will have a higher ROI when working from an integrated PLM environment.  And in addition to that, in the mid-market users have a voice – their acceptance is also part of the ROI.

Conclusion
The keywords for the development phase are global collaboration and visibility of actual data and affected changes. To make data available, integration with the data creator’s desktop is important as then it will be available straight from the source. I keep it here to ‘classical’ PDM / PLM as new concepts like PLM 2.0 will drastically change the way we work, however getting there will take years

point Note: It might be misleading to talk about ROI benefits per phase, as other and additional benefits may come from doing the whole process different.  I will stick to my initial approach as it will give you a baseline to start working from. Remember in order to understand– you need to start measuring even if it is not the ultimate approach

And closing with Queen’s day how it could be (2008 – learning Dutch is not required)

Can ERP vendors do PLM ?

April 19, 2009 in ERP, Innovation, Observations, PLM | Tags: , , | 7 comments

observation I am writing this post as i come across this question on a regular base,  and as a response on a recent post from Jim Brown. I addressed this topic already in previous posts in the past, for your convenience i have put all relevant links I considered at the bottom of this post.

myplm

I believe the question is hard to answers if asked this way. It all depends on where is your point of gravity. You can divide the PLM providers in different groups.

 

 

  • PLM vendors with a focus pure on PLM – their major business is in providing the majority of the PLM related tasks, independent of a certain CAD or ERP package, but interfaces usually through a generic approach with these applications. Matrix One (now integrated in Dassault’s ENOVIA offering), Aras (Open Source), Arena (On-line) are examples of this type of PLM providers.
  • PLM vendors coming from their CAD environment, initially manage their 3D CAD data and extending these capabilities to other authoring tools. ENOVIA VPLM and SmarTeam (main CAD system managed CATIA) are Dassault’s solutions, Siemens UGS (main CAD system managed NX) and PTC (main CAD system managed Pro/E) are examples of this type of providers
  • ERP vendors who extended their offering with PLM functionality – either by developing PLM functionality themselves (SAP) or by acquisitions of PLM functionality (Oracle / BaaN)
  • and there is still a vendor that does not do PLM, but calls it digital prototyping

PLMmindsharers

As each of these PLM providers has their customers and market share – interesting to read is CIMDATA’s overview of the PLM market. What you see there is that it is hard for the independent PLM vendors to be ranked in the top 5. Also the biggest independent PLM vendor in the past, Matrix One, had a hard time to compete against the CAD or ERP based vendors. Why ??

I believe because the major reason lies in the fact that companies want to keep their IT-infrastructure as simple as possible. Buying a PLM system from the current major CAD vendor or from the current major ERP vendor keeps their situation manageable. Why deal with a third vendor that has to integrate with their CAD and ERP software ?

This would lead to a statement that there are only two type of major PLM providers: CAD based or ERP based. And here I am back to the initial question: Can ERP vendors provide PLM ?

Here I believe there is a major difference in the approach of PLM. Yes, both types of companies can provide PLM functionality but they offer it in a different way. It is like Ferrari and Volkswagen provide cars, but are they addressing the same audience ?

planning Some years ago I had a conversation with a SAP country manager about PLM. It was in the time that SAP did not recognize PLM yet as a business approach required  in addition to ERP.  He told me that SAP was managing all the company’s data and processes and that it was just a matter of time before also companies would recognize that engineers working with their CAD systems are nothing else but resources in the whole process. “Designers believe they are artists and cannot be managed but we will show them we can” . Here you see the focus is not on creating the environment for innovation or new products, but on managing existing processes as efficient in a certain way.
To generalize ERP vendors talk PLM but practice efficiency and neglect the fact that innovation and creativity are not manageable (sorry for the generalization but it make things more clear)

CAD based PLM vendors focus a lot on the product creation process. Supporting companies to design and develop new products, mainly in the virtual world. They do not try to manage the development process like a production process but work with mile stones to assure progress and managing quality and risk (NPI – new product introduction). Only when the product definition is mature and complete it will be handed over to ERP to produce the products where needed. Did you ever wonder why CAD based PLM vendors do not expand into ERP ?

And here lies the the difference I believe. If you choose for a CAD based PLM vendor, your company is focusing on innovation, creating new products, when you choose for an ERP based PLM system you will focus on efficiency and process management. Ask the ERP vendor to which level PLM is integrated in their company – is there a person responsible for PLM in the top management ? Technically you can integrate a full portfolio of products, but understanding and making PLM a part of the strategy is the decisive question for the future.

Conclusion

Yes, ERP vendors can provide PLM functionality and as a company you should decide where is your business focus.
If your focus on efficiency and not on innovation ERP providers can offer a total solution.
If your company focuses on new and better products, I believe that your focus should be on CAD based PLM vendors as they offer the best environment for innovation support and capturing design knowledge.

 

And be critical – as before you know the front falls off

 

PLM and ERP previous posts:

PLM and ERP – the culture change

We already have an ERP system

Can chaos become order through PLM ?

April 3, 2009 in Change, Observations, PDM, PLM, ROI on PLM, SMB | Tags: , , , , , | 1 comment

tornado_butterfly You might have heard about the chaos theory and the butterfly effect ? In general, the theory promoted by Edward Lorentz and others, claims that the flapping of the wings of a butterfly, somewhere in South America may influence ultimately the path of a tornado, either preventing or accelerating that a tornado may hit at a certain place in North America.

WOW, if a butterfly can do this, can you imagine the impact of all of us, flapping our notes and plans around PLM in an organization ?  What a chaos we can create ?

I came to this association, looking back on my activities the past three weeks. Talking with implementers and companies, who all had a tornado of wishes and activities,  trying to create order through a PLM implementation – the anti-chaos theory.

Most of the discussions were based on a typical mid-market approach.

What do I mean by a typical mid-market approach – and I am generalizing here. None of the people I have been talking to in the past weeks match the exact characteristics, however all contributed to the picture in my mind.

shout_left

 

Typical mid-market approach (my generalization):

 

  • (Power) User Driven / Do It yourself approach – inside the organization there are people who have the dream to improve the company with PDM / PLM and the energy to prove it. They build the plan and define the solutions. External resources are only hired to do specialized services, fitting in the thought process of the power users. They believe that everyone will see the benefits of the implementation and join their approach step-by-step enthusiastically.
  • Focus on technical details– often the wishes are based on implementing technical capabilities close to the understanding of users, usually requiring a minimum of change in the daily processes. For example the focus might be on a technical capability how to connect the PLM system to the ERP system (Middleware / XML /Web Services / …..)  instead of discussing how it will work from the process point of view – how is the process impacted ?
  • Task solving – much in combination with the previous point, the focus is on optimizing and/or automating tasks of a certain user. The end-user’s daily tasks/pains are the focus for solving, which means trying to automate as much as possible, providing as much as possible single system / single screen solutions. 
  • Risk Avoidance – often these companies do not have the capabilities (people / time / budget) to experiment with new directions. Approaches from other similar companies are followed (looking for references). For sure not a bad approach, however the result is it will be harder to be differentiate from your competitors. And of course risk avoidance should always be considered in the scope of manageable risks.
  • Lack of top-management investment / push – although the top management in these companies subscribe to the needs for PLM, the focus of the investment is usually mainly on the external costs (software and services), where internal resources are forced to do the PLM activities beside daily tasks. Later the management will wonder why things are going slow, as they did their job (they approved the investment– waiting for the results now)
  • Focus on business skills – the people in the project team are often well educated in their daily business and practices, but lack project management, risk management and change management skills. These ‘soft’ skills are often acquired by buying a book to be placed on the desk.

observation

 

After writing these generalizations, I had the feeling that instead of characteristics, i was writing about risks . As this was not the intention, let see the how to manage these risks:

 

  • The power users should realize that they are sent on a difficult mission which requires a lot of creativity to implement changes in the context of the PLM project. And strange as it seems the PLM software might not be the biggest challenge.
    The biggest challenge will be on choosing the right best practices and to implement them with acceptance of the users. This is change management combined with implementation knowledge / experience. They point for the power users should be to have an implementation partner with experience, who can explain why best practices work and explain how other companies address this issue. Without practical guidance the power users have become pioneers, which is something the management for sure wants to avoid.
    Often to avoid user objections, the project team decides on heavy customizations or ‘weird’ compromises – nice to keep the user community quiet, but bad for the future, as benefits will not be the same.
    This mainly happens as there is too much focus the ‘hard’ side of the project ( hardware /software /IT /Services ) , and no or limited attention to the human / change management side.
    Power Users – be aware !
  • The management should realize that it is a company’s decision and vision. So from their side a steering committee with a clear vision is required. Their job is to keep the vision, prioritize the activities and make sure the power users are not creating an isolated solution based on their dreams.
    The most important role of the management is to take continues responsibility for the project – it does not end by giving the approval for the project and budget. Where users might reluctantly accept changes, it is the job of the management to enforce the changes and support them.
    This can be done in a harsh way by imposing the changes, however this will cause resistance and the end users will demonstrate the management was wrong. This leads at the end to a situation where the company as a whole will be in a worse position as before.
    So managing by motivation should be the approach, as after all the power lies in motivated users, who understand the benefits of the changes and benefits for their future job.
    Management – be aware !
  • Make sure the focus and priority is on business not on IT. Sell and explain the business benefits internally all the time.
    All be aware !

To conclude:

  • The mid-market characteristics look like risks for a successful PLM implementation, if not addressed and taken seriously
  • There is significant management support and control needed to monitor, guide and sell the PLM project.
    To make sure the company benefits are targeted and not the individual users or departments demands only.
  • Implement bottom up but control and direct top-down
  • Your implementation partner should have resources with skills for both levels – so not only programmers who can do miracles, but also consultants that can explain, validate best practices based on other experiences

 

Understanding chaos – enjoy:

To PLM or Not to PLM – measuring the planning phase

March 15, 2009 in PDM, PLM, ROI on PLM, SMB | Tags: , , | 2 comments

observationFinally I have time to continue on my sequence: “How to come to measurable PLM benefits ?” I think it is a topic where everyone talks about, but little is known in concrete figures. One of the main challenges is also “What to measure ? “. As I added to Martin’s comment on my previous post, we can measure comparable activities, like how much time and people are involved in average for an engineering change. And when a company makes the statement: “We reduced the time for an engineering change in average from 23 days to 8 days” – what does it mean ?

Does is mean people have spent less time to understand and implement correctly the change ? Probably – so there might me xxx amount of money related to this saving in time. Of course, there might be also a saving in distribution costs, assuming in the traditional approach a paper-based distribution process was used – people spending time in distribution, printing, copying etc.

Everyone experienced with Excel and formulas can make these kind of calculations (and I did it too) and often I was surprised about the huge benefits showing up in the spreadsheet. So please continue filling spreadsheets as in general the benefits will be high

In parallel a second approach should be considered. Benchmarking against similar companies and Aberdeen has published some papers in this area, (see for example: The Best Kept Secret of Top SMB Product Developers -Finding the Shortest Path to PLM Value) . Maybe less specific per activity but they offer a good secondary view of the PLM benefits, in this case viewed from the business point of view.

Back to ROI measuring – and now in the planning phase

planning The planning phase, by my definition is the phase where we have a concept and we start to analyze which activities and which resources are required to develop the concept. In a Built To Order process, the planning phase might overlap the concept phase, as the inputs from the prospect require besides to provide a solution also the need to have it done within a certain budget and timeframe.

So the most important questions related to the planning phase are:

  • How many projects we are doing are similar in approach?
    Measure: time spent in finding similar solutions / percentage reuse /classify projects
    Analyze: Can we improve by standardization
  • How often do we have to do a major change /disruption in our planning ?
    Measure: the amount of projects that have small compared to major changes (define a rule to differentiate)
    Analyze: What is the reason for the major changes
  • During execution of a project – do we know if we are on track ?
    Measure: Select an arbitrary project and make a status
    Analyze: Was this status correct looking back later ? ( a month – some months)
  • How much time and effort do we spent to understand the status of a project ?
    Measure: Select an arbitrary project and make a status
    Analyze: How much time and people were involved to get the status
  • How much time does it take to plan an engineering change ?
    Measure    : Once an ECO (Engineering Change Order) has been approved, what does it take to plan the change
    (perhaps you already planned too as part of the ECR process- excellent) – resources and time
    Analyze: Can we improve by doing things different

Again all the above points can be addressed by PLM, either through a sales and product configurator (a configurator btw already requires a certain level of standardization or modularization of products. I will write  more on configurators and how to get there perhaps in the future. Meanwhile read this excellent white paper from the Valent Group: 7 Myths of Configurators).
Project and program management combined with template best practices, how to do execute an customer order or a new product introduction are also providing huge benefits. Every time you have the chance to do something similar, you have reduced the risk dramatically. So investing in standardization and templates is an investment in risk reduction and increased reliability

At then the measurable results will come from two sides: customer satisfaction and market share (hard to measure) and internal increased efficiency (easy to measure)which contributes to your margin or to your market share as you can follow a different price point.

status Conclusion
The keywords for the planning phase are: standardization, reuse (in the broadest context) and activities that can be monitored with low effort . This allows companies to control their margin and their risks and their health status.

And planning is import – see video below (and I hope all are still alive)

To PLM or Not to PLM – measuring the concept phase

February 25, 2009 in Change, Green Development, Innovation, PLM, ROI on PLM | Tags: , , , , , | 5 comments

shout_leftI am writing this week’s post on my way to a customer to finalize an implementation and in parallel describing the Return On Investment of this project. But before that, I would like to have a short note about my previous post ‘Free PLM software does not help companies“.
The reason I wrote this post was because I wanted to assure that companies do not believe that ROI for implementing PLM is based on the software costs. PLM implementations are a combination of software, business skills and the company culture. Specially in the current economical situation, I wanted to make clear that these factors are not overlooked. Also I did not want to say Open Source PLM is bad, I made my points on the messaging, however in functionality and usage I do not see a big difference between other types of PLM systems. I got some interesting comments on this post and I advise all of you, who have read the post to go through the comments to get a broader perspective. Once I have had some more opportunity to investigate this area deeper, I will come with a more in-depth post on this topic.

To PLM or Not To PLM

But now back to: To PLM or Not To PLM, where I wrote in a first post on this topic that before judging the costs and ROI of PLM, we should start analyzing our current processes and situation and use this as a baseline to guesstimate the PLM benefits.

The first PLM phase to analyze is the concept phase, where new ideas are picked up (or not). Actually this is the phase where we define the future of the company. The economical recession in a way forces companies to rethink their strategy and fortunately all of the competition is in a similar position. downturn means  less activities, the company might be in the position to allocate time to address these analysis for PLM ROI. Instead of making people redundant, use these people to work on a new and optimized product strategy.

think Existential questions to ask yourself as a company

The basic questions to ask about the concept phase:

  • Do we know where our products are currently in their lifecycle ?
    Measure: quantity, sales trends, margin
    Analyze: is our portfolio healthy ?
  • How do customer rate our products ?
    Measure: market share, market awareness, customer satisfaction, quality, field issues
    Analyze: will customers keep on buying from us ?
  • Where are we different from the competition ?
    Measure: where do we win/ where do we loose and compare per quarter ?
    Analyze: how can we improve the success ratio ?
  • In case of bidding
    Measure: how many bids do we handle per quarter and with which effort
    Analyze: What is the win percentage and how to influence this ?
  • Who are our customers ?
    Measure: does the 80-20 rule apply – does 80 % of the revenue come from 20 % of the customers ?
    Analyze: What is the trend specially in relation to the current market situation
  • Where does innovation come from ?
    Measure    : the amount of new ideas, the source (people, customers) and the ones that reach it to the portfolio
    Analyze: Do we have a guarantee for innovation ?

Additional questions to be asked due to current financial and global situation: PARIS

  • How do we strive for climate neutral products – sustainable development ?
    Measure: the amount of energy used to build the products but also to recycle and what remains
    Analyze: How can we change our products and production process ?
  • How do we capture our company’s IP due to the aging workforce in most of the countries
    Measure: How many people with the specific knowledge will  retire in 5 – 10 years ?
    Analyze: Where and how can I assure this knowledge remains in the company ?

For many of the above questions you might say that you know how to conduct your business as you are doing most of these activities and even more.  However the question you should ask yourself also is: How long does it take to answer these questions and to react on these trends ?

Because all the above topics are positively influenced by PLM – here it the PLM ROI !

eb Project and Portfolio Management, company wide workflow process allow the company to measure, to run analysis and to have information within hours (or worse case in days), where in a company where every department and discipline has their own environment, the effort to collect this information becomes huge and not natural. And as it will take a lot of time to collect the information,  people tend to react on their guts or intuition, which might be wrong if you are among the wrong people or if the world changes in a way never seen before.

Additional capturing product and process knowledge allows companies to contain their IP. And just to make this point clear: Product knowledge is not only CAD and Bills of Materials. It is all collected information: issues during design, during production, coming from field services, best practices used and more. The challenge anyway for every PLM system is to provide an environment, user-friendly enough for all users, to start managing their total product IP in a single environment.

Conclusion
PLM as a total approach brings a lot of value and control in the concept phase, the phase where the company’s future is merely defined. And it is obvious that the future should be green and sustainable. Use the current downturn to shape the future – the questions in this post and your analysis should be the base.

Free PLM software does not help companies !

February 15, 2009 in ERP, open source, PLM | Tags: , , , | 11 comments

observationLast week I saw once more a post, where free PLM software was offered and combined with the open source aura it should be THE solution for companies that want to implement PLM during this economical downturn. I believe this is a big mistake and for the following reasons:

WYPIWYG (What You Pay Is What You Get)

I learned that the WYPIWYG rule usually applies in the software world. Free software is nice, but does not guarantee that in case some functionality is missing or corrupt, that it will be fixed. So in case a company wants to implement the free PLM software, what to do if you feel something important for your business is missing ? You can ask the software provider to implement it for you – but will this be done ? Probably only when it is easy to achieve it will be done, but no commitment as the software is for free.

To assure it can be done, the software vendor will say it is open source software, so it can be changed if you want it. But who is going to make the change ? The mid-market company that thought to have selected an economical solution is not an IT-company – so who to hire?  The open source software development company ? And this is what their  business model is based on – they have the expertise with their software, so probably they are the best to adapt the open source software – not for free of course – and they learn from that but the customer pays.
Conclusion: there is no such thing as a free lunch.

It does not mean that all open source software is bad. Linux has shown that for an operating system it makes sense. Operating systems are 100 % in the scope of IT. PLM is something different. PLM systems indeed need to provide an IT backbone to assure data collaboration and replication globally. However PLM is probably more focused on business process changes and NOT on IT.

 

PLM requires people with business skills and not software developers

From my experience, PLM projects fail in case there are no business knowledgeable people available. It did not only happen with free PLM software or open source software. Some years ago, ERP vendors started to provide free PLM software to their customers to keep PLM companies on a distance. Like free PLM software it looked nice business wise,  the software is free when you buy their ERP system. But who is going to implement it ?

This free PLM software availability has changed in the past years for ERP vendors. Also ERP vendors see PLM as a growth market for their business, so they started also to invest in PLM, providing PLM consultancy and no longer for free PLM functionality. However in one of the projects I was involved, it is clear that PLM and ERP are complementary approaches. Interesting is that none of the PLM vendors focus on ERP, apparently ERP vendors believe they can master PLM. I won’t say it is impossible however I believe if there is no real PLM vision on the top level of an ERP company, you cannot expect the competitive focus to exist.

 

Are CAD vendors providing PLM ?

Some CAD vendors have an embedded data management solution to manage their own data. This is usually more a PDM system and often the word PDM (Product Data Management) is too much for that. These systems manage their own CAD data but have no foundation for a multi-discipline Engineering BOM. For me, this is the base for PDM, as most companies have several disciplines working with different tools all around the same product. So CAD data management for me is not a the base for PDM, so for sure not for PLM.

 

PLM vendors bring real PLM value !

For me it is clear having worked with different vendors in the past:  an  ERP vendor, several PDM and PLM vendors, it is clear for me in order to bring committed value to a customer, you need first of all people with PLM skills – the ones that can differentiate between business process adaptation and software development. In order to implement PLM successful companies need to change the way they were working (read many of my previous posts about this – in particular this one). Software developers tend not to take this approach, but they adapt or extend the software to support the old way of working.

Finally paying for PLM software guarantees that the development of this software has a continuation based on business drivers and best practices. A PLM software vendor has the drive to improve to stay in business, both by software capabilities but even more by providing industry best practices.

 

point

Therefor my conclusion is that free PLM software does not help mid-market companies.

Feel free to react as I believe it is an important topic in this market.

To PLM or Not to PLM ? start measuring !

February 7, 2009 in PLM | Tags: , | 1 comment

observation It is already a month ago that I published a post. You might have been thinking: “Has the Virtual Dutchman gone, due to the credit crisis ?”

On the contrary, this month January has been an extremely busy month with a lot of activities mainly in Europe. Except from all the discussions with customers, I also had lot of interaction with some of my peers in the field all around the topic of PLM.

Part of these discussions were around: 

question “How would the best PLM system look-like in the context of the mid-market ?”

And

“If this PLM system exists, would it be implemented by mid-market companies?”

However first, as an interlude,  I would like to show you two interesting links from the past month.

  • Martin Ohly on his web site Global PLM trying to share his experiences and view on PLM. Certainly when you would like to get an impression of all the topics around global PLM, you should go there. You will find topics there for discussion and like Martin, I am trying to do it in a similar way through my blog, although I focus more on sharing the experiences with customers and leave the architectural details in the background.
  • Oleg Shilovitsky has been bombarding us since a few months with thoughts around PLM his Daily PLM Think Tank. It is interesting to see how Oleg combines concepts, trends from other disciplines with PLM. As they are all air balloons, some of them explode, others get a lot of attention as somewhere around the globe other people had similar thoughts. A nice example of global brainstorming – still everyone keeps their own IP

Now back to the question: To  PLM or not to PLM ?

myplm This is the question I hear the most from the companies I have been visiting. They learn from the PLM vendors and analysts that they should do PLM. However every vendor has its own PLM definition, technology or solution. So who to choose ?

Here I tend to say, that the selection of the right PLM product is the last step of moving towards PLM. Yes, you can start with a PLM product and then learning on the job what is the best fit/ Not recommended. In a later post I will focus on what are the questions that a customer should consider when selecting a PLM system, the first question remains: To PLM or Not to PLM ?

Before selecting a PLM system, I would like to discuss and assist companies with their internal discussion in the company: To PLM or Not PLM ? In order to justify PLM, you need to have a justification for your company.

What will PLM bring us ?

The decision for Yes or No PLM will depend on ROI (Return On Investment) and  long term strategy. Of course there is a connection between the long term strategy and the ROI. But how do you determine the ROI ? Often I hear the question: “What will be the ROI for my company ?”  The only answers I can give without more details are commonalties, like:  Reducing the time engineers use for searching with 50 % or more . Based on the costs of your engineers you can estimated the value for this time saving, etc, etc

However, immediately one of the customers said, we already have an efficient search. Yes a lot is stored in directories, but we feel we manage it well, so the benefits are perhaps only 5 % ?

And here started the discussion. In general the files in their directories were reliable, the problem only appeared when suddenly someone else needed quickly the data used for a design and unfortunate found something in the directory of a wrong project.  The result was that the wrong spare parts were used, which led to a production stand-still at the customer which led to a claim. But this happened only once the manager said.

point Here you see that an incident, which most employees of the company do not want to take into consideration (it was an incident),  lead to losing a good relation with a customer (and probably no future customer anymore) and the costs of an incidental claim. It is not only counting efficiency.

This is where the long term strategy comes. How do you as a company make sure that you will have customers in the future ? And for this question, there are many parameters, like:

  • Do we still have the right products ? 
  • What do customers expect from us in the future?
  • What is the competition doing ?
  • What are trends we must follow ?
  • Where can we innovate (differentiate)?
  • How efficient do we bring a product or order to delivery ?
  • Can we be more efficient ?
  • Can we do the process different and become more flexible ?
  • Can we lower the risk by standardizing ?

Measuring is needed
These questions are not easy to answer unless you have a clear sight on what is happening in your core business and primary processes. And it is here where mid-market companies often differ from the big enterprises. Everyone is busy to do their job and tasks and there is no strategic department that looks from a distance to the company to analyze and describe it and plan the strategy. The management in the company has it as a secondary job often left apart due to the primary tasks.

The current economical down-turn  makes it even more important how to survive and in a shorter time frame.
But although the economical down-turn creates a threat it also is an opportunity. Companies might have currently less work to do, so they have the chance to look to what there are usually doing as a first baseline.

In my upcoming posts, I want to focus on these type of questions for benchmarking – knowing that per industry they might be a little different.  The reward at the end might be two-fold: you know as a company where you are and secondly now you can start really calculating the ROI of a PLM implementation. The last part can be done with an external consultant experienced in PLM as he/she can estimate benefits from other implementations. The ROI will justify and guarantee that your company is better tuned when all lights from the economy go to green.

Conclusion: Start thinking and measuring now you have the time. The result will create the base for a good justification for PLM when and where needed with a correct ROI. And it is not only about doing thing more efficient, this will not kill the competition, it is about doing things different 

Success with your analysis – and feel free to ask your questions through the comments – you can indicate if you want to treat them private or public

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  2. Unknown's avatar
  3. Håkan Kårdén's avatar

    Jos, all interesting and relevant. There are additional elements to be mentioned and Ontologies seem to be one of the…

  4. Lewis Kennebrew's avatar

    Jos, as usual, you've provided a buffet of "food for thought". Where do you see AI being trained by a…

  5. Håkan Kårdén's avatar