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Two weeks ago I received through the PLM group on LinkedIn, the following question from Nathalie: “Do you know any specific examples of what some companies have done to get their users ready, excited or more committed to the new PLM system?”
When digging in my mind and planning to give a quick answer, I realized it was an interesting question with a contradiction embedded: users and excitement for a new PLM system.
This week I was attending the SmarTeam User Group meeting in the Netherlands, where an excellent presentation was given by Simon and Hessel from a Dutch company called Meyn (Poultry processing) about their PLM implementation. They shared their excitement !
Combined with an interesting discussion on Oleg’s blog with Frank, I believe I have the ingredients to answer the above question more complete.
PLM is not exiting for users
I think this is fact number one. When you go to tradeshows or PLM exhibitions, you see usually only 3D CAD demos, nobody tries to demonstrate PLM functions and features in detail. As a side step, I believe the best PLM system should be almost invisible for the user. Users want to work in their own environment with applications like CAD, Excel (BOM handling apps), Office, FEA tools, Simulation tools and more.
ERP has a more clear value proposal, if you want to define and schedule your manufacturing and manage the financial transactions, everyone has accepted that you need ERP. User acceptance is not relevant, users have to work with the provided interface as otherwise production or accounting will fail, there is no alternative.
In contrary, the clear value and definition of PLM are not clear to user. For that reason these users do not get excited when confronted with PLM. They have been surviving without implementing PLM, so they believe there is an alternative.
But we know there are PLM benefits?
My previous post – PLM in the mid-market a mission impossible? – lead to a discussion with Oleg and Frank coming with anew and interesting view point. Frank mentioned that in the German area, many mid-market companies do PLM without purchasing an enterprise PLM system from the known vendors.
The discussion focused on granularity, as all of us believed that a set-by-step approach towards PLM best practices, driven by people who understand the company very well, is the key to success. For this approach you need people inside the customer’s organization who can formulate the vision assisted by consultants working very dedicated in that industry. It requires a different type of consultant as those active in the big enterprise projects.
Instead of implementing PLM as a standard process, in this approach the customer drives and leads the activities where they see benefits in their overall business process. To achieve this, the company must have has a clear vision, where they want to be in the next 5 – 10 years.
Next implementations steps should fit in this strategy and prioritized based on different parameters and these steps are not always with a focus on PLM.
And here lies the key for successful PLM implementations.
The implementation might be based on an academic approach around a core PLM data model and best practices. Mid-market offerings are around an OOTB (Out-Of-The-Box) quick implementation – the PLM system/implementer leads.
Something the management of likes to hear; quick and with little customization, which would translate in lower costs of implementation and disruption of the organization. But then, the end-users start to complain. There is too much change their standard way of working and they do not see the advantages – keying in more data in a system does not help them.
The introduction of PLM brings more complexity and as the new system has to prove itself, there is not big enthusiasm from the average user. The management can push, like in the ERP situation, but in general also the management is anxious to learn if this OOTB-approach brings the benefits and when it fails they ask the vendor where the estimated ROI can be found.
Concluding you will be lucky if users get excited form the OOTB approach.
In the second and granular approach, the company defines their strategy and vision, not necessary a 100 % PLM vision. This strategy need to be clear and shared with the employees in the company, especially for those who are affected by changes.
Next together with implementation partners, who bring in the know-how and possible software tools, a part of the company’s process is addressed and improved. It can be in any area, changing the CAD engine, automate BOM handling, connect sales to engineering or connect after sales/service to engineering.
Many of these areas of interest have different solutions, some are extensions of the CAD environment, some of them are extensions of the ERP environment and some of them are extensions of the IT-platform used in the company.
This approach is not sold by the PLM vendors, as they want to introduce their system as the IT-platform, wrap around the CAD and even capture the definition of the MBOM and initiation of the Item master.
A step-by-step approach based on different granular components, every time in the direction of the company’s strategy, plus all the time feed-back to the end-users on the positive impact of the change, is for me the key to success. In my previous post I was looking for a global provider for these required components.
With the step by step approach with granular solutions, we get users involved and excited.
And this brings me the to the presentation from Meyn
The first time I got involved with Meyn was in October 2004. At that time they had chosen to move from their BaaN-2D CAD infrastructure to a new environment with BaaN – 3D CAD (CATIA). Simon presented their target strategy and vision: moving away from being an Engineering To Order company to become primarily a Configure To Order company.
ENOVIA SmarTeam was chosen to manage the 3D CAD and to connect the information to BaaN. Initially Meyn started in the classical PLM approach, but already after a few months, the understanding was there, they need have step-by-step approach, focused on results for the new CATIA users, without communicating around a complete PLM focused project.
So they followed a stepped approach, they called them waves.
Moving from Engineering to Order to Configure to Order is not software implementation. It requires rationalization of your products; convert them into modular, configurable parts. For this you need to be an engineering expert, not a software expert.
But when it comes to implementation of this concept in the software, you need both experts. And through this collaboration, a methodology for skeleton design was established which was driven by Meyn. And the reason the users were excited was, that they were doing real engineering, the benefits were significant visible.
Customer project related engineering time (typical ETO), which was in the beginning their core activity, became around 30 % of the time. More time could be spent on developing new machines in a modular way. With almost the same amount of engineers the turn-over of the company had more than doubled. A win-win environment which makes also the end-users excited.
Still the backend with ERP at Meyn remained almost the same similar to the time they were working in the 2D environment. And the most interesting conclusion at the end of the presentation was, they are still using the same slide with the vision and they can explain why each step was taken and justify it by measurable benefits.
And this brings me to the answer of the question
“Do you know any specific examples of what some companies have done to get their users ready, excited or more committed to the new PLM system”?
- The management needs to have a clear vision where they want to be as a company in the future. This is not an IT-vision, but a business vision which explain why changes are needed. This vision should be clear to the employees. Communicate!
- Where possible provide metrics!
- Do not talk about a PLM system; it can be also in other tools. Talk about improvement steps in the business processes contributing to the vision. The PLM system is the information backbone, not the front-end. Management and implementers should talk business functionality not IT functions and features. Do not talk in applications!
- Build step by step user scenarios with focus on methodology and user understanding. Implementations with a function-feature focus are hard to accept by the users. Talk business!
- The management should present their vision again and again, supported by metrics what has been accomplished and what has been learned for the future – repeat!
Conclusion
There are thousands of mid-market companies that have a vision to improve their business. The PLM system should never be the topic of discussion with the end users; it is the change in working methods that is important, supported by various systems -CAD/ERP/CRM – and almost invisible …….. PLM
The company Meyn is an example of this approach. Simon and Hessel are working for Meyn as engineers improving their company’s business. Unfortunate it is not their business to explain all around the world, how PLM supports business change in a mid-market company. I was glad to attend their session last week.
In 2008 and 2009 several analysts predicted that the mid-market was now ready for PLM and that most of the PLM vendors were building a targeted offering for the mid-market. I was, and still am, a believer that mid-market companies will benefit from PLM in case ………… they implement it.
When you review my observations in my blog from the past two years, apparently this does not seem to happen. Therefore in the past months, I have been analyzing posts and discussions around the ‘old’ and ‘new’ PLM, I have been talking with representatives from various PLM and PDM vendors, and last but not least analyzed what was the implementation process of a PLM system in companies, where I could get these insights.
This all lead to this post, perhaps too big for a blog, too small for a report.
First the definitions
Before giving my opinion, first my definitions of PLM and mid-market (as everyone has their own definition):
PLM means for me the management of all product related data and processes, from the initial concept phase, through planning, development, production planning and after sales/service. When talking about PLM, I have always a circular process in mind. Experiences from products in the market are again inputs for new product development. Instead of a linear process where every department manages their own data, the challenge is that every discipline contributes and collaborates around the product data. This implies that a PLM implementation always requires a business change process for a customer
Mid-market companies are for those companies where there is no strategic layer available plus a minimized investment in IT-resources. This leads to organizations where most changes are happening inside departments and cross-departmental changes are hard to implement. The IT-department might be a facilitator here but usually IT people focus on architecture and infrastructure instead of business change. This implies that a PLM changed should come from external people.
And who are doing PLM?
On the enterprise level, there is a battle between the big three (Dassault Systems, Siemens and PTC) and they are challenged mostly by the two big ERP vendors (SAP and Oracle) and on the PLM front by Aras, competing through its Open Source model. Of course there are many other vendors. These observations come from the area where I am active.
There are various ways to group these PLM vendors; one is from the CAD engine point of view: DS-CATIA / Siemens-NX / PTC-Pro/E. Although all claim to support a multi-CAD environment, the main focus in these companies is around the PLM integration with their primary CAD engine.
Where in the past, CAD independent PDM systems existed (Metaphase, MatrixOne), they could only survive in the major PLM industries by being integrated with CAD tools and were acquired for that reason. It will be interesting to see if Aras can play a major role in the PLM only domain, where others failed in the past due to lack of integration capabilities.
SAP and Oracle took a different path; they have understood that PLM cannot be neglected in an enterprise, so they need to address it. SAP did this by developing a PLM module as a logical extension on their infrastructure. Oracle has chosen to add PLM to their portfolio by the acquisition of two different PLM vendors. Where SAP does not have the challenge to explain to customers a full integrated story, Oracle has to spend more time on marketing to make it look like a single platform, which will come in the future. Big question however for both companies: do they really understand PLM? Is it in their veins and core strategy or does it remain an extension to gain market share, especially as you have no connections to the design world? (Try to find PLM on their corporate website).
Interesting to see how Aras will evolve. In their business model, the initial purchase of software is not needed, but once working with Aras you pay also for maintenance like with other PLM vendors. Their advantage is that switching from an existing legacy PLM vendor is less painful, as there are no initial software costs, which can be huge for an enterprise. I believe they have a good chance to succeed in industries where there is less a dependency on the CAD engine.So on the enterprise level the need for PLM is justified. Resources exist and are budgeted both at the customer level as at the supplier level. The PLM suppliers are either the PLM vendors themselves with service teams, or big, global service providers specialized in implementing the PLM software. They can do strategic PLM projects and support the required business change.
So why does it look like a mission impossible in the mid-market ?
The big enterprise vendors (PLM/ERP) believe that you can just strip down your enterprise software in a kind of prepackaged mode – PLM Out of the Box is a common heard expression. Also the analysts praise in their reports the mid-market approach from some of these vendors.
But do they really address the mid-market or only the high-end mid-market? Again it is all about the definition of where is the mid-market and in this post I stay with my definition of mid-market.
There are two main characteristics for this mid-market:
- Sales and implementation of software is done through Value Added Resellers and not through the vendors or big service companies. The software revenue per customer does not justify high expenses for global consultants with additional high expenses due to travel costs (and sometimes the local language issue). The local VAR is supposed to be the point of contact.
- Mid-market companies do not change their main company processes. Depending on the type of core process, let’s assume ETO or BTO, they have sales and engineering working close together on product/solution definition and they have manufacturing planning and production working close together on product/solution delivery. In term of functionality a PDM focus for sales/engineering and an ERP focus for manufacturing.
A mid-market company can be characterized as a two pillar company :
Who are successful in the mid-market ?
There are two software vendors, touching our PLM prospects , that really understand the mid-market, Autodesk and Microsoft.
Autodesk has a huge range of products and when we focus on the area of manufacturing, Autodesk does not talk about PLM. And I believe for several reasons.
Autodesk has never been a front-runner in making new technology and concepts available for the mainstream. They are more a company providing functionality for mainstream concepts, as compared to a company pushing new concepts and technology for premium pricing.
And this is what their customers like, as they also do not have internal strategic resources to push the company to new directions and surely no one wants to take the risk.
Thus risk avoidance and understandable concepts are key targets for mid-market companies.
Autodesk tries to avoid reaching beyond their engineering domain, the maximum they cover is presented in their Digital Prototyping solution. With their Vault product range they stay close to PDM, but do not go into the concepts of PLM, like mBOM handling. PLM is not established enough in the mid-market, so a no-go area for Autodesk.
Microsoft addresses the mid-market more from the IT-infrastructure. Slowly SharePoint has reached a certain status of an infrastructure component for content management – so why not for all the engineering data? SharePoint is the most relevant component related to PDM or PLM in my review and what I observed here is that the IT-manager often is the person who supports and enables a cross-departmental implementation of SharePoint. So not pushed from a strategic business level but from a strategic IT architecture approach.
PLM providers and implementers jumped on this opening in the mid-market by providing PLM capabilities on top of SharePoint. This to get their software used in the mid-market. It does not mean they do PLM, it means they expand the visibility of engineering data across the organization. Microsoft apparently does not want to enter the area of managing CAD or engineering data. You see mainly investments in the Microsoft Dynamics software, where ERP and CRM are targeted. Again PLM is not established enough in the mid-market to provide common functionality, so a no-go area for Microsoft.
And the impact of a indirect sales channel….
VARs are the next challenge for PLM in the mid-market. The PLM Vendors, who work with VARs, expect that these VARs are an extension of their sales organization. And sales means here selling software . PLM means however also selling services and I learned in the hard way in my past that companies selling products and services within the same group of people are constant in internal conflict how to balance software and service budgets
Selling and implementing PLM software is also difficult in mid-market companies as these companies buy software because they want to solve a pain in one of their departments. It is not common that they have a holistic approach. So VARs trying to sell PLM are engineering centric – often with their roots in CAD Selling. And as their nature comes from product selling, they feel comfortable in selling data management and PDM as this remains close to product features easy to justify. PLM requires different people, who can guide a business change across departments at the customer.
It is very rare for VARs to have these skilled people in place due to lack of scale. You need to act local to be cost efficient and close to your customer. As a VAR has only visibility of a limited group of implementations, the consultancy practices often are not based on global experience and best practices, but defined on their own best practices, sometimes bring their ‘magic’ to be even more different than required, to differentiate from other VARs.
The companies implementing PLM for enterprises can afford to share global knowledge; VARs need to build up the knowledge locally, which leads to an extreme dependency on the person who is available. And to be affordable on the payroll a VAR, the consultant often is an experienced application engineer, who knows to satisfy his customer by providing services on top of the product.
And as PLM is not established enough in the mid-market, they will not invest and push for PLM which requires a long term experience build-up, so almost a no-go area for VARs
So no PLM in the mid-market?
I believe real PLM in my mid-market will be a rarity, based on a lucky coincidence of the right people, the right company and the right product at a certain time. It will not become a main stream solution in the mid-market as there is the design world and the ERP world.
PLM SaaS (Software As A Service) delivered by Arena or PLMplus will not bring the solution either for the mid-market. You might remove the IT complexity, but you are missing the resources (internal and external) for business change – who will be there to initiate and guide the change . PLM SaaS probably will be implemented as a PDM environment.
I give more credits for Social PLM (Facebook alike collaboration, Google Wave). This approach might bypass the classical way of working in companies and lead to new concepts, which probably will not be tagged PLM – will the new trigram be SPC (Social Product Collaboration) ?
Still it will not happen fast I believe. It requires a change of the management in mid-market companies. Most of the managers are representative of the older generation, not wanting to take the risk to jump on a new hype they haven’t made themselves familiar yet
Conclusion: PLM in the mid-market seems like a mission impossible and although PLM concepts are valuable for the mid-market as analysts report, the typical mid-market characteristics block PLM to become a common practice there.
I am looking forward to learn from your comments
This post is a reply on a post from YML, with whom I have been working in the past. At that time we had interesting discussions on various topics around PLM and I am happy to continue this discussion in blog space. Please read his post in order to understand the full reasoning below.
First I want to make a statement to avoid misconception. I am a PLM evangelist and perhaps my definition of PLM is wider than what PLM vendors currently offer. For me PLM focuses not only on storing and managing the product data (PDM), but also on the whole process of how new products or improved products are created, designed, produced and supported.
From the Dassault Systemes and Autodesk (read Jim Brown’s comments on them) perspective, there is a lot of focus on the collaboration around the virtual product, however for me personally, when working with mid-market customers, I am mainly focusing on capturing design knowledge and IP plus creating visibility of knowledge inside a company, without being dependent on knowledge stored in people brains.
Interesting development in that area I am observing recently is in www.vuuch.com. An initiative to empower design discussions.
Now back to the reply on YML’s post:
So when Yann writes:
However I disagree with the statement that you use as foundation : Software vendor are proposing excellent product with a good ROI and SMB customer don’t understand it because they do not have a vision.
I must say: read my statement above – there is still work to be done. When I am talking about the lack of vision in the mid-market companies, I will provide an update based on some experiences I had the past few weeks, where lack of vision is blocking process improvements.
Next Yann is mentioning all the propriety formats of all vendors, PLM vendors, vendors of authoring tools (CAD, Content,…) and even limited version support. Yann makes a point for open-source solutions, which are part of the WEB 2.0 evolution. Interesting to see that at the same time Kurt Chen writes an interesting post on What Can PLM Offer for SMBs? in the same context.
My main comment on this topic is that I understand the beauty of open source, however I also believe that if you want to work with open source solutions, you need to have a 100 % clear concept of what the product should do (that is why Linux is successful – I believe PLM is not there yet) or you need companies that have strong IT-knowledge/support to adapt the software to their needs.However, this contradicts the fact that mid-market companies usually do not have these resources to invest in this kind of activity. So what would they do ? Hire consultancy firms or software companies (sometimes the original developer of the open source software) to adapt the software to their needs. This creates almost the same dependency as what customers would have with traditional PLM vendors – they rely on their software provider as the resource to drive PLM.
Then the question comes up:
Who would I trust to assist my mid-market company to evolve towards PLM ?
A company developing software or a company that has experience in my industry and perhaps does not deliver the best in class product (yet).I have met a company that decided to discontinue PLM software as the provider only brought programmers into the game, they tried to solve requests from the users and at the end – after 1.5 year of programming the system became so complex but crucial details were missing. An industry knowledgeable person with PLM knowledge would approach it different – first focusing on the process and then analyze where automation would bring benefits.Also Yann mentions:
It is interesting to note that nobody is blaming Ford, GM, … of not being able to see that they have good chance to go bankrupt in some month from now. It is interesting that many people blame now these companies of not being able re-invent/adapt their products to their market. when all of them where using PLM systems and had huge PLM projects on going
and additional:
In order to develop this agility SMB need to put very high in the list of capabilities for their information system the following features : Agility, re-configuration, continuous evolution / transformation, openness, ease of integration with unknown system, overall strategy of the PLM vendor
Here I disagree with the first quote. Ford and GM have no PLM implementations, they built a dinosaur type of implementation with focus on product development – yes provided by PLM vendors, but so rigid implemented that they lost the capabilities to be connected to the market.And I fully agree with the second quote – nothing to add. PLM should be implemented in such a way that it does not restrict a company in its flexibility – as innovation does not come from doing a process more efficient – it comes from doing things different
So to conclude for today:
- Yes, current PLM vendors are not perfect and there is a challenge to reach the mid-market
- Open Source solutions make only sense if combined with industry knowledge
- Agility, re-configuration, continuous evolution / transformation, openness, ease of integration with unknown systems should be the overall strategy of the PLM vendor (not only mid-market)
Thanks Yann, and enjoy your fishing, take notice of what could happen:
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