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As promised in my blog post: PLM 2021 – My plans – your goals? I was planning to experiment with a format, which I labeled as: The PLM Doctor is IN.
The idea behind this format that anyone interested could ask a question – anonymous or through a video recording – and I would answer this single question.
As you can see from the survey result, many of the respondents (approx. 30 % that did not skip the question) had a question. Enough for the upcoming year to experiment – if the experiment works for you. As it is an experiment, I am also looking forward to your feedback to optimize this format.
Today the first episode: PLM and ROI
Relevant links discussed in this video
CIMdata webinar: PLM Benefits, Metrics & ROI with John MacKrell
VirtualDutchman: The PLM ROI Myth
Conclusion
What do you think? Does this format help you to understand and ask PLM related questions? Or should I not waste my time as there is already so much content out there. Let me know what you think in the comments.
Added February 10th
As the PLM Doctor sometimes talks like an oracle, it was great to see the summary written by SharePLM Learning Expert Helena Guitierrez.
Click on the image to see the full post.
Last week I shared my thoughts related to my observation that the ROI of PLM is not directly visible or measurable, and I explained why. Also, I explained that the alignment of an organization requires a myth to make it happen. A majority of readers agreed with these observations. Some others either misinterpreted the headlines or twisted the story in favor of their opinion.
A few came from Oleg Shilovitsky and as Oleg is quite open in his discussions, it allows me to follow-up on his statements. Other people might share similar thoughts but they haven’t had the time or opportunity to be vocal. Feel free to share your thoughts/experiences too.
Some misinterpretations from Oleg’s post: PLM circa 2020 – How to stop selling Myths
- The title “How to stop selling Myths” is the first misinterpretation.
We are not selling myths – more below. - “Jos Voskuil’s recommendation is to create a myth. In his PLM ROI Myths article, he suggests that you should not work on a business case, value, or even technology” is the second misinterpretation, you still need a business case, you need value and you need technology.
And I got some feedback from Lionel Grealou, who’s post was a catalyst for me to write the PLM ROI Myth post. I agree I took some shortcuts based on his blog post. You can read his comments here. The misinterpretation is:
- “Good luck getting your CFO approve the business change or PLM investment based on some “myth” propaganda :-)” as it is the opposite, make your plan, support your plan with a business case and then use the myth to align
I am glad about these statements as they allow me to be more precise, avoiding misperceptions/myth-perceptions.
A Myth is bad
Some people might think that a myth is bad, as the myth is most of the time abstract. I think these people do not realize that there a lot of myths that they are following; it is a typical social human behavior to respond to myths. Some myths:
- How can you be religious without believing in myths?
- In this country/world, you can become anything if you want?
- In the past, life was better
- I make this country great again
The reason human beings need myths is that without them, it is impossible to align people around abstract themes. Try for each of the myths above to create an end-to-end logical story based on factual and concrete information. Impossible!
Read Yuval Harari’s book Sapiens about the power of myths. Read Steven Pinker’s book Enlightenment Now to understand that statistics show a lot of current myths are false. However, this does not mean a myth is bad. Human beings are driven by social influences and myths – it is our brain.
Unless you have no social interaction, you might be immune to myths. With brings me to quoting Oleg once more time:
“A long time ago when I was too naive and too technical, I thought that the best product (or technology) always wins. Well… I was wrong. “
I went through the same experience, having studied physics and mathematics makes you think extremely logical. Something I enjoyed while developing software. Later, when I started my journey as the virtualdutchman mediating in PLM implementations, I discovered logical alone does not work in businesses. The majority of decisions are done based on “gut feelings” still presented as reasonable cases.
Unless you have an audience of Vulcans, like Mr. Spock, you need to deal with the human brain. Consider the myth as the envelope to pass the PLM-project to the management. C-level acts by myths as so far I haven’t seen C-level management spending serious time on understanding PLM. I will end with a quote from Paul Empringham:
I sometimes wish companies would spend 6 months+ to educate themselves on what it takes to deliver incremental PLM success BEFORE engaging with software providers
You don’t need a business case
Lionel is also skeptical about some “Myth-propaganda” and I agree with him. The Myth is the envelope, inside needs to be something valuable, the strategy, the plan, and the business case. Here I want to stress one more time that most business cases for PLM are focusing on tool and collaboration efficiency. And from there projecting benefits. However, how well can we predict the future?
If you implement a process, let’s assume BOM-collaboration done with Excel by BOM-collaboration based on an Excel-on-the-cloud-like solution, you can measure the differences, assuming you can measure people’s efficiency. I guess this is what Oleg means when he explains OpenBOM has a real business case.
However, if you change the intent for people to work differently, for example, consult your supplier or manufacturing earlier in the design process, you touch human behavior. Why should I consult someone before I finish my job, I am measured on output not on collaboration or proactive response? Here is the real ROI challenge.
I have participated in dozens of business cases and at the end, they all look like the graph below:
The ROI is fantastic – after a little more than 2 years, we have a positive ROI, and the ROI only gets bigger. So if you trust the numbers, you would be a fool not to approve this project. Right?
And here comes the C-level gut-feeling. If I have a positive feeling (I follow the myth), then I will approve. If I do not like it, I will say I do not trust the numbers.
Needless to say that if there was a business case without ROI, we do not need to meet the C-level. Unless, and it happens incidental, at C-level, there was already a decision we need PLM from Vendor X because we played golf together, we are condemned together or we believe the same myths.
In reality, the old Gartner graph from realized benefits says it all. The impact of culture, processes, and people can make or break a plan.
You do not need an abstract story for PLM
Some people believe PLM on its own is a myth. You just need the right technology and people will start using it, spreading it out and see how we have improved business. Sometimes email is used as an example. Email is popular because you can with limited effort, collaborate with people, no matter where they are. Now twenty years later, companies are complaining about the lack of traceability, the lack of knowledge and understanding related to their products and processes.
PLM will always have the complexity of supporting traceability combined with real-time collaboration. If you focus only on traceability, people will complain that they are not a counter clerk. If you focus solely on collaboration, you miss the knowledge build-up and traceability.
That’s why PLM is a mix of governance, optimized processes to guarantee quality and collaboration, combined with a methodology to tune the existing processes implemented in tools that allow people to be confident and efficient. You cannot translate a business strategy into a function-feature list for a tool.
Conclusion
Myths are part of the human social alignment of large groups of people. If a Myth is true or false, I will not judge. You can use the Myth as an envelope to package your business case. The business case should always be a combination of new ways of working (organizational change), optimized processes and finally, the best tools. A PLM tool-only business case is to my opinion far from realistic
Now preparing for PI PLMx London on 3-4 February – discussing Myths, Single BOMs and the PLM Green Alliance
In my previous post, the PLM blame game, I briefly mentioned that there are two delivery models for PLM. One approach based on a PLM system, that contains predefined business logic and functionality, promoting to use the system as much as possible out-of-the-box (OOTB) somehow driving toward a certain rigidness or the other approach where the PLM capabilities need to be developed on top of a customizable infrastructure, providing more flexibility. I believe there has been a debate about this topic over more than 15 years without a decisive conclusion. Therefore I will take you through the pros and cons of both approaches illustrated by examples from the field.
PLM started as a toolkit
The initial cPDM/PLM systems were toolkits for several reasons. In the early days, scalable connectivity was not available or way too expensive for a standard collaboration approach. Engineering information, mostly design files, needed to be shared globally in an efficient manner, and the PLM backbone was often a centralized repository for CAD-data. Bill of Materials handling in PLM was often at a basic level, as either the ERP-system (mostly Aerospace/Defense) or home-grown developed BOM-systems(Automotive) were in place for manufacturing.
Depending on the business needs of the company, the target was too connect as much as possible engineering data sources to the PLM backbone – PLM originated from engineering and is still considered by many people as an engineering solution. For connectivity interfaces and integrations needed to be developed in a time that application integration frameworks were primitive and complicated. This made PLM implementations complex and expensive, so only the large automotive and aerospace/defense companies could afford to invest in such systems. And a lot of tuition fees spent to achieve results. Many of these environments are still operational as they became too risky to touch, as I described in my post: The PLM Migration Dilemma.
The birth of OOTB
Around the year 2000, there was the first development of OOTB PLM. There was Agile (later acquired by Oracle) focusing on the high-tech and medical industry. Instead of document management, they focused on the scenario from bringing the BOM from engineering to manufacturing based on a relatively fixed scenario – therefore fast to implement and fast to validate. The last point, in particular, is crucial in regulated medical environments.
At that time, I was working with SmarTeam on the development of templates for various industries, with a similar mindset. A predefined template would lead to faster implementations and therefore reducing the implementation costs. The challenge with SmarTeam, however, was that is was very easy to customize, based on Microsoft technology and wizards for data modeling and UI design.
This was not a benefit for OOTB-delivery as SmarTeam was implemented through Value Added Resellers, and their major revenue came from providing services to their customers. So it was easy to reprogram the concepts of the templates and use them as your unique selling points towards a customer. A similar situation is now happening with Aras – the primary implementation skills are at the implementing companies, and their revenue does not come from software (maintenance).
The result is that each implementer considers another implementer as a competitor and they are not willing to give up their IP to the software company.
SmarTeam resellers were not eager to deliver their IP back to SmarTeam to get it embedded in the product as it would reduce their unique selling points. I assume the same happens currently in the Aras channel – it might be called Open Source however probably it is only high-level infrastructure.
Around 2006 many of the main PLM-vendors had their various mid-market offerings, and I contributed at that time to the SmarTeam Engineering Express – a preconfigured solution that was rapid to implement if you wanted.
Although the SmarTeam Engineering Express was an excellent sales tool, the resellers that started to implement the software began to customize the environment as fast as possible in their own preferred manner. For two reasons: the customer most of the time had different current practices and secondly the money come from services. So why say No to a customer if you can say Yes?
OOTB and modules
Initially, for the leading PLM Vendors, their mid-market templates were not just aiming at the mid-market. All companies wanted to have a standardized PLM-system with as little as possible customizations. This meant for the PLM vendors that they had to package their functionality into modules, sometimes addressing industry-specific capabilities, sometimes areas of interfaces (CAD and ERP integrations) as a module or generic governance capabilities like portfolio management, project management, and change management.
The principles behind the modules were that they need to deliver data model capabilities combined with business logic/behavior. Otherwise, the value of the module would be not relevant. And this causes a challenge. The more business logic a module delivers, the more the company that implements the module needs to adapt to more generic practices. This requires business change management, people need to be motivated to work differently. And who is eager to make people work differently? Almost nobody, as it is an intensive coaching job that cannot be done by the vendors (they sell software), often cannot be done by the implementers (they do not have the broad set of skills needed) or by the companies (they do not have the free resources for that). Precisely the principles behind the PLM Blame Game.
OOTB modularity advantages
The first advantage of modularity in the PLM software is that you only buy the software pieces that you really need. However, most companies do not see PLM as a journey, so they agree on a budget to start, and then every module that was not identified before becomes a cost issue. Main reason because the implementation teams focus on delivering capabilities at that stage, not at providing value-based metrics.
The second potential advantage of PLM modularity is the fact that these modules supposed to be complementary to the other modules as they should have been developed in the context of each other. In reality, this is not always the case. Yes, the modules fit nicely on a single PowerPoint slide, however, when it comes to reality, there are separate systems with a minimum of integration with the core. However, the advantage is that the PLM software provider now becomes responsible for upgradability or extendibility of the provided functionality, which is a serious point to consider.
The third advantage from the OOTB modular approach is that it forces the PLM vendor to invest in your industry and future needed capabilities, for example, digital twins, AR/VR, and model-based ways of working. Some skeptic people might say PLM vendors create problems to solve that do not exist yet, optimists might say they invest in imagining the future, which can only happen by trial-and-error. In a digital enterprise, it is: think big, start small, fail fast, and scale quickly.
OOTB modularity disadvantages
Most of the OOTB modularity disadvantages will be advantages in the toolkit approach, therefore discussed in the next paragraph. One downside from the OOTB modular approach is the disconnect between the people developing the modules and the implementers in the field. Often modules are developed based on some leading customer experiences (the big ones), where the majority of usage in the field is targeting smaller companies where people have multiple roles, the typical SMB approach. SMB implementations are often not visible at the PLM Vendor R&D level as they are hidden through the Value Added Reseller network and/or usually too small to become apparent.
Toolkit advantages
The most significant advantage of a PLM toolkit approach is that the implementation can be a journey. Starting with a clear business need, for example in modern PLM, create a digital thread and then once this is achieved dive deeper in areas of the lifecycle that require improvement. And increased functionality is only linked to the number of users, not to extra costs for a new module.
However, if the development of additional functionality becomes massive, you have the risk that low license costs are nullified by development costs.
The second advantage of a PLM toolkit approach is that the implementer and users will have a better relationship in delivering capabilities and therefore, a higher chance of acceptance. The implementer builds what the customer is asking for.
However, as Henry Ford said, if I would ask my customers what they wanted, they would ask for faster horses.
Toolkit considerations
There are several points where a PLM toolkit can be an advantage but also a disadvantage, very much depending on various characteristics of your company and your implementation team. Let’s review some of them:
Innovative: a toolkit does not provide an innovative way of working immediately. The toolkit can have an infrastructure to deliver innovative capabilities, even as small demonstrations, the implementation, and methodology to implement this innovative way of working needs to come from either your company’s resources or your implementer’s skills.
Uniqueness: with a toolkit approach, you can build a unique PLM infrastructure that makes you more competitive than the other. Don’t share your IP and best practices to be more competitive. This approach can be valid if you truly have a competing plan here. Otherwise, the risk might be you are creating a legacy for your company that will slow you down later in time.
Performance: this is a crucial topic if you want to scale your solution to the enterprise level. I spent a lot of time in the past analyzing and supporting SmarTeam implementers and template developers on their journey to optimize their solutions. Choosing the right algorithms, the right data modeling choices are crucial.
Sometimes I came into a situation where the customer blamed SmarTeam because customizations were possible – you can read about this example in an old LinkedIn post: the importance of a PLM data model
Experience: When you plan to implement PLM “big” with a toolkit approach, experience becomes crucial as initial design decisions and scope are significant for future extensions and maintainability. Beautiful implementations can become a burden after five years as design decisions were not documented or analyzed. Having experience or an experienced partner/coach can help you in these situations. In general, it is sporadic for a company to have internally experienced PLM implementers as it is not their core business to implement PLM. Experienced PLM implementers vary from size and skills – make the right choice.
Conclusion
After writing this post, I still cannot write a final verdict from my side what is the best approach. Personally, I like the PLM toolkit approach as I have been working in the PLM domain for twenty years seeing and experiencing good and best practices. The OOTB-box approach represents many of these best practices and therefore are a safe path to follow. The undecisive points are who are the people involved and what is your business model. It needs to be an end-to-end coherent approach, no matter which option you choose.
According to LinkedIn, there are over a 7500 PLM consultants in my network. It is quite an elite group of people as I have over 100.000 CEOs in my network according to LinkedIn. Being a CEO is a commodity.
PLM consultants share a common definition, the words Product Lifecycle Management. However, what we all mean by PLM is one of the topics that has evolved over the past 19 years in a significant way.
PLM or cPDM (collaborative PDM)?
In the early days, PLM was considered as an engineering tool for collaboration, either between global subsidiaries or suppliers. The main focus of PLM was to bring engineering information to manufacturing in a controlled way. PLM and cPDM, often seen as solving the same business needs as the implementation of a PLM system most of the time got stuck at the cPDM level.
Main players at that time were Dassault Systemes, UGS (later Siemens PLM) and PTC – their solutions were MCAD-driven with limited scope – bringing engineering information towards manufacturing in a coordinated way.
PLM was not really an approach that created visibility at the management level of a company. How do you value and measure collaboration? Because connectivity was expensive in the early days of PLM, combined with the idea that PLM systems needed to be customized, PLM was framed as costly and hard to deliver value.
Systems Engineering and New Product Introduction
Then, 2005 and beyond, thanks to better connectivity and newcomers in the PLM market, the solution landscape from PLM became broader. CAD integrations were not a necessary part of the PLM scope according to these newcomers as they focused on governance (New Product Introduction), Bill of Materials or at the front-end of the product design cycle, connecting systems engineering by adding requirements management to their PLM suite.
New players in this domain where SAP, Aras, followed by Autodesk – their focus was more metadata-driven, connection and creating an end-to-end data flow for the product. Autodesk started the PLM and cloud path.
These new capabilities brought a broader scope for PLM indeed. However, they also strengthened the idea that PLM is there for engineers. For the management too complicated, unless they understood the value of coordinated collaboration. Large enterprises saw the benefits of having common processes for PLM as an essential reason to invest in PLM. The graph below showed the potential of PLM, where the shaded area indicates the potential revenue benefits.
Still, this graph does not create “hard numbers,” and it requires visionaries to get a PLM implementation explained and justified across the board. PLM is framed as expensive even if the budgets spent on PLM are twenty percent or less compared to ERP implementations. As PLM is not about transactional data, the effects of PLM are hard to benchmark. Success has many fathers, and in case of difficulties, the newcomer is to blame.
PLM = IoT?
With the future possibilities, connectivity to the machine-level (IoT or IIoT), a new paradigm related to PLM was created by PTC. PLM equals IoT – read more here.
Through IoT, it became possible to connect to products/assets in the field, and the simplified message from PTC was that now thanks to IoT (read ThingWorx) PLM was now really possible, releasing traditional PLM out of its engineering boundaries. The connected sensors created the possibility to build and implement more advanced and flexible manufacturing processes, often called Smart Manufacturing or Industrie 4.0.
None of the traditional PLM vendors is talking about PLM solely anymore. Digital transformation is a topic discussed at the board level, where GE played a visionary role with their strong message for change, driven by their CEO Jeff Immelt at that time – have a look at one of his energizing talks here.
However is PLM part of this discussion?
Digital Transformation opened a new world for everyone. Existing product lifecycle concepts could be changed, products are becoming systems, interacting with the environment realized through software features. Systems can be updated/upgraded relatively fast, in particular when you are able to watch and analyze the performance of your assets in almost real-time.
All consultants (me included) like to talk about digital transformation as it creates a positive mood towards the future, imagining everything that is possible. And with the elite of PLM consultants we are discovering the new roles of PLM – see picture below:
Is PLM equal to IoT or Digital Transformation?
I firmly believe the whole Digital Transformation and IoT hypes are unfortunately obfuscating the maximum needs for a digital enterprise. The IoT focus only exposes the last part of the lifecycle, disconnected from the concept and engineering cycles – yes on PowerPoint slides there might be a link. Re-framing PLM as Digital Transformation makes is even vaguer as we discussed during the CIMdata / PDT Europe conference last October. My main argument: Companies fail to have a link with their digital operations and dreams because current engineering processes and data, hardware (mechanical and electronics) combined with software are still operating in an analog, document-driven mode.
PLM = MBSE?
However what we also discussed during this conference was the fact that actually there is a need for an end-to-end model-based systems engineering infrastructure to support the full product lifecycle. Don Farr’s (Boeing) new way to depict the classical systems engineering “V” also hinted into that direction. See the image below – a connected environment between the virtual modeled word and the physical world at any time of the product lifecycle
So could MBSE be the new naming for PLM?
The problem is as Peter Bilello also mentioned during the CIMdata/PDT conference is that the word “ENGINEERING” is in Model-Based Systems Engineering. Therefore keeping the work what the PLM “elite” is doing again in the engineering box.
So perhaps Model-Based Enterprise as the new name?
Unfortunate MBE has already two current definitions – look here and here. Already too much confusion, and there a lot of people who like confusion. See Model-Based – The confusion. So any abbreviation with Model-Based terminology in it will not get attention at the board level. Even if it is crucial the words, Model-Based create less excitement as compared to Digital Twin, although the Digital Twin depends on a model-based approach.
Conclusion
Creating and maintaining unique products and experiences for their customers is the primary target of almost every company. However, no easy acronym that frames these aspects to value at the board level. Perhaps PID – the Product Innovation Diamond approach will be noticed? Your say ….
Perhaps an ambiguous title this time as it can be interpreted in various ways. I think that all these interpretations are one of the most significant problems with PLM. Ambiguity everywhere. Its definition, its value and as you might have noticed from the past two blog posts the required skill-set for PLM consultants.
As I am fine-tuning my presentation for the upcoming PLMx 2018 Event in Hamburg, some things become clearer for me. This is one of the advantages of blogging, speaking at PLM conferences and discussing PLM with companies that are eager to choose to right track for PLM. You are forced to look in more depth to be consistent and need to have arguments to support your opinion about what is happening in the scope of PLM. And from these learnings I realize often that the WHY PLM remains a big challenge for various reasons.
Current PLM
In the past twenty years, companies have implemented PLM systems, where the primary focus was on the P (Product) only from Product Lifecycle Management. PLM systems have been implemented as an engineering tool, as an evolution of (Product Data Management).
PLM systems have never been designed from the start as an enterprise system. Their core capabilities are related to engineering processes and for that reason that is why most implementations start with engineering. Later more data-driven PLM-systems like Aras and Autodesk have begun from another angle, data connectivity between different disciplines as a foundation, avoiding to get involved with the difficulty of engineering first.
This week I saw the publication of the PLMPulse survey results by i42R / MarketKey where they claim:
The results from first industry-led survey on our status of Product Lifecycle Management and future priorities
The PLMPulse report is based on five different surveys as shown in the image above. Understanding the various aspects of PLM from usage, business value, organizational constraints, information value and future potential. More than 350 people from all around the world answered the various questions related to these survey. Unfortunate inputs from some Asian companies are missing. We are all curious what happens in China as there, companies do not struggle with the same legacy related to PLM as other countries. Are they more embracing PLM in a different way?
The results as the editors also confirm, are not shocking and confirming that PLM has the challenge to get out of the engineering domain. Still, I recommend downloading the survey as it has interesting details. After registration you can download the report from here.
What’s next
During the upcoming PLMx 2018 Hamburg conference there will be a panel discussion where the survey results will be discussed. I am afraid that this debate will result again in a discussion where we will talk about the beauty and necessity of PLM and we wonder why PLM is not considered crucial for the enterprise.
There are a few challenges I see for PLM and hopefully they will be addressed. Most discussions are about WHAT PLM should/could do and not WHY. If you want to get to the WHY of PLM, you need to be able to connect the value of PLM to business outcomes that resonate at C-level. Often PLM implementations are considered costly and ROI and business value are vague.
As the PLMPulse report also states, the ROI for PLM is most of the time based on efficiency and cost benefits related to the current way of working. These benefits usually do not offer significant ROI numbers. Major benefits come for working in a different way and focusing on working closer to your customer. Business value is hard to measure.
How do you measure the value of multidisciplinary collaboration or being more customer-centric? What is the value of being better connected to your customer and being able to react faster? These situations are hard to prove at the board level, as here people like to see numbers, not business transformations.
Focus on the WHY and HOW
A lot of the PLM messages that you can read through various marketing or social channels are related to futuristic concepts and high-level dreams that will come true in the next 10-20 years. Most companies however have a planning horizon of 2 years max 5 years. Peter Bilello from CIMdata presented one of their survey results at the PDT conference in 2014, shown below:
Technology and vision are way ahead of reality. Even the area where the leaders focusing the distance between technology and vision gets bigger. The PLM focus is more down-to-earth and should not be on what we are able to do, but the focus should be on what would be the next logical step for our company to progress to the future.
System of Record and System of Engagement
At the PLMx conference I will share my experiences related to PLM transformations with the audience. One and a half-year ago we started talking about the bi-modal approach. Now more and more I see companies adopting the concepts of bi-modal related to PLM. Still most organizations struggle with the fact that their PLM should be related to one PLM system or one PLM vendor, where I believe we should come to the conclusion that there are two PLM modes at this moment. And this does not imply there need to be only one or two systems – it will become a federated infrastructure.
Current modes could be an existing PLM backbone, focusing on capturing engineering data, the classical PLM system serving as a system of record. And a second, new growing PLM-related infrastructure which will be a digital, most likely federated, platform where modern customer-centric PLM processes will run. As the digital platform will provide real-time interaction it might be considered as a system of engagement, complementary to the system of record.
It will be the system of engagement that should excite the board members as here new ways of working can be introduced and mastered. As there are no precise blueprints for this approach, this is the domain where innovative thinking needs to take place.
That’s why I hope that neutral PLM conferences will less focus on WHAT can be done. Discussions like MBSE, Digital Thread, Digital Twin, Virtual Reality / Augmented Reality are all beautiful to watch. However, let’s focus first on WHY and HOW. For me besides the PLMx Hamburg conference, other upcoming events like PDT 2018 (this time in the US and Europe) are interesting events and currently PDT the call for papers is open and hopefully we find speakers that can teach and inspire.
CIMdata together with Eurostep are organizing these events in May (US) and October (Europe). The theme for the CIMdata roadmap conference will be “Charting the Course to PLM Value together – Expanding the value footprint of PLM and Tackling PLM’s Persistent Pain Points” where PDT will focus on Collaboration in the Engineering Supply Chain – the extended digital thread. These themes need to be addressed first before jumping into the future. Looking forward to meeting you there.
Conclusions
In the world of PLM, we are most of the time busy with explaining WHAT we (can/will) do. Like a cult group sometimes we do not understand why others do not see the value or beauty of our PLM concepts. PLM dialogues and conferences should therefore focus more on WHY and HOW. Don’t worry, the PLM vendors/implementers will always help you with WHAT they can do and WHY it is different.
Finally, I have time to share my PLM experiences with you in this blog. The past months have been very busy as I moved to a new house, and I wanted to do and control a lot of activities myself. Restructuring your house in an agile way is not easy. Luckily there was a vision how the house should look like. Otherwise, the “agile” approach would be an approach of too many fixes. Costly and probably typical for many old construction projects.
Finally, I realized the beauty of IKEA´s modular design and experienced the variety of high-quality products from BLUM (an impressive company in Austria I worked with)
In parallel, I have been involved in some PLM discussions where in all cases the connection with the real C-level was an issue. And believe it or not, my blog buddy Oleg Shilovitsky just published a post: Hard to sell PLM? Because nobody gives a SH*T about PLM software. Oleg is really starting from the basics explaining you do not sell PLM; you sell a business outcome. And in larger enterprises I believe you sell at this time the ability to do a business transformation as business is becoming digital, with the customer in the center. And this is the challenge I want to discuss in this post
The value of PLM at the C-level
Believe it or not, it is easier to implement PLM (in general) instead of explaining a CEO why a company needs modern PLM. A nice one-liner to close this post, however, let me explain what I mean by this statement and perhaps show the reasons why PLM does not seem to be attractive so much at the C-level. I do not want to offend any particular PLM company, Consultancy firm or implementor, therefore, allow me to stay on a neutral level.
The C-level time challenge
First, let´s imagine the situation at C-level. Recently I heard an excellent anecdote about people at C-level. When they were kids, the were probably the brightest and able to process and digest a lot of information, making their (school) careers a success. When later arriving in a business environment, they were probably the ones that could make a difference in their job and for that reason climbed the career ladder fast to reach a C-level position. Then arriving at that level, they become too busy to dive really deep into the details.
Everyone around them communicates in “elevator speeches” and information to read must me extremely condensed and easy to understand. As if people at C-level have no brains and should be informed like small kids.
I have seen groups of people working weeks on preparing the messages for the CEO. Every word is twisted hundred times – would he or she understand it? I believe the best people at C-level have brains, and they would understand the importance of PLM when someone explains it. However, it requires time if it does not come from your comfort zone.
Who explains the strategic value of PLM
There are a lot of strategic advisory companies who have access to the board room, and we can divide them into two groups. The ones that focus on strategy independent of any particular solution and the ones that concentrate on a strategy, guaranteeing their implementation teams are ready to deploy the solution. Let´s analyze both options and their advice:
Independent of a particular solution
When a company is looking for help from a strategic consultancy firm, you know upfront part of the answer. As every consultancy firm has a preferred sweet spot, based on their principal consultant(s). As a PLM consultant, I probably imagine the best PLM approach for your company, not being expert in financials or demagogic trends. If the advisory company has a background in accountancy, they will focus their advice on financials. If the company has a background in IT, they will focus their information on an infrastructure concept saving so much money.
A modern digital enterprise is now the trend, where digital allows the company to connect and interact with the customer and therefore react faster to market needs or opportunities. IoT is one of the big buzz words here. Some companies grasp the concept of being customer centric (the future) and adapt their delivery model to that, not realizing the entire organization including their product definition process should be changing too. You cannot push products to the market in the old linear way, while meanwhile expecting modern agile work processes.
Most of the independent strategic consultants will not push for a broader scope as it is out of their comfort zone. Think for a moment. Who are the best strategic advisors that can talk about the product definition process, the delivery process and products in operation and service? I would be happy if you give me their names in the comments with proof points.
Related to a particular solution
When you connect with a strategic advisory company, which an extensive practice in XXX or YYY, you can be sure the result will be strategic advice containing XXX or YYY. The best approach with ZZZ will not come on the table, as consultancy firms will not have the intention to investigate in that direction for your company. They will tell you: “With XXX we have successfully transformed (many) other companies like yours, so choose this path with the lowest risk.
And this is the part what concerns me the most at this time. Business is changing rapidly and therefore PLM should be changing too. If not that would be a strange situation? Read about the PLM Identity crisis here and here.
The solution is at C-level (conclusion)
I believe the at the end the future of your company will be dependent on your DNA, your CEO and the C-level supporting the CEO. Consultancy firms can only share their opinion from their point of view and with their understanding in mind.
If you have a risk-averse management, you might be at risk.
Doing nothing or following the majority will not bring more competitive advantage.
The awareness that business is global and changing rapidly should be on every company’s agenda.
Change is always an opportunity to get better; still no outsider can recommend you what is the best. Take control and leadership. For me, it is clear that the product development and delivery process should be a part of this strategy. Call it PLM or something different. I do not care. But do not focus on efficiency and ROI, focus on being able to be different from the majority. Apple makes mobile phones; Nespresso makes coffee, etc.
Think and use extreme high elevators to talk with your C-level!
Your thoughts?
Do you know the expression: “You have lies, damned lies and statistics”? Pointing to the fact that statistics are often abused to “prove” statements. A typical example from Hans Rosling, the Swedish statistics guru and entertainer: “In Sweden most of the people have an above average amount of legs!”
The proof: the Swedish average is 1.999 and as most of the people in Sweden have 2 legs, thus above average. Now it is time to share some statistics with you.
Last time, I asked readers of this blog to participate in a small survey about their PLM thoughts and experiences. Although many people have read the post, perhaps, not till the end, there are only 22 responses so far at this time. If you haven’t participated yet, please do so by answering: 6 questions – the result will be published in July. There are no rewards to win. The only thing we all will gain is the statistical insight of people who have read this blog and apparently are PLM minded.
What does it mean to be PLM-minded?
There are many discussions related to PLM. What is actually PLM? Is it A Journey ? Or is it a Vision? An IT-solution? An infrastructure? Or is it Boring or just the Opposite?
It is hard to tell what the purpose is of PLM really without some numbers to guide you. And when it comes to PLM decisions, I noticed that most of the companies, I am working with, believe they make decisions based on numbers and statistics. Personally I believe in our current society it is more the emotional side that drives our decisions, not pure the rational and numbers. This is another discussion.
We always find a way to interpret the numbers. For the outside world, we pretend we make decisions based on pure, objective criteria. This would mean you can capture an organization in numbers and decide from there what’s best for the organization. An utopia we will see after some small statistics.
Some numbers
In the past year I spent most of my time in eight PLM-related discussions, most of them still on-going. Here, some of the statistics
Size
Four of them are large enterprises, where the power is inside the business unit. They act as one company, (one logo) but actually every business unit is focused on their own business profit and loss. They are not genuinely motivated to think about synergy with other businesses in cases it affects their work. Sometime IT believes they can bring the synergy by defining the common tools.
The other four companies are more centralized enterprises; some of them are large, with a centralized management and a single target to deliver to the market. Therefore, for a PLM project, they are easier to work with as you have more a single voice, instead of an opinion with a lot of conditions.
Type
All eight companies are not in traditional PLM industries. They are either project centric industries, where every delivery is supposed to be unique, or they are an owner/operator of a collection of assets to be managed during a long lifecycle. The reason: since 2008 I am personally interested and driven to demonstrate PLM practices and capabilities are valid for other industries too.
All eight companies involved expressed in the current engagement that PLM is essential for their future.
Vision
The need for PLM comes from a vision. I believe you should start always with the vision. Before acting, you need to know what your goal is. And a goal does not mean you know what your pain is. Understanding the pains does not solve the future; it is a first step to help you shape a future with no more pains. A typical example that they are different can be found in the current economic crisis. Everyone experiences the pains and understands there is a need for change. But all we have a different opinion about that is the required change. There is no single vision?
From the eight companies, only two of them could express a clear vision where they want to be in the future. This means six of them either have not clarified their vision yet (still in work) or even do not believe there is a way to define the vision. They are more focused on solving a pain than creating a vision.
Game changer
In three companies, the PLM project is considered to be a game changer. It was not about just fixing actual pains. The target is to be different from the competition and achieve a competitive advantage. Game changers are the most complex projects. The company needs to have a clear vision. It needs to have a trust in the fact that changing the game is indeed possible. And finally game changing contains the word CHANGE, which most companies try to avoid (evolution no revolution). But game changers, when successful, have the dominant companies for several years before others catch up.
In relation to change, two of the eight companies believe will be impossible to change the game. Although individual persons in the organization believe it is required, their ERP implementation and its related implementation scope have already taken part of the logical PLM space. This is blocking any serious PLM initiative making the implementation a PDM implementation, which has less value.
Constraints
Four companies stated upfront IT-constraints that could not be discussed. This introduced a lot of complexity. Some of the IT-constraints were emotional (we just decided a year ago to standardize on software xyz – we cannot afford to change to something else now, perhaps in the future). Other constraints were quite irrational and were based on (IT) decisions to standardize on a technology or solution, irrelevant or counterproductive to the business needs.
ROI
Only three of the eight companies require an ROI estimate to convince the management. As mentioned before, everyone is looking for reliable numbers to support a decision. Still decisions are made emotionally, and ROI numbers might be based on statistics. These three companies believe that the ROI numbers will lead to the right decision.
Another three out of this eight companies did not need an ROI estimate. They think that what they will select as future solution is always justified: they just need PLM. The difficulty will come when they have to compare RFPs (Request for Proposal) from different vendors. Each vendor is focusing on its unique features, and from there the RFP review becomes an apples and pears comparison. Probably again the emotional decision will be made at the end. Most likely the cheapest to be sure nobody can be blamed.
PLM = PLM?
I believe the small amount of statistics provided in this post demonstrate that it is not easy to get a hundred percent common understanding of what PLM is about. Imagine what you would give as advice to one of these eight companies. This makes PLM difficult as a discipline as it is not just a collection of tools to implement. If you are selling hammers everything might look like a nail. Be aware of hammer PLM.
In addition to what is PLM, the majority of companies that claim to have implemented a PLM system do not necessary use PLM in all its capabilities. Often it is still more automation of the way the company worked before. Something you understand when attending PLM user conferences, like the product innovation conferences.
Innovation and disruption needed
I believe that in order to benefit in an optimal manner from PLM, a company needs to switch their mindset from being a departmental measured and triggered company into a customer centric company, where information flows and is shared with all relevant roles in the organization.
Sharing data, instead of owning data, is a big game changer. It requires companies to work different. In the past when you did not need to share data, you could store it anywhere and in any way you prefer to do this. It was your duty and job security to control the data. Now when an experienced person retires or leaves the company, we struggle to get this information back (or we lose it and recreate it later when needed again). Search engines become popular technology to find back data – if possible! I believe Search engines can help to connect the past to the future infrastructure, but there is more.
Sharing data does not mean storing data in the cloud. The cloud makes it easier to share data as the company can focus more on the business side of the solution instead of the IT-side where and how to store it at what cost. It is the awareness of the content (“Do I search for something that exists”) and the quality (“Can I trust what I have found”) that we share that needs to get the focus.
For data sharing a disruptive change is needed, which does not happen in the classical PLM environments. There we think too much in departments and a sequential (or concurrent) way of working.
Aiming for sharing is disruptive. The fact that engineers need to provide more accurate data is seen as a productivity loss instead of a gain through the whole organization – see an old post: “Where is my PLM ROI “?. Organizations normally do not like disruptions. Individuals do. If they find a cheaper and easier way to get their work done, they will grab this opportunity and not do anything more. However companies have the tendency and need to keep things more complex as it is not a single task the focus on. It is a complex network of interactions.
I had the chance to read two interesting topics in this context recently. First a relative new blog related to disruptive innovation: the Off-White papers. Although it is not about PLM, it describes the challenges related to disruptive innovation, and if you have a twisted PLM-brain you will get the message.
The same for a book I have been reading from H. Thomas Johnson called Profit Beyond Measure . Johnson describes in his book, based on cases from Toyota and Scania, a different business model focused on customer delivery instead of internal departmental optimization. Again my twisted PLM-brain got triggered by the customer centric business model. A favorite quote:
A continuously linked and balanced organization that “works to customer order” reflects a very different management style (and organization JV) than does a decoupled and discontinuous organization that “works to schedule”
It is the difference between managing by results (MBR) and managing by means (MBM). And I believe this is the target of modern PLM too.
Conclusion
Even with some small statistics I hope it is clear that PLM is not a simple activity as there are many constraints that can influence a project. Having an understanding about these constraints and being able to remove the blocking constraints is what I believe is the job of a PLM consultant.
Do you agree? Is there an easier world? I am looking forward to your feedback through the comments or through a response in the small survey: PLM, your opinion
This strange title came to my mind when I made an overview of my PLM posts in this blog so far. As I am working in the PLM space already for many years, I noticed by reviewing the topics below, that progress in PLM is slow. Yes, technology changes every 5 years, business models can change due to that, but most of the underlying concepts haven’t changed much.
At the implementation level, especially in traditional manufacturing companies, you notice a slow progress, although closely related to PLM, I believe 3D CAD has become a common practice, which could be one of the drivers for further change towards more PLM.
And this brought me to the Echternach procession, which currently is a dancing procession, where the pilgrims dance slowly to the church ( 1 mile / 1.6 km – dancing from left to right). In the Netherlands, we learned in primary school, that in the past the pilgrims made three steps forward and then two steps backward, which became an expression for a slow forward moving process in our idiom.
And if you look back to the topics overview underneath the movie , you see PLM adaptation is a slow process in the mid-market, still a way to go – perhaps dancing like the pilgrims this year ?
PLM and ERP
PLM and ERP – the culture change , continued, conclusion
Connecting PLM and ERP , continued
PLM and change
PLM for the SMB – a process of culture change
Culture Change in a mid-sized company a management responsibility
The gap between mid-market companies and PLM – 15 year ?
What not to do in a bottom-up PLM implementation approach
Implementing PLM requires a vision
What if SMB as vision for PLM and PLM vendors do not understand it
Can Chaos become order through PLM
What have PLM and Capitalism in common ?
Some users do not like the single version of the truth
PLM concepts
Working file based in the supply chain – manager have two options (actually one)
Where does PLM start beyond document management ?
PLM and ROI
5 reasons not to implement PLM
2. PLM implementations take too long
3. We already have an ERP system
4. Isn’t PLM the same as CAD data management ?
To PLM or not to PLM – start measuring
Measuring the development phase
Free PLM software does not help companies
Where is my PLM Return On Investment
Who decides for PLM in a mid-market company ? continued academic conclusion
The title of this post came in my mind when looking back on some of the activities I was involved in, in the past two weeks. I was discussing with several customers their progress or status of the current PLM integration. One of the trends was, that despite the IT department did their best to provide a good infrastructure for project or product related information, the users always found a problem ,why they could not use the system.
I believe the biggest challenge for every organization implementing PDM and later PLM is, to get all users aligned to store their information in a central location and to share it with others. Only in this manner a company can achieve the goal of having a single version of the truth.
With single version of the truth I mean – if I look in the PLM system I find there all the needed data to explain me the exact status of a product or a project.
If it is not in the PLM system, it does not exist !
How many companies can make that statement ?
If your company does not have the single version of the truth implemented yet , you might be throwing away money and even bring your company at risk in the long term. Why ? Let’s look at some undisclosed examples I learned in the past few weeks:
- A company ordering 16 pumps which on arrival where not the correct ones –
1 M Euro lost - During installation at a drilling site the equipment did not fit and had many clashes – 20 M Dollar lost, due to rework and penalties
- 7000 K Euro lost due to a wrong calculation based on the wrong information
- A major bid lost due to high price estimation due to lack of communication between the estimator and the engineering department
- 500 K Euro penalty for delivering the wrong information (and too late)
All the above examples – and I am sure it is just a tip of what is happening around the world – were related to the power & process industry, where of course high-capital projects run and the losses might look small related to the size of the projects.
But what was the source of all this: Users
Although the companies were using a PLM system, in one company a user decided that some of the data should not be in the system, but should be in his drawer, to assure proper usage (according to his statement, as otherwise when the data is public available, people might misuse the data) – or was it false job security as at the end you loose your job by this behavior.
People should bring value in collaboration not in sitting on the knowledge.
Another frequently heard complaint is that users decide the PLM system is too complex for them and it takes too much time for them to enter data. And as engineers have not been bothered by any kind of strict data management, as ERP users are used to work with, their complaints are echoed to the PLM implementer. The PLM implementer can spend a lot of time to customize or adapt the system to the user’s needs.
But will it be enough ? It is always subjective and from my experience, the more you customize the higher the future risks. What about upgrades or changes in the process ?
And can we say NO to the next wish of this almighty user ?
Is the PLM system to blame ?
The PLM system is often seen as the enemy of the data creator, as it forces a user in a certain pattern. Excel is much easier to use, some home-made macros and the user feels everything is under control (as long as he is around).
Open Source PLM somehow seems to address this challenge, as it does not create the feeling, that PLM Vendors only make their money from complex, unneeded functionality. Everything is under own control for the customer, they decide if the system is good enough.
PLM On Demand has even a harder job to convince the unwilling user, therefore they also position themselves as easy to use, friend of the user and enemy of the software developer. But at the end it is all about users committing to share and therefore adapt themselves to changes.
So without making a qualification of the different types of PLM systems, for me it is clear that:
The first step all users in a company should realize is that, by working together towards a single version of the truth for all product or project related data, it brings huge benefits. Remember the money lost due to errors because another version of data existed somewhere. This is where the most ROI for PLM is reported
Next step is to realize, it is a change process and by being open minded towards change, either motivated or pushed by the management, the change will make everyone’s work more balanced – not in the first three months but in the longer term.
Conclusion: Creating the single version of the truth for project or product data is required in any modern organization, to remain competitive and profitable. Reaching this goal might not be as easy for every person or company but the awards are high when reaching this very basic goal.
At the end it is about human contribution – not what the computer says:
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
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