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The last month I have been working with Aerosud Aviation in South Africa to finalize and conclude on ROI and the lessons learned around their PLM implementation, which started in May 2007. I was lucky to be involved in the initial scoping of the project in 2007 and assisted the local Value Added Reseller together with the team from Dassault Systèmes UK team in a step by step project towards PLM.
When I met the people in Aerosud the first time in 2007, I noticed it was a young company, with open-minded people, everyone trying to improve their daily activities per department. There was the need for PLM as some of their major customers required Aerosud to have a PLM system in place. Also Configuration Management was mentioned many times in the interviews and what I learned that time: Excel was the tool for configuration management.
Based on the initial interviews a plan needed to be developed in which steps to implement PLM. The following three major points were the guidance for the implementation:
- The company was thinking documents and understanding documents especially Excel
- The company had no clear understanding of what PLM would mean for them as real awareness was not inside the company. Customers like Boeing and Airbus talked about the importance of PLM, but how this could impact Aerosud as a company was no commonly clear
- People in the company had a major focus on their department and there was no availability of a overarching group of people leading the implementation
You could say you will see the above points in many smaller and medium-sized companies. I wrote about it also in one of my previous posts: Where does PLM start beyond document management ?
The project phases
The good news for Aerosud was that their PLM Champion was an expert in CATIA and was familiar with writing macros in Visual Basic plus the fact that everyone in the company was open for using the system as standard as possible – no demands for special behavior of the system: “because we do this already for 100 years”
The last phrase you hear a lot in ancient Europe
The choice was to start with implementing ENOVIA SmarTeam Design Express and to focus in two phases around design data management (phase 1) and the usage of design data by other users (phase 2)
The plan was that each phase would take maximum 2-3 months and we would give the users the time to digest and change their habits towards the standards in the system. In reality it took almost a year, not due to technical or conceptual issues, but this was the maximum pace we could have with the amount of time and available resources. The good news after these two phases was that the first bullet was much clearer understood – the difference between having a system with a single version of the truth or Excel management.
In the summer of 2008 (our summer – as it was winter in South Africa) there was a management workshop in Aerosud and here after three days of discussion the position of PLM became clear. One year ago this would not have been possible, now people had seen ENOVIA SmarTeam and they could imagine what benefits the system could further bring. This addressed the second bullet I mentioned before. Although this workshop was not scheduled upfront, looking back now I see this was a crucial point to get understanding for the next PLM steps.
The next PLM steps were extending to a real Item-centric data model, because if you want to do PLM you need to work around Bill of Materials and all related information to the items in the Bill of Material. At the end this gives you configuration management without chasing Excels.
Again the next steps were divided in two phases with again a scope of 2 – 3 months. The implementation would be based on the ENOVIA SmarTeam Engineering Express methodology which came as a logic extension of the current implementation, without having to change the database or existing data model.
In the first phase we had awareness sessions for BOM (discussing EBOM / MBOM / Effectivity, etc) plus in parallel we introduced the item as place holder for the information. Not longer folders or projects as the base.
Introduction of the item was conceptual not a big issue and the major activities in this phase were focused on connection legacy data or current data from projects to the items. Data coming from various sources (directories, legacy databases) plus NC data became connected and visible in the single version of truth.
In the second phase of moving to PLM the focus was on EBOM and MBOM. Initially assuring that from the designer point of view the CATIA design and EBOM were connected as smoothly as possible, trying to avoid a lot of administrative overhead on the designer (sometimes unavoidable – see my previous post: Where is my ROI, Mr. Voskuil)
After having implemented a streamlined CATIA – EBOM connection, the focus moved to the MBOM. For me this is the differentiator for companies if they implement PLM or just Product Data Management). Implementing the MBOM requires a culture change and this is the place where the ERP people need to see the benefits instead of the threats . Luckily in Aerosud the manufacturing engineers were working in their Excels initially and not in the ERP system – which happens a lot in older companies.
For that reason the concept of MBOM in PLM was much better understood. Now Aerosud is experiencing these capabilities and once they become obvious for everyone the third bullet will be addressed: people start to work in processes cross-departmental instead of optimizing their department with a specific tool.
As this activity will continue, I also conducted with the Aerosud management and PLM implementation team an ROI assessment. Estimates about the experienced and projected benefits were kept low and on the realistic side. The result was that the outcome for the ROI period was approx 27 months, almost the same time as the whole project had as throughput time. This proved again the statement about a phased PLM approach. payback of project comes in parallel with the implementation and will ultimately fund the next steps.
End of July I will be holding a webinar with more details about this implementation for the Dassault VAR Community. I will be happy to expand this information for a wider audience afterwards, as I believe the project is representative for many mid-market companies that struggle to find the place where PLM fits ….. and brings ROI
Let me know if you are interested in this follow up and I will collect the inputs for a follow up.
Again three busy weeks and I envy my colleagues who had the time to write a blog post on a regular base.
Two major topics kept me busy:
- explaining the complete PLM scenario from concept (initial BOM), through CAD, through EBOM and MBOM to a final shipped product. I will come back on this topic in future posts as it even goes beyond my old post: Where is the MBOM. To be more detailed in the future
- analyzing ROI and predicting ROI for various PLM implementations. And this is the topic I want to share 2 experiences with you, and I am curious for feedback or other viewpoints
Where is my ROI, Mister Voskuil?
Some years ago I supervised a PLM implementation and I only was involved after the company had already implemented their 3D CAD software (SolidWorks) after years of 2D AutoCAD. The reason for my visit was that the technical manager was a good guy in monitoring the productivity of his engineering department.
And then he showed me some statistics. Working with AutoCAD 2D was defined as the baseline. Implementing SolidWorks brought initially a drop in their drawing output (pay attention to the wording) but after 6 – 9 month the started to be more efficient with SolidWorks and at that time the output was rated at 120 % (or sometimes even more due to more and enhanced product modeling)
Then came the SmarTeam implementation and again the output of the engineering department dropped and going down to 70 % and after a year effort of the SmarTeam implementing VAR, they were still not happy as output was below 100 % still.
Conclusion from their side: There is no ROI on implementing PLM
In the following discussion, we discovered that the working methods of the engineers had changed. Less freedom in adding data, incomplete information as the integration with SolidWorks enforced a more strict methodology to the CAD users (who of course complained). The effect of the changed working procedures was however that downstream tasks should have been eliminated. In production preparation 4 people were in the past completing, checking the engineering BOM coming from the design department. They fixed the mistakes and then typed them all in another order into their ERP system for production.
It appeared that those 4 people had a much easier job – first of all, they did not complain. Data was immediately on release of the design sent to the ERP system – no manual interaction – and there they could pick-up the EBOM and adapt it for production. There was less search work to do – as the designer already provided validated input plus there were no typos anymore. Amazingly these 4 people never complained to their management that they could do more, they kept on having their ‘busy’ days.
Morale 1: Measuring ROI in a single department (often a mid-market characteristic) does not give you a good understanding of PLM benefits. PLM once implemented correct, affects the whole organization
We know there is ROI, but where is it ?
As you noticed, a less confronting customer, as we all feel being involved in a successful PLM implementation going in the right direction. Yes, perhaps a little to slow, but the advantage is that people start to see the benefits of a ‘single version of the truth’ – we haven’t reached the advanced scenarios yet as I mentioned in the top.
But now we tried to measure, as I also wrote in previous posts, if you had your organization under control before PLM, in that case, you would be able to measure the impact – after 6 months / after 12 months / after 2 years?
It is like climate change, statistics demonstrate there is a trend and I believe we have an impact on this planet. Still, skeptics (luckily less and less) explain to us that it is just a normal climate variation, and after 10 – 50 years we will have a new ice age. Not sure if these people are optimists or …….. it just does not fit in their lives
But PLM is somehow the same, we see it has an impact, we measure and try to explain, especially in the mid-market companies, skeptics is a natural survival mechanism as you cannot risk to be too optimistic. (This is how startup’
So in our situation, we started to fill in spreadsheets which brought huge benefits. Imagine searching goes much faster – let’s say instead of 1 hour per day we need only 10 minutes per day per employee. We have 120 people per day searching for data, does it mean we can do it with 20 people instead? Or what would these people do in the remaining 50 minutes per hour?
Right, they will find other work to do – less stress, more time to chat with colleagues, have a coffee and above all, they won’t complain. People are flexible in filling their day and if the company is lucky some of the ambitious people might fill their day with innovation or other relevant improvements.
Morale 2: Even if there is an indisputable ROI on a PLM implementation, the management should analyze what should be the impact on the organization. Invest more in creativity/engineering instead of quality assurance? In the mid-market, this might be perceived as a bad sign – as the quality is key. But how much money would we make on a high-quality product that no-body buys anymore?
Conclusion: With these two anecdotes I tried to share my ROI struggle which is still following PLM. I am looking forward to more anecdotes or inputs on the soft side of ROI. Be welcomed to join the discussion
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
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
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)
I 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.
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: 
- 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 !
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.
Jos Voskuil's Weblog 
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