Clarity on PLM

I had the chance to talk with … the PLM team at SAP recently to get an update on their plans and their progress to date. I have stayed in touch with them over the years, and have always been impressed by the opportunity they have to connect the business of manufacturing with the business of product development. As I reflected on the conversation, I struggled to understand why after all of the years of SAP getting too much credit for PLM, why they don’t seem to be getting as much credit for their recent efforts as I would expect. Today I hope to present both sides of the argument in the hopes to bring some clarity to the subject, and to start a conversation so we can all learn from each other.

Too Much Credit?

I have focused a lot of discussion on the complementary roles of ERP and PLM, and for many companies that translates to the roles of SAP and PLM. I have cautioned manufacturers in the past:

• Not to assume that an ERP provider that “checks the box” for PLM actually has a suitable PLM suite
• Don’t assume that any company offering both ERP and PLM have actually integrated them in a way that works for their particular business
• PLM suites vary significantly between vendors, even among the “best-of-breed” vendors
• PLM is not just another module of ERP, but a suite of solutions itself with some unique requirements

Those comments were typically in reaction to the “suite provider effect” where executives take a cursory look at a software requirement (such as PLM) and say “Doesn’t our ERP company have that? Let’s just use theirs.” While the ERP vendor’s solution deserves a review, if it doesn’t meet the business needs than the potential benefits of a single vendor and an integrated solution don’t add up to much. This conversation started way back in 2003 with my article Can ERP Speak PLM? in Technology Evaluation Centers (TEC) when I served as the analyst for the PLM Evaluation Center.

With all of those cautions in mind, my hope was that manufacturers that have an ERP (such as SAP) would do a thorough evaluation of their needs, and then select the solution (or solutions) that would work best for their business. In other words, they shouldn’t just take PLM from their ERP provider blindly.

Not Enough Credit?

With all of those cautions aside, the ERP provider should get a fair evaluation. There are benefits to integration and a single vendor solution. And SAP has clearly invested in PLM. I wrote about SAP’s PLM strategy and roadmap in the past on my Manufacturing Business Technology blog.* SAP has taken on a multi-year program to enhance their PLM offering, and they have made significant progress. Last year they introduced a new, web-focused interface that pulls together a product-centric dashboard for an item. The “PLM Object Navigator” as it was called offers information about a part from both ERP and PLM perspectives, including configurable sidebars. They have now extended that interface to the process PLM community, where SAP has a significant installed base.

But user interface isn’t all that SAP has focused on. They have integrated CAD management and visual communication capabilities to develop visual representations of the CAD models that all users can access. They have added functionality including labeling functionality for consumer packaged goods (CPG). They have also enhanced product compliance, collaboration, and requirements management.

SAP has remained consistent in their focus to support four PLM “value scenarios,” enabling business processes to help manufacturers in specific initiatives to establish “Product and Service Leadership“:

• Consumer-Driven, Sustainable Innovation
• Integrated Product Development
• Continuous Product and Service Integration
• Embedded Product Compliance

The names have changed slightly over time, but the needs SAP is trying to meet are well-planned, important, and have remained consistent. Clearly, SAP has a plan and has been hard at work to achieve it. 

The Confusion, and the Questions

When I talk to the SAP PLM team, I can feel the excitement and their sense of accomplishment. I hear about the progress on their plans and how they are fulfilling the needs of their customers. Yet from the manufacturers I speak with, I don’t feel the same enthusiasm. So here are my questions:

• Am I talking to the wrong companies, or the wrong people?
• Is it still too early?
• Did the down economy last year stall SAP’s ability to get the word out?
• Does SAP not have the ear of the product innovation, product development, and engineering staff?
• Are manufacturers tired of hearing what is coming?
• Is there just still more that needs to be done?
• Are the best-of-breed vendors too far ahead? Or too entrenched?
• Is there a slow revolution happening that I am just not in touch with?

So that’s what I hear from SAP, and my resulting confusion. I hope you found it interesting. What do you think? Can you help shed some light on my questions?

*Note: Sorry, no link to past posts on SAP PLM right now. Unfortunately the blog was taken offline by Reed Business when they closed the magazine. I hope to get that content back at some point to share with you.

What I learned this week … came from some reflection on a workshop I conducted on enterprise systems for a small division of a large A&D contractor. We discussed their needs for functionality across a number of different solutions including ERP, PLM, QLM, and EPM. Other than a craving for alphabet soup after all of the acronyms flying around the room, I took some time to think about the enterprise systems ecosystem and how disjointed it is. I couldn’t believe the number of different, disconnected solutions they needed. It begged the question, should we fight best-of-breed or embrace it?

My Observations

On the one hand, I realized that there was no one system that could handle all of their needs, and that they would have to address overlaps and conflicts between the systems they needed. Their business strategy requires capabilities including:

• ERP
• PLM (Product Lifecycle Management) – including a significant amount of document/content management
• EPM (Enterprise Program Managment) – including project accounting and billing for government contracts, which might not really fit cleanly under the EPM label
• QLM (Quality Lifecycle Management – including process management for things like ISO, CAPA, and others

As they begin to look at solutions, I am hopeful they find and ERP that meets their program/contract accounting needs. I am also hopeful that either their ERP or PLM will be able to give them a start on their quality and risk management requirements. I am also thankful that they don’t need customer relationship management (CRM), supply chain management (SCM), or service lifecycle management (SLM) right now – just thinking about integrating all of that makes my head spin.

Even without the other solutions, this was a big laundry list of solutions for a small manufacturer to tackle. I was concerned about the best-of-breed approach we were arriving at, although I am not aware of any single, integrated solution that would meet their needs. Then, I also realized that integrating the collection of solutions they need will be a lot easier than it would have been even five years ago. In many cases, integration today involves connecting web services. It still takes work to map out processes to the appropriate solutions and define cross-application workflow (reminds me of an older article I wrote on Business Processes Cross Application Boundaries, still interesting to read I think). But the technical job of integration has gotten much easier. While I don’t expect this company to develop a lot of sophisticated composite applications, simply tying capabilities together in a portal and creating hyperlinks between information may take them a long way.

Implications for Manufacturers

I believe that the trade-offs between a fully integrated solution and a best of breed approach have shifted. Integration is still not easy, but the need to trade off critical functionality for integration has diminished. For example, in the integration of ERP with PLM we have seen a lot of advancement, and I see a lot of standard integration offerings between vendors. And as one participant in a recent study on ERP and PLM integration indicates, even solutions from a single vendor typically require integration work because one size does not fit all. But if we stick with best-of-breed, don’t we perpetuate the lack of standard application boundaries and overlapping scope issues we find with the different applications? Clearly, there is still a trade-off to be made.

So those are some of my thoughts on best-of-breed strategies, I hope you found it interesting. I hadn’t really given enough thought about how much has changed until putting it into context for this manufacturer. What do you think? Is best-of-breed returning to favor as the preferred approach? How much functionality are you willing to trade for integration?