Clarity on PLM

I had the chance to talk with … Dassault Systemes recently about acquiring process PLM vendor Enginuity PLM, see the announcement here. As soon as I saw my friend Dr. John Sottery‘s name on the webcast along with Enovia CEO Mich Tellier, I had a pretty good guess about what they were going to tell me. DS made an investment in taking their PLM solution for recipe-based industries like CPG, food & beverage, personal care and pharmaceutical to the next level. This move combines strength on strength, because Enovia and Enginuity PLM serve very different roles in the R&D and product development process.

What did they do Before the Acquisition?

CPG, recipes, and formulas are not new to Dassault Systemes. DS acquired MatrixOne in 2006, and the MatrixOne platform is now the architecture behind Enovia V6. MatrixOne enjoyed some significant success in the CPG industry, and include specification management capabilities that are running in a number of CPG companies, most notably P&G. As an interesting note, P&G is also an Enginuity customer so they have already been running both solutions. DS was already competitive in the CPG industry, and frankly didn’t have much to offer in the way of formulation or recipe design. This acquisition changes that.

Now what do they Offer?

When a big company like Dassault Systems buys a smaller company like Enginuity, there is typically instant synergy. That is true in this case because:

• Enginuity provides deep domain expertise to DS.
• DS provides scale and market access that Enginuity could not achieve.

That is a typical scenario that happens when a suite provider like DS buys a specialist like Enginuity. But the synergy here is even more pronounced because:

• Enovia brings specification management, collaboration, and other PLM capabilities.
• Enginuity brings R&D tools to the chemists, and was built to fit into a broader PLM environment.

As a bonus, other DS brands have a lot to offer to the CPG industry as well. This includes 3DVIA with their shopper solutions and CATIA and SolidWorks for packaging design. I believe this provides a pretty unique and compelling offer.

So Where Does Enginuity Fit in DS?

One of the interesting implications of the acquisition is considering what type of solution Enginuity really is. DS is adding Enginuity to the Enovia brand, which makes sense. I know Enginuity has been labeled a PLM system. But I have known Enginuity for years, and I will be the first to tell you that I believe Enginuity is much stronger as a design tool than a PLM system. In fact, I would go so far as to say it is more like “CATIA for chemists.” But that is good news, because Enovia already has the PLM capabilities and Enginuity fills the design gap. Not to mention that Enginuity adds compliance capabilities to help formulators develop products that not only match product performance specifications but also meet regulatory needs as well. Read more about how compliance puts a “hidden tax” on innovation in the process industries here, in fact I interviewed a number of Enginuity customers for this research.

Why is it important to look at Enginuity as a design tool? Partially because it makes it clear that it is a complementary solution, but more importantly because it opens up the possibility that they will build even more advanced tools for formulators . Enginuity already handles more complex design functions than any other formulation system I have seen. On the phone, Dr. Sottery mentioned simulation and predictive modeling as well. Those kinds of sophisticated design tools are more like a specialty design solution in CATIA than what PLM can already offer (collaboration, change management, IP protection, etc.). With the resources of DS, Enginuity has the opportunity to explore those potential capabilities more deeply.

The key that makes this acquisition a good move is that the Enginuity solution is built based on strong formulation knowledge, and helps chemists develop the recipe in the first place. That is the part that has been missing from the major PLM systems. PLM can manage the specs well enough, but provided little value to the innovators at the bench level. Enginuity changes that. So I agree with DS for including the offering in Enovia, but for clarification I think that it is much more of a design tool that now fits in well with the existing specification management / PLM capabilities already in Enovia (again, from MatrixOne). To me, this adds to the synergy that DS and Enginuity gain from being a part of the same business.

Implications for Manufacturers

Some of you may know I spent quite a bit of time working with software for the formula-based industries, so this is an area that is near and dear to my heart. I have long been a proponent that recipe-based manufacturing (processing, dare I say) requires different solutions than discrete PLM offers. This move by DS opens up the opportunity for those that produce from a recipe or formula to arm their chemists and formulators with tools they need to innovate along with the PLM solution to support the enterprise in bringing the product to market. This is what we had the vision for ten years ago when I was with Sequencia (sold a decade ago), and I am happy to see that the solution is available from a major PLM brand.

So that’s what I hear from Dassault Systemes and Enginuity, I hope you found it useful. What do you think? What else should I have asked them?

A quick peek into some feedback on my research on … the Evolving Roles of ERP and PLM in the manufacturing industry. First, thanks to Oleg for his feedback an continuing the ERP-PLM conversation on PLM Think Tank. Oleg made some very good points and provided some good research on the research. But in the spirit of a healthy debate I want to “myth bust” his response. I will address each of the sections in his response idividually, although I split the first one into three responses.

Responses and Reactions

Managing Innovation (Busted) - The title to Oleg’s report does not reflect the thrust of my paper, but he touches on a topic that is near and dear to my heart. He makes a strong point that innovation can’t be managed. I think the first two responses to his post say a lot, particularly the first one, show that this isn’t the case. No, we are not going to automate innovation with a product line of robots. But the energy and time of smart, innovative people can be harnessed and guided to produce more results by following an innovation process. I call this operationalizing innovation. It is about process. Really.

Distinct Roles of ERP and PLM (Busted) - The point that I was making in my paper is that ERP and PLM serve different purposes. PLM helps drive product innovation, ERP helps execute the business of manufacturing. PLM’s primary role is not managing innovation, it is helping companies innovate, develop new products, and engineer them more effectively. These are fundamentally different purposes. Yes, there is overlap. But there are more differences than overlaps. See the table below for more of my thoughts on this.

PLM as a Module of ERP (Busted) - Oleg disagreed with my statement that “PLM is not just another module of ERP” and points out SAP as an example. I disagree strongly with this. SAP tried to introduce PLM as just another module. If they were successful there would be no market for PTC Windchill, Siemens Teamcenter, or Dassault Systemes Enovia. What has SAP done over the last couple of years? SAP  developed a multi-year program to introduce PLM as a complete subystem to ERP instead of a module. See my post Does SAP “Do” PLM? for more on that. Can an ERP vendor provide PLM? Sure. Is it part of the ERP system itself? Not in the near future. Need more proof? Oracle bought Agile instead of developing further on their e-business suite. Busted.

Design and Product Data Management (Confirmed) - The core of PLM is data management. PDM should be rock solid, with very robust security. I do believe that extending to other areas (compliance, costing, etc.) that leverage that core data makes absolute sense. It is like building a house on an unstable foundation, it may look nice but in the end it will collapse.

Cross Funtional Processes (Plausible) – I absolutely agree that processes are organizational.  I believe that business processes absolutely come before software and functionality. I also agree that business processes cross enterprise boundaries (click to see the article with that same name). But my point was – and still is – that companies need to choose which processes will be supported by which solution. Yes, the answer can be that some processes are supported by a combination of the two. And I would love to see business process management (BPM) play a role, even to the point of developing composite applications that leverage the functions of each system. But the point is that there are some overlap areas where companies need to choose. There is more to agree with here than disagree, though.

PLM and ERP Integration (Plausible) – I didn’t go into technical integration in my report. Why? Because I believe that it is more important to get the ownership of data and the alignment of business processes right. This includes addressing semantic differences between the systems. The days where we couldn’t get one machine to talk to the other or data was stored in a proprietary format were the dark days of integration. Today, the technical side of integration is “easy.” By “easy” I mean it is a simple matter of time and money, but it is possible. It no longer requires magic. But it does require effort. And there are some good integration stories between ERP and PLM, but currently it is mostly customer or through integration partners. So we are mostly in agreement here (I think).

Where Does PLM Stop and ERP Begin? (Busted) - Oleg says “don’t even try to put this border.” Unfortunately, as a manufacturer you have to. You have to develop a strategy about which system will address which process (again, it can be a combination). From a vendor perspective there are no boundaries, and I am not suggesting some industry standard footprint of each solution. But for an individual implementation? In some processes you have two tools that can do the job, you have to pick.

Summary
So that was a “quick” reply to Oleg’s comments on my recent research. I hope you found it interesting. I hope you found it entertaining. Mostly I hope you (and Oleg) recognize the good spirit in which this is written. Respectful debate is good for all of us. I appreciate Oleg’s perspective even when I disagree. And more often than not, we agree.

Do you see it differently? Let us know what it looks like from your perspective.

Please feel free to review more free research and white papers about PLM and other enterprise software for manufacturers from Tech-Clarity.

A quick peek into some Tech-Clarity research on … Innovating Through an Economic Downturn points out the importance of innovation so that smaller manufacturers can survive in the current, global economic crisis. The paper is intended to help companies develop an action plan that both recognizes the difficult reality that most manufacturers face today, and allows them to continue to invest in the future. This research complements earlier Tech-Clarity research focused on Engineering’s Role in Surviving a Down Economy, focusing on the implications for small to mid-size businesses (SMB).

The Research
The research includes interviews with three manufacturers, highlighting the challenges they faced during difficult economic times and the approaches they took to live to fight another day. The research points out that small to mid-size manufacturers have to make difficult trade-offs between product innovation and cost control, but that companies that continue to invest in innovation will fare better during the economic downturn and beyond.

The research identified three strategic approaches that companies have adopted during their downturns:

• Product (and Market) Innovation – Companies can’t afford to stop innovating. While some companies might be tempted to go into a pure sustaining engineering mode (putting the brakes on new product development), it is important for companies to continue to move key innovations forward to be prepared when market conditions improve.
• Reductive Innovation (innovation to reduce cost) - Small to mid-sized manufacturers are often caught in a pinch during economic downturns, having to offer price concessions to customers while simultaneously experiencing weaker product demand. This double-impact on their top lines means that they need to reduce cost in order to maintain profitability. Product innovation can be applied to cost reduction by reducing product or manufacturing costs. Many companies recognize that a down market is a good excuse to go back to correct over-designed or suboptimal designs that were acceptable during the good times.
• Process Innovation- Perhaps one of the major improvements can come from process innovation. Many innovative ideas are product lifecycle related and impact the efficiency of developing and managing products. By improving the efficiency of product innovation and product development, smaller manufacturers can afford to spend more of their limited resources on developing winning products.

These approaches were supported by product lifecycle management (PLM) solutions, which can support each of these three strategies. PLM, in fact, often helps companies achieve these three strategic objectives simultaneously – leading to improvements in both top-line revenue and bottom-line profitability.

My Thoughts
The three manufacturers interviewed helped crystallize a key fact – companies facing difficult times must act. By turning to innovation, these companies were able to survive their difficult times. In each case, the use of PLM technology helped to enable this innovation, providing the support required to continue to innovate despite limited resources. PLM helped them to put in place better processes that helped them survive the downturn, but also left them in a stronger competitive position during their recovery. PLM is unique among enterprise applications because of the dual role it can play in increasing revenue and decreasing cost – a compelling opportunity for SMBs in troubled times.

Implications for Manufacturers
The implications are clear. Small to mid-size manufacturers need to act despite difficult economic times. Now that the economy appears to have stabalized, it is time for companies to develop a PLM and innovation strategy to set themselves up for short-term and long-term success.

This research highlighted the experiences of three ENOVIA SmarTeam customers. Look for more information on the Enovia SmarTeam solution in an upcoming “One to One” post later this week.

So that was a quick peek into some recent research on innovating to combat difficult times, I hope you found it interesting. Does the research reflect reality? Do you see it differently? Let us know what it looks like from your perspective.