Clarity on PLM

What I learned this week … was a retrospective look at an article analyzing how industry-specific PLM application are. The review was in response to a comment on my post In Search of a Common PLM Definition. I had a little bit of fun with the review, and I thought I would share it here. In fairness to Oleg, I decided to use my “mythbusting” technique that I used on him earlier in the year in Mythbusing ERP-PLM Integration.

Responses and Reactions

Need to Document and Prioritize PLM Requirements (Confirmed) - I start by saying companies should document and prioritize requirements. I believe that holds as true today as ever. And I think that you might agree, so let’s confirm that as a statement that holds up today.

Inegrating PLM to Manufacturing (Plausible) - I use “technology transfer” as an example of a very industry-specific part of PLM. For those that aren’t as familiar with the term, it is effectively translating the product as defined in engineering / R&D (and PLM) into a product that can be produced, up to and including instructions for automated plant equipment. This is an area that really hasn’t come to be in most PLM solutions. The example holds trues as industry specific, but despite efforts in Digital Manufacturing (DM) and Manufacturing Process Management (MPM) - most manufacturers are still not yet integrating PLM to plant solutions like Manufacturing Execution Systems (MES) or Manufacturing Operations Management (MOM). The opportunity is still compelling, but I thought we would be further ahead. Hats off to my old friends at Sequencia for being ahead of the curve.

Product Portfolio Management in PLM (Confirmed) - I use Product Portfolio Management as an example for a general solution. I think this one still stands true, and is a hot topic in product innovation and product development today.

My Bio (BUSTED, big time) - Most importantly, what was I thinking with that bio picture? I think I thought it made me look like a serious analyst. Instead, I just look like I have a stomach ache (and seriously need a haircut). Yikes. Busted. Definately.

So that is a brief look at some old research with the benefits of hindsight, I hope you found it interesting. Who knew? I didn’t, if you did let us know about it. I look forward to additional commentary (although not on the picture, the glasses, or the haircut please).

NOTE: I use the “mythbusting” concept out of pure admiration and respect for such a brilliant concept, that helps kids (and adults) learn about how cool engineering can be while entertaining them.

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.

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.

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?

What I learned this week … came from a question in response to my post on The Evolving Roles of ERP and PLM in Manufacturing. The question came from a knowledgeable source, and I had to think hard before answering. I thought I would share my thoughts here instead of responding via e-mail for two reasons. The first is I think there are other questions that should be asked first, and other readers might get some value out of the answer. The second is that some of you might be able to answer the initial question better than I can. It also caused me to go back and review a report from five years ago to refresh my memory on my recommendations, and I think they hold up pretty well today (sigh of relief).

The Question

The question as asked was “For a mid-size company that has a complex Bill of Materials, are there specific ERP systems that integrate well with CATIA and SmarTeam?” It was a good question, and I started developing a mental list of solutions that I thought might fit will with SmarTeam. Then, a red flag popped up in my head. What level of priority are we giving integration to PLM in making an ERP decision? As much as I firmly believe in the need to integrate ERP and PLM, making the right choice of each system overrides any ease of integration between the two. As I wrote in my first paper on this topic titled The Complementary Roles of ERP and PLM “relative capabilities should be based on analysis of products and references, as not all systems are alike” and “clearly a manufacturer can’t choose between product innovation and corporate execution – both are critical elements of the manufacturing business model.”

Implications for Manufacturers

For manufacturers that are looking for an ERP system, please put PLM integration on your list of priorities. But also consider where in the priority list it should really be. Having the wrong ERP system well integrated to PLM is far worse than having the right ERP system without integration to PLM. ERP is essential to running the modern manufacturing enterprise. And as much as everyone likes to call ERP a commodity and say they are all the same, they are not. If I was advising a company to look for an ERP system, here are some things I would put on the priority list before integration with PLM. If I thought about it harder, I might add some more, but these are off the top of my head. Part of this was included in the original question, and I am sure they would have taken these into consideration as well, but I thought it was worth sharing:

Industry – Does the ERP system work in my industry? How many references do they have like my company?

Manufacturing Model – Am I a make-to-stock, make-to-order, assemble-to-order, engineer-to-order, or project-based job shop manufacturer? ERP requirements for each are very different.

Sales Model – Do I sell directly or through a distribution network? Do I rent or lease products in addition to selling them? Does the ERP system address those? What about service?

Company Size – Does the solution fit the complexity of my business? If I am a small to midsize business (as many SmarTeam customers are) then do I really want a highly complex ERP system designed to support multi-nationals?

Geography – Particularly if the ERP is supporting financials, does it meet the regulatory and accounting needs of my country. Taxation? Human resources? Are they up to date?

Technology – Can I support the technology? Does it fit with my strategic IT infrastructure?

Support – This isn’t about the product itself, but about the whole solution (including training, hotline support, new releases, etc.) Is their support sufficient for my needs? Can I find local resources to help? As I said in the original paper, “For best results, the analysis of ERP and PLM should extend beyond the product into the software vendor’s capabilities for training, provision of best practice templates, business knowledge and solution implementation.”

After that, I would look for the ability to easily integrate with other solutions. If there was pre-integration with my existing PLM system that would be great. But first, I would make sure that I bought the right ERP system. By the way, this goes the other way as well. I would not buy a PLM system just because it came pre-integrated with my ERP solution, or even because it came from the same vendor. First it has to work to support it’s intended function. Then, and only then, is it worth integrating to other enterprise systems.

So that is how I feel about integrating ERP and PLM, I hope you found it interesting. I realize I jumped up on my soapbox a bit here, but I thought it was important that people understood that I wasn’t promoting integration over functionality. And as for the original question, please feel free to contribute your thoughts on which ERP fits well with SmarTeam and I will pass them along (with my above caveats that it should be checked first for other factors).

A quick peek into some research on … how the roles of ERP and PLM have evolved from Tech-Clarity’s most recent report, Tech-Clarity Insight: The Evolving Roles of ERP and PLM – Integrating the Roles of Execution and Innovation. This research is a follow up to The Complementary Roles of ERP and PLM. The paper furthers my previous research and describes how the use of these enterprise systems has evolved, and the associated maturation of the integration between ERP and PLM systems. As my past research has concluded, these systems remain the cornerstone of product profitability and are better together.

The Research

The research included interviews with manufacturers Emerson and Cameron, along with an interview with a Systems Integrator that focuses on ERP-PLM integration. What I appreciated the most about the integrator’s perspective is that they partner with leading vendors of both PLM and ERP software, and understand both perspectives. Having worked closely with ERP systems prior to reconnecting with my engineering roots and focusing more on PLM, I recognize how rare it is to speak with people that really understand (and respect) both domains.

The Research Findings

At the highest level, the key takeaways from the research are:

• PLM and ERP still play distinct, complementary roles in helping manufacturers drive product profitability
• ERP supports the business of planning and managing the execution cycle
• PLM owns the innovation cycle – including product development and engineering
• Companies are making great progress in integrating ERP and PLM, as ERP-PLM integration has become the norm and many have moved to advanced levels of integration

What Else is New?

The advances in integration caused me to rework my “Innovation Cycle – Execution Cycle” framework that I use to explain the roles of ERP and PLM. I have changes the model to reflect a more bi-directional model, and to support exchanges of more advanced information including:

• Bill of Process (BOP) – including the ERP “routing” in addition to the manufacturing BOM
• Quality, Compliance, and Cost plans – from PLM to ERP for execution
• Actual results – from ERP to PLM, including costs, inventory levels, etc.

The other thing that is new is not well reflected in the graphic yet. That is that ERP is frequently managing the execution of the manufacturing business, but not necessarily executing it. There is frequently a layer of solutions including Manufacturing Execution Systems (MES), MRO, Supply Chain Management, and others that manage real-time execution and integrate to ERP as the backbone. But that is a study for a different time.

Implications for Manufacturers

So what can manufacturers learn from this research? The first thing is that they shouldn’t be spending their time choosing between ERP and PLM. They need both. The second is that integration has moved from a “nice to have” to a standard, and that more advanced companies are extending ERP-PLM integration beyond release to manufacturing and change management. Companies that haven’t integrated the ERP and PLM systems are now behind the competitive curve. Of course if your company doesn’t have both ERP and PLM, your business is either very unique or the chances are you are even farther behind the curve. The good news is that it appears easier to integrate ERP and PLM than ever before due to advances in technology, and that companies are improving efficiency and reducing cost by doing so. So the task at hand is easier to achieve, and provides solid payback. Sounds like ERP and PLM integration needs to be on everybody’s enterprise systems agenda.

So that was a quick peek into some recent research on the roles of ERP and PLM, I hope you found it interesting. Does the research reflect your experiences? 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.