Clarity on PLM

What I learned this week … was that we could use a good, common PLM definition and scope, but we will not get one. The discussion (a lot of discussion in multiple forums, actually) came from my post SAP, Too Much or Too Little Credit for PLM Efforts and another called Who Will Disrupt Entrenched PLM Vendors? Chris Williams pointed out on a LinkedIn thread that he felt maybe the confusion was due to a lack of understanding of what PLM really is, and asked for a common definition. My response? Not so much.

A Not-so-Common Defintion

Chris asked the million dollar question. But PLM is not one thing. While ERP has matured to a more common footprint across the vendors, the scope of PLM from each of the vendors differs. I define PLM as “processes and software used to improve product innovation, product development, and engineering performance.” That is (by definition, not by fault) very broad. There is no one “PLM” definition. The vision of the vendors shows consoliation over time, but today they are very different. Siemens includes MRO (maintenance, repair and overhaul) for A&D. Dassault Systemes has spent much more effort in “lifelike simulation.” PTC includes development of product documentation. Then, there are the applications that don’t come as a part of the suite, which makes each implementation different. Aras includes APQP and quality. They are all different.

Implications for Manufacturers

The lack of a common definition is also why putting in PLM without a strategy is a quagmire waiting to happen. But a common defintion won’t help. While there are standard processes in PLM, they are not as common as in ERP. There are examples of common processes, such as Stage-Gate processes for new product development (NPD) or CMII for change management. But product innovation and product development are not as standardized processes as accounting, as an example. It is not the lack of common PLM system definition at the root of this, it is the lack of common PLM processes. And as much as companies like Invention Machine are putting process orientation into innovation, it will still not be as standardized as ERP functions like human resource management.

So, manufacturers really need to think about what problems they want to solve before implementing PLM. You can’t just install the software and expect any benefits (beyond maybe simple data management). This is what I call the PLM Program, a strategy and vision for PLM that you accomplish in small, incremental steps.

So those are my thoughts on a common PLM defintion, don’t hold your breath waiting for it. I hope you found it interesting. Do you have a better one? I didn’t, if you do let us know about it.

That, by the way, is one of the reasons it is very hard for ERP to simply build another module and call it PLM. That is why SAP has a long program to develop PLM (which will be yet another variation on the PLM theme, different from the others).

What I learned this week … came from some discussions with Chris Williams yesterday about my blog post SAP – Too Much, or Too Little Credit for PLM? in combination with a conversation over breakfast with Oleg, author of PLMTwine. In both conversations I kept hearing about who is going to disrupt the big PLM vendors (Dassault Systemes, PTC, Siemens PLM). Maybe I am just a small thinker, but there seems to be a lot more talk about disruption than actual disrupting going on. Time to share my thoughts, with the expectation that I might be eating my own words on this very blog over the next couple of years.

Disrupting Giants

Maybe it is my jaded view, but I don’t see technology being the disruptor to PLM. I have drawn as many “waves of technology” charts as the next guy, and discussed how difficult it is for vendors to move from one technology to the next big wave. But two things have happened:

• Enterprise software companies have managed to gain significant scale
• Vendors have gotten smarter at riding waves of technology

Already I am sure there are people disagreeing. Let me share my experience.

The Technology Wave Argument

Let’s start with the technology waves. Who will out-technology the big vendors. Will it be a SaaS play like Arena Solutions? Will it be open source like Aras? Or a brand new technology, like Chris William’s Vuuch? Or a more generalized infrastructure technology like Microsoft SharePoint? Or the king of disruption (they are disrupting everybody, I think I heard the words “disruption” and “Google“ at breakfast with Oleg more times than I orderd another cup of coffee (that is saying a lot).

OK, let me share some history that I lived through (maybe you have too). In the ERP world, many players have come and gone. Some have crashed and burned due to their own mismanagement, some have become obsolete in technology and withered away, and others tried and failed trying to migrate to new technology. So why doesn’t this happen to the current largest enterprise software vendor, SAP? Long ago, SAP burst onto the scense with Client-Server architecture with R/3. But truth be told, that transition was a slow and deliberate one. Since that time they have moved their technology along several times. Each time slowly, methodically, and never scrapping the old solution and going for broke on the new one. Countless others tried to grab the brass ring and jump to a new architecture, and drove their companies into the ground.

So while some get frustrated by slow evolution of architecture by big PLM vendors, I say they are being prudent. They are moving deliberately. Some say that will be their downfall. I say slow evolution is the best practice they learned from SAP’s success in ERP. I have heard the “we are going to make SAP (or Oracle, or whatever) obsolete pitch hundreds of times. Some from really great ideas and technologies. But where are they now? Part of the answer lies in the next section.

The Benefit of Scale

The key question in disrupting giants is what can you do that they can’t respond to? What can you where they can’t buy or build their way to the next generation? Particularly when most vendors are several steps ahead of the majority of their customers? Current vendors need to show a vision and a path, but revolution is pretty scary to most of the manufacturs they count as customers. As Oleg points out, and here I agree, one thing they can’t compete with is “free.” But I do not forsee the day that there will be an effort of the scale it takes to develop a full, integrated, PLM system. That is not just technology – it is data model and process as well. Let’s face it, this stuff is complex. But here is the thing. If one of these technologies gets hot, won’t the vendors with scale just acquire it? We are not talking about a solution with the broad interest and potential of word processing (Google Docs) or a brand new idea like social networking (Facebook, etc.). Who except a major enterprise player would invest in disrupting the PLM market? Who would find that investment appealing?

So is it SAP PLM? Or Oracle with their Agile solutions? They have the scale, do they have the will? Is PLM an interesting enough market that they will invest enough to compete with best-of-breed? Realizing, of course, that they have the advantage of their installed base in hand? Perhaps? But I don’t see this happening overnight. I believe the big ERP vendors will get to a level where they can compete, but the big PLM vendors have enough scale to stay ahead. SAP and Oracle will be players in the market, but I don’t think they will own it.

Bottom Line

Will their be acquisitions? Mergers? Sure. The names may change (I didn’t expect UGS to become Siemens PLM), but the assets (software and customer base) are large enough to live in. In my opinion. Unless they fall to their own mistakes, I don’t see a sudden displacement coming. I hope that I am not eating these words at some point, but if I should I will. But that is the way I see it.

Implications for Manufacturers

Buy the solution that works for you. Invest in it. Markets move slowly and software takes a long time to go away. Focus on the solution that meets your business needs, and that you feel you can grow with. Buy a solution that will fit the direction of your PLM vision. Keep an eye on new technologies and see where you can apply them. But I wouldn’t lose too much sleep about disruption right about now.

So have I just grown closed minded? Have I always been a small thinker and I just didn’t know it? Or am I making some sense? I hope you found it interesting. Let me know what it looks like from your vantage point.

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 … is that it is time for me to update the sources where I learn about product innovation, product development, engineering, and manufacturing – and the software that supports it (PLM, etc.). So I thought I would look for suggestions. I have always believed that everybody should have more than one source for information, and so I try to make sure to learn from others and share my thoughts. That is why I chose to focus one-third of my blog posts on “What I Learned,” because if I am not learning then I will just regurgitate the same old stuff. I know blogs like that, they get tiring. My approach? “Two ears and one mouth.”

Places to Learn

Given my role as an analyst and researcher, I get a lot of opportunities to learn:

• Manufacturers – obviously I like to hear about the way technology is working in the field, and how it is helping improve a real manufacturing business. I also like to hear about future strategies that manufacturers are putting in place.
• Bloggers – I find that blogs are a great feed of information with opinions. Different bloggers have different levels of credibility, so I take what I read in light of who I hear it from.
• Print Magazines – I have to admit, I like the feel of the paper, but there are fewer of these around. I typically get news feeds from their web sites or blogs.
• Conferences – I love to hear what people have to say in public, and then ask them some questions offline. Very interesting to hear how the “party line” and the “real story” meet up.
• Other Analysts – I like to share ideas and discuss with other analyst firms. I don’t see them as competitors as much as colleagues. This is why I try to include others’ research in my “Research Rap” posts as well as my own. I should probably read more of their printed works, but I am always concerned that they would feel I am stealing their ideas. I don’t think most really feel that way, and I know many that read my work. I should rethink this one.
• Vendors – I believe that most vendors I speak to have deep knowledge and passion about the industries they serve. I love to hear their views on the market, where they think the future of PLM and manufacturing software will be, and how they plan to support it. I respect vendors’ opinions, although of course I realize that they have multiple motives when talking to an analyst.

Your Turn

OK, that is where I turn to you. What I would love to hear from you (via comment here or direct message) is:

• What other sources should I be paying attention to?
• Which people/companies in the above categories should I be listening to?

So those are my thoughts on getting educated on PLM, I hope you found it interesting. I welcome your help.

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).

I had the chance to talk with … Dassault Systemes and IBM today about Dassault’s announced acquisition of parts of IBM’s PLM business. For many, this is the dissolution of a long-standing marriage that they are comfortable with and makes sense. They may mourn the loss. To me, this is just the final correction to a legacy relationship that has served its time and purpose. Dassault Systemes (DS) and IBM have been great partners – and still will be. But this move will allow IBM and DS to focus on their core competencies and allow DS to continue pursuing their PLM vision.

Dassault Systems Acquires IBM PLM

A Market Correction, a Return to Core Competencies

The relationship has evolved over time. What made sense when the relationship started has changed based on the maturity of the PLM market. DS PLM software is being used by a lot of major companies, and they have their own choices for their systems integrators and consultants. So over time, DS has developed relationships with other leading systems integrators. In the same way, IBM customers may be using DS solutions, or they could be using software from Siemens, PTC, or others. So IBM has developed relationships with these PLM companies. This is just the natural way of things in a multi-vendor market, and it is probably the most beneficial relationship for DS and IBM customers.

To me, this is the natural course of things and it allows each company to focus on their strengths:

• IBM can now focus on systems integration, business consulting, and infrastructure like middleware/SOA/business intelligence/cloud computing in a multi-vendor world. IBM is not out of the PLM business. In fact, PLM is still very strategic to IBM. But directly selling and servicing PLM software from one vendor no longer makes sense. IBM will transition their sales and support teams, but retain their PLM Centers of Excellence, domain expertise, and consulting resources. IBM will still be in PLM in a big way and can focus on their significant PLM opportunities, but in a way that makes more sense for IBM.
• Dassault Systemes can now focus on selling software and servicing their customers. This move strengthens the DS team, and gives them more control of their sales and support business because it is now fully a part of DS, and working with their other PLM partners. DS can now focus on being a software vendor without worrying which customers are direct customers and which are IBM customers. DS benefited greatly from the IBM relationship over the years, but has been ready to move on for some time. And they made a bold market move to make it happen.

This move, although significant, is simply a matter of core competencies and focus. The legacy relationship just didn’t continue to make sense at this point, and it has evolved in this direction over the last several years.

Impact on the PLM Market

This is good for the PLM market, and I don’t think it will be a huge surprise that these two PLM leaders have returned to more focused roles. The way that it happened (as an acquisition) accelerated a needed change, so that might be a surprise. I think this is good for everybody. DS partners with lots of consulting firms and IBM partners with lots of software vendors. Now, none of them have to be concerned that IBM and DS are unnaturally tied together. This is a correction of a legacy issue in the PLM ecosystem, in my opinion. Now, all is right with the universe.

This had to happen, and the IBM-DS relationship has been evolving in this direction over the last several years. The real question that was outstanding in my mind was how DS and IBM could take the final step to return to more focused roles. The end result of an acquisition is probably the cleanest way for this to happen, and one that I think should work well for both businesses. I would not have predicted an acquisition, but now that it is done I think it was a great resolution. It is a win-win for both companies.

One last piece to consider is that Dassault works with IBM, but also works with Microsoft and others from an infrastructure point of view. Having IBM and DS play more focused roles in the PLM ecosystem also makes those relationships more straightforward.

Impact on Manufacturers
The net impact on the manufacturing industry? As much as this change means to the market (and to IBM and Dassault) I think that customers will see little difference. The same people that were supporting them before will continue to support them, although they will have a different logo on their business card. IBM is still strongly in the PLM business, so those IBMers that stay in IBM will still be available as well.

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

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.

What I learned this week … came from reflecting on three major PLM product announcements this week. In one week, Dassault is announcing the new release of their “PLM 2.0″ suite, Oracle is announcing the next release of Agile PLM, and Siemens PLM is announcing the new releases of Teamcenter and Tecnomatix. Jeff Hojlo and I will be covering each of the releases in our blog, but I thought it made sense to start with some context-setting across all three. I am impressed with the amount of investment that PLM vendors have made in their products in what has been a difficult year for enterprise software in general, kudos to all three (and the others that have continued to invest in this solution set that continues to grow in importance).

Note: A special thanks to all of my friends in the vendor community for picking my vacation week at the beach to come out with some of the most exciting PLM news in some time! They couldn’t have just checked with me first (sarcasm intended).

Context from Past Discussions and Perspective

I have talked in the past about PLM expanding in three directions:

• People – Product development and product innovation are expanding across the enterprise to more people inside and outside of the business
• Product – A “product” consists of much more than R&D or engineering specifications, and needs to include a richer view that includes commercial considerations so we are looking at the “whole product.” In addition, the technical view needs to grow to include mechanics, electronics, and embedded software
• Lifecycle – Product-related processes are being integrated across previously disparate functions

As I talk about these three, I have to give an honorable mention to:

• Process – PLM processes are being expanded and integrated across all three of these directions, and it this extension and integration of processes and information that really puts the value into PLM. Without process, the other three are not possible.

Giant Leaps in Functional Scope

First, I want to start with the functional enhancements that the vendors have focused on. In the releases, I see significant investment in all three areas above. But it’s easy to talk about where your predictions come true. Instead of focusing on what I got right (not my style), let’s focus on what I missed. I missed:

• SOA – From a technical perspective, the adoption of service-oriented architecture (SOA) promises to make PLM more web-friendly, but also to allow it to be more easily pulled apart so individual elements can be incorporated into composite “mash up” processes and applications.
• Analytics -I am not going to be big enough to admit that I didn’t see this one coming. I have lived through ERP and Supply Chain and seen the transition from gathering information to leveraging it to make decisions. This is happening in PLM in a number of different areas, including designing for compliance, cost, etc. It is exceeding my expectations in terms of adoption by the vendors.
• Web 2.0 – The impact of Web 2.0 technologies and concepts are having a very big impact on PLM. The further expansion of collaboration and social computing in product development is starting to be seen. PTC also focused on this during their recent PROuser event and their earlier release of ProductPoint.

Implications for Manufacturers?
So what does this mean for manufacturers today? If you are a customer of one of the three vendors, you have some very nice functionality (and technology) to look forward to. It is time to start looking at the potential to improve your business and plan your migration. Vendors have spaced out releases in recent years, so hopefully you are due. It is time to start learning about the capabilities available, deciding how to take business advantage of them, and planning for their adoption.

If you are not a customer of one of these three vendors, take a look at your vendor to see how they are doing against the criteria above. I have seen some nice progress from PTC and SAP this year as well.

If you are not using PLM, it is time to consider why not. I believe there are very few manufacturers that will remain competitive without these capabilities. Further, this is just more proof that PLM is continuing on the path to become one of the most important – if not the most important – enterprise applications for manufacturers. The continued evolution of the solutions is just further evidence of the additional value that customers are demanding from their vendor partners.

So that is what I learned this week, I hope you found it interesting. Let me know what you think. Look for more on each relevant release shortly. After all, the sun is bad for your skin and PLM is good for everybody!

What I learned this week … came from a post on PLM Think Tank (aka PLM Twine) titled 5 reasons why Wiki fails for PLM collaboration which I think points to an interesting set of questions:

+    +    +   +   

• Is social computing software enough on its own to support product innovation, product development, and engineering?
• Will social computing software evolve to handle more full PLM-related requirements as it matures?
• Will PLM leverage social computing platforms to extend their capabilities?
• Will PLM embed social computing capabilities of their own?

This post caught my eye a while ago, but I didn’t have time to respond (lots of excuses, including moving the office, I got the flu, kids got the flu, the dog ate my blog, etc.). As it turns out, time passing works out well because I have had the opportunity to read some really interesting comments on Oleg’s post. Here is my take on an interesting conversation, and some of my thoughts on the direction that social computing in PLM might take.

Note: In the title of this post I purposely not using my normal name for this concept, which is “social computing in PLM” because I think that begs the question. So I am using what I believe will be the term adopted across the industry, which is “Social Product Development.”

Relevant Past Discussion and Perspective
I have posted a number of times recently on the use of social computing techniques to improve product innovation, product development, and engineering performance. For some background, please see my post on takeaways from COFES on social networking in PLM.

Next Level Down Thinking – Technical Approach
What I have been focused on has been the business value of integrating social computing capabilities into PLM solutions. Although I have a long technical background (anybody else out there that has programmed in Fortran let me hear from you) that is not my current role in our industry. I am convinced of the business value that the mix of capabilities will bring, but I am not close enough to the technologies to know how they will be brought to life in individual companies or in the mass market. So it was nice to see some next-level-down, technical analysis of the topic. Oleg’s post drives the question about wikis relatively deep, pointing out the five reasons he sees them falling short (read the post, but in short they are information access, content maintenance, updates, integration, and structural information). At the risk of trivializing something I haven’t explored in detail, I take away two main things from Oleg’s comments:

• A wiki isn’t PLM grade because it falls short on advanced data management needs (including version control, associativity, or managing structured content like a bill of material)
• A wiki isn’t PLM grade because it lacks the ability to integrate (beyond a static URL)

The conversation that follows is enlightening, I was very impressed with the quality of the respondents. I take two main points away from the conversation (again, I suggest you spend the time reading it yourself, my goal is to expand a bit and point you to some good content that I learned from):

• Don’t count wikis short, there is work being done to make them enterprise class
• Don’t try to replace your PLM system with a wiki, they are not meant to replicate what PLM has evolved into over the last decade or so

Implications for Manufacturers?
Of the two things I am taking away from the post and the comments, I want to focus on the last one – don’t try to replace you PLM system with a wiki. My focus on using social computing techniques in PLM isn’t to slap on existing tools and expect them to do the full job. That would be like handing somebody a relational database and an object-oriented programming language and saying “here is your PLM system, it just needs a bit of work.” OK, too extreme, but you get my point. What we should be focusing on as an industry is how to leverage the concepts of social computing to improve the things that PLM already supports, but make them even better. Perhaps we employ wikis to manage engineering rules/knowledge (PLM doesn’t do a great job there from my experience), or maybe the value will come from using social communities and reputation scoring to feed the front end of innovation? Whatever it may be, I believe that there are things that PLM alone doesn’t address, and there are certainly PLM needs that social computing platforms fall very short on.

So that brings back my original question. Who will make this happen? Will it be natural the evolution of social networking platforms? Will it be custom development by manufacturers that use both technologies? Will PLM integrate social computing platforms? Or will PLM vendors build their own social computing capabilities? The answer lies in the “next level down” thinking that prompted this post, and similar thinking that is going on in the software vendor community. In my opinion, domain expertise always overrides technology expertise. When new technologies have come along, it has been people that understand the intersection of technology with the business processes (in this case, the processes of product innovation, product development, and engineering) that lead the way. They are also the ones that are willing to focus on a specific solution as opposed to a generalized technology that could be applied to a broader market. To me, it will be PLM-knowledgeable people leading the way. The bigger question is where they will be working. Will they work for a forward-thinking PLM vendor that builds these capabilities in? A social computing giant that hires in experienced PLM talent? Or some upstart with a PLM background that rethinks the whole thing from the ground up? If I had the answer I would be a (retired, wealthy) investor instead of an analyst, sorry. What I am confident in is that the business value is real, and that if I was in the shoes of any of those categories of vendors that is where I would be putting my investment. But I am only an analyst, so I will sit by and examine how it plays out. It’s tough to be on the sidelines (or is the press box?) for this one.

So that is what I learned this week, I hope you found it interesting. Let me know what you think. I apologize if I tried to make up for the tardiness of replying to the post by writing a very long post, I probably had to much time to think about it.

A quick peek into some research on … how the economy has impacted smaller companies in the engineering software market. This is a follow up to last my post on the impact of the economy on the engineering software market as a whole, with the detail I promised on smaller vendors. Last week I tipped my hand by saying that  smaller companies believe they will weather the storm, and some feel they will come out stronger on the other end. That generated some interesting discussion, so I thought I should hurry to post some detail, so here it is…

Research Background
My presentation at COFES indicated that the engineering software market is staying positive in challenging times. The research, conducted jointly by with Tech-Clarity, Cyon Research, and Design Insight, was presented at the annual “Congress for the Future of Engineering Software” and was the result of 1,000 survey responses. As I stated last week, the research was not intended to be an economic forecast, but instead an indication of the sentiment of the industry. The study was designed to guage respondents’ opinions about the market, and should be take as such.

Research Results – Smaller Vendors
The survey allowed respondents to classify themselves as customers (those that use engineering software), vendors, or channel (among others). Vendors were then broken down into the following two major categories:

• Broad Vendor – (broad suite) – a software company that offers a broad range of solutions
• Targeted Vendor – (targeted solutions) – a software company that offers one (or a few) best of breed tools

I was particularly interested in how the smaller vendors were weathering the financial storm. These smaller vendors play an important role in the PLM ecosystem, frequently pushing the boundaries of current functionally (I call these companies “innovators”) or serving a niche solution or population (I call these “specialty vendors”). These companies typically provide deeper capabilities for a specific industry, user population, or process that the larger vendors don’t support as well. These companies help to fill in the gaps for manufacturers while they wait for the larger vendors to address these needs (of which, some will probably remain unmet).

So what is happening to these vendors? The chart above shows that 75% felt that these companies would struggle, but survive. Given how drastic and unpredictable this economic downturn has been, I find that a surprising level of confidence. Still, 32% of respondents believed that smaller companies would go out of business, and 28% believed they would get acquired. Note that while this was supposed to be the “most likely” outcome, respondents could pick multiple outcomes. I believe this data is showing that respondents believe that some smaller companies will survive, and others will be acquired or go out of business. This is not an “either-or” situation, the scenario will be unique for each of the smaller vendors.These results are far away from the “doom and gloom” that are prevalent in some other industries.

My favorite view into this subject can be seen in the table below. When you analyze the opinions of what will happen to the smaller vendors based on who is commenting, you find a few interesting things:

• Targeted vendors don’t think they are going away
• Bigger vendors think they will be acquired (by them, I assume?)
• Bigger vendors are the most pessimistic about specialists, but interestingly the customers disagree

So the view from the smaller vendors’ perspective is not as bleak as some might thing. On the other hand, few believe it’s “business as usual.” These are tough times, and there have already been corporate casualties.

My Thoughts
What does all this mean? My opinion is that the engineering software market – as a whole – will struggle but survive.The smaller vendors, who are more nimble but also more vulnerable, believe they will stand the test of time. This is good for all of us, as they typically push the limits of the current solutions and help bring more innovation to the software market.

Implications for Manufacturers
For manufacturers, you should make sure to know how healthy your vendor is, but don’t panic. I don’t believe that a “rip and replace” strategy to save on software and maintenance costs will be easy to justify as a short-term reaction. Stick with your strategy, but update it based on the economic realities. If you are in the position to take advantage of it, this might even be a pretty good time to look for some deals from your vendors.

So that was a quick peek into some recent research on the impact of the economy on smaller vendors, 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.