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* Welcome * Welcome to this issue of 2PLM, an e-zine distributed every two weeks on a free subscription basis. This week's guest article, "PLM Dilemmas", is from Menno Huijben of Sofigate Oy. First though, a few words about the rise of PLM. * Product is King, PLM rules the Product Lifecycle * The world has changed a lot since the Engineering Data Management Newsletter noted in 1991 that "Companies pioneering EDM found it can help reduce engineering costs by 15%, product development cycles by 25%, engineering change time by 30%, and the number of engineering changes by 40%". In those bygone days, the focus was on product data, and EDM and PDM were justified on the basis of expected improvements in cycle times and engineering changes. These days, with product king, companies are looking to PLM, and its focus on the product, to provide hard financial benefits - such as a 25% increase in product revenues - and PLM is a top priority among corporate initiatives for 2006. The last decade and a half has also seen the emergence of the World Wide Web, which now provides so much information about the lifecycles of products as varied as airplanes, cars (PDF), pharmaceuticals, isomerization units and muffin mix, as well as packaging and WEEE recycling in the UK and China. Another change is that, in the 1980's, leading companies had recognized the need for Simultaneous Engineering / Concurrent Engineering to overcome the problems of "Engineering throwing the design over the wall to Manufacturing". During the 1990's they implemented CAD, CAE, CAM and PDM technologies, well-defined New Product Development processes, and platform product architectures, thus creating effective product development capabilities. Now, in the 21st Century, leading companies have recognized the problems of "throwing the product over the factory gates and forgetting about it", and are implementing PLM to provide visibility and control of products across the complete lifecycle - from cradle to grave. But, as mentioned in March, it isn't easy to overcome traditional mindsets - dating from days before the tools and needs to manage the product lifecycle existed - and work towards the new paradigm of PLM. So, to help companies as they launch PLM Initiatives, develop PLM visions and strategies, and implement PLM plans, we produced Making Progress With PLM In 2005 : Q&As, Vision, Achieving The Next Level. It answers frequent questions about PLM, develops a generic, customizable PLM Vision, and describes typical activities in a PLM Initiative. Over the last six months, it's been updated in response to user feedback, and is now at Version 1.5. For example, Chapter 2 which included about 25 questions back in March, now answers more than 60 questions. 
* PLM Dilemmas * by Menno Huijben Is PLM being bought or sold? I don't know if this question is very relevant, but I do know that answering it correctly would require extensive market research. I ask the question because it seems to me that the PLM market is inefficient. Of course, PLM Vendors are working hard to sell PLM, and many companies are putting lots of effort into buying PLM. Several larger corporations have already invested in PDM and PLM. Those corporations bought PLM. Indeed, they used the sales force of PLM vendors during the evaluation process, and the Vendors helped to tighten their business cases. But those corporations had made up their minds, and done their homework, before sending out their RFP's (Requests for Proposal). PLM as a concept was not sold to them. Only the PLM vendor's image, local/global presence, prospects, and, in the end, the software licenses were sold. Once acquired as customers, those same large corporations serve as references in the PLM vendor's sales process. Although there is rarely hard, documented evidence of business performance improvement thanks to the PLM investment, the simple fact that such a well-known company uses 'our product X for PLM' is a major sales argument in selling PLM to companies that have not yet bought it. Those companies that have bought PLM came to that decision after a long process - a process hardly visible on the 'lessons-learned' presentations of the reference visits. This long process was needed to get the required maturity to be successful with PLM. But, when PLM is being sold, the vendors are in a non-zero-sum game, somewhat akin to the "Prisoner's Dilemma" (details). Slightly modifying the stakes and the possible outcomes of this dilemma, the 'PLM Vendor dilemma' would be "Tell the truth about PLM and you lose the deal". (That would be the vendor saying that PLM is difficult, takes time, and requires a lot of effort before the benefits are realized, while the competitor says that PLM is all nice and easy because their product X and experience is superior - as is obvious from their reference list). If all Vendors would tell the truth, the punishment would be an overall reduction in PLM investments, but I suggest that would only be a temporary reduction, after which investments would grow much faster. If all Vendors go on repeating 'how easy PLM is with our product X', large scale adoption of PLM will remain difficult. Disappointing projects, budget overshoots, technology issues, etc., all those stories spread very fast. Prospects are far better informed than 10 years ago - unrealistic promises will back-fire over time. When PLM vendors are not able to sell the real benefit of PLM, they focus on the features and functions of their product - the more fancy stuff that is included in the license fee the better. And here another 'PLM dilemma' appears: while one vendor focuses on really delivering, with simple functionality, the promised value, the competitor will develop a product with more features. A buyer presented with the typical opaque license pricing systems of PLM vendors will be forced into negotiations with the final candidates during which the number of features included for a certain price will become an important item. But the customer who is sold too much functionality too early will be overwhelmed, and will find it difficult to keep the right focus and succeed with PLM. Selling PLM, and for that matter any 3-letter acronym IT system, is generally still about software licenses and commission, not about measurable value added to the customer. That is strange. PLM, being inherently long-term, makes it possible for the vendors to engage in long-term agreements with their customers. This creates ongoing value and stable revenue, not just sales for the next fiscal quarter. However, on the buyer side, we also face dilemmas: PLM buyers issuing overly complex RFP's. These are often produced by an external consultant, basically describing in great detail the requirement specification for designing, one could say, a complete new PDM system. Business drivers in such RFP's tend to be described only on a very high level, they are very generic, or are just trivial. Actually, these buyers are often not even real buyers, as many of them have forgotten to sell PLM first to their senior management. They only notice this at the end of their extensive and expensive evaluation process: no investment permission. Needless to say, this behavior causes a lose-lose situation for Vendors and Buyers. Only the Vendor opting-out early enough from the evaluation process will keep his loss minimal. So, to rephrase my question from the beginning: How can we create a more efficient PLM market? Perhaps we need more trust and transparency. PLM Buyers and Sellers should focus on the long-term value that PLM will create for them. All of us are in the non-zero-sum PLM game. A non-zero-sum game is a situation where all participants can gain. This must be easy: the PLM market is almost infinite. Menno Huijben is a senior advisor at Sofigate Oy, a management consulting company consulting private and public sector in IT investments. |
