The evolution of PLM

Sure, Simdata is a management consulting firm that focuses on strategic management consulting for vendors of technologies in the PLM space, including industrial companies. We do this on a worldwide basis with work across 6 continents to date. We also have a research group that researches the market. We've been doing this for over 30 years, market research around the market numbers, revenue numbers that the major vendors where we track about 700 of the vendors on a daily basis and then report on this yearly. And then we also have some education services around PLM certification, and we do some events mainly for vendors and technologies, and we do some small events around the end users of the industrial companies in Europe and primarily in Europe, US, and Asia. One of the things that the PLM needs to do, and I think also what is happening at this point in the market in general, is what we call the platformization of PLM. This is raising PLM up to an enterprise level, making it basically on same par as like an ERP solution. And so what we're seeing is the vendors and industrial companies take this on and say, how do I have end-to-end connectivity of my processes around product innovation, which is kind of the core of what PLM has been all about. It's been about creation and management, dissemination, et cetera, of intellectual property, which is core to actually enabling innovation. So this platformization, we see this underway. We see acquisitions by various vendors. Take this on to kind of broaden out their solution offering. We're seeing more and more industrial companies raise this up to the enterprise level and say, we really need this backbone, this backbone information process backbone that allows for other technologies, third-party technologies to be plugged into this, to be part of the platform basically, heterogeneous platform, but enabled by a core backbone. To us, that's where things are going. We think there's a lot of good reasons for that. And this, this enablement of innovation is key for most companies. And it's not just product innovation, it's also process innovation. So how do you run your development processes? How do you support your product in the field? And you think about Internet of Things and how that will allow you to take data in from the field and better understand how you manage that product in the field or support it, but also how you create the next product. And you can be innovative in anywhere from that concept through end of life. Or maybe even continuous life from a circular life cycle perspective. So the key word that we think right now is the platformization, and then the platformization of PLM. I think one thing is that it's an engineering system. If a company has that feeling, they will never be successful because it's not just about engineering. It's about not just product engineering, it's manufacturing engineering, it's service, It's disposal, it's portfolio management, it's conceptualization, it's ideation. I mean, it is really an end-to-end perspective, and if a company thinks and perceives it's just an engineering system or yet another engineering system, they generally will fail or sub-optimize what they do. To me, that is the biggest issue. The second biggest issue that generally happens within organizations is, like with any system, and PLM being notorious for this, they put it in expecting it to do like they did things before, and again, if they think that, if they have that perception that, oh, I can just go implement it and do the same processes I did before in the same way, they've missed the point. They've missed the point about how do they change the way they manage information, how do they change the way they execute processes, and those to me are the two biggest misperceptions out in the industry. The first thing is kind of, I would say, a level set. It has to have a certain set of capabilities that you need, but that's usually just a fraction of it, because there's a lot of technologies out there now that provide that minimum set of capabilities. But it's still kind of the, you have to get in the door and that's getting in the door. The next step, which is I think much more critical, is the vendor itself and how do you work with it, how do they work with you, how do they allow you to evolve the solution that they provide you with. Because, you know, PLM, in order for it to stand still, it means you don't change your business and generally you don't change your business, you die. So changing the platform, changing out the capabilities, evolving or taking advantage of new capabilities that the vendor provides you, this relationship, this partnership is really key and people have to ask and understand how does that PLM vendor become a partner for your organization? How do they let you or provide you capabilities to let you upgrade more easily? How do they support you to extend the capabilities based on their newest version, for example? So those are some of the questions that we suggest really focusing on that business partnership. And then the sustain— the other one that's related to that is the sustainability of their solution set itself. Do they let you upgrade easily? Do they provide you mechanisms to migrate data so that you don't have an obsolete system 5 years from now, but you can evolve that system over time, taking advantage of new capabilities without having to re-implement every 5 to 10 years? Productivity. Cultural change. Ultimately, no matter what the technology is, if you don't change the way you work and try to do things the same old way, it's not going to be very successful. And I'm often asked, you know, how many implementations do we see being successful? I said, well, today we see a lot implemented, and that's success on one level, but not implemented to the way that they get the most benefit. And that's because they haven't paid attention to the organizational change aspect of it. And any company that's getting into PLM And if they just want to implement what they're already doing, they probably missed the point. So they have to think beyond that and say, how do I really enable my business in a new and better way? How do I better connect people and information and processes? There's so much things that I can't do in my, usually in current situations, especially if they have no kind of concept around PLM. They're using email and using, you know, different kind of file servers and other things that are totally different than the way PLM can support the organization. So they don't start up front understanding the changes required, organizational changes required. Could be structure, it could be just cultural change of using technologies differently, then they're going to really miss the technology side of it or the enablement that could be, well, that is possible. I think one is this move towards platforms, and there's some vendors that are taking this much more serious than others, and they're building out their solutions from kind of concept to end of life type of capabilities. I think those are the few that are doing that, just a handful or so. Those can be disruptors for the rest of the industry. I think Internet of Things can be a disruptor. And how do you bring that in? It's really a big data issue when it comes down to it. So you have devices, smart devices that are connected. But how do you bring that data that's coming from those— all your products that are in the field that are connected in some way to Internet of Things, and how you bring that back in and take advantage of rapid improvements there in your product better ways of maintaining the products in the field and other aspects of having an understanding of that data. So big data or data analytics from a PLM perspective can be a disruptor as well. These are more on, obviously, on how industrial companies will use that technology. From the vendor side of it, besides kind of the platform, building out platforms, we're not seeing a lot of changes except for upgradeability and some approaches that some vendors are taking with the ability to upgrade more easily and building out let's say, more resilient platforms, more sustainable platforms, and that again could be a disruptor in the industry. And there's one final piece I'll comment on is there are some movements towards different types of financial arrangements, you know, moving to subscriptions or certain types of subscriptions, providing open source software, which again could change the playing field for the traditional vendors, which are very used to concurrent licenses or named user licenses. So that's a potential disruptor on the commercial side of the house. Yeah, so a process industry actually, if you think about in the, let's say, the purest sense, I mean, all information are just pieces of information. They're objects. So in the process industry, you have formulas, okay? You don't have bills of materials. You do actually. You have that on the packaging side. But then you have the formula, which is in the packaging, which is really a structure as well. And then you have the recipe, which is really And the discrete side more is a routing, you know, how do I actually put the things together? So they actually have very similar concepts called a little bit differently, but they have the same needs. They have regulatory requirements. They have the interaction. This is probably the most unique thing is they do have an interaction between the formulated product and the packaging. So if I have to understand those, they go together. Depending on what I put in the formula, I also then have to drive labeling and different labeling or claims. So there's actually, in some ways, it's more complex than discrete manufacturing. Maybe the product itself doesn't have as many parts, but actually the interaction with other components like labeling and claims management and the packaging itself actually is probably just as complex as you see in the discrete market. I will add though, there's some other industries that we're starting to see start to scratch the surface of PLM. One of them is the insurance industry. You think about the insurance industry, they have a product, it's called assurance, you know, the policy. That policy is a collection of information which is configured for, it may be where the person lives, what age that person at, what coverage they want. Guess what, they're all regulated as well, so they actually have very similar needs as well as the process and discrete industry, but their product has a little, you can still touch it because it's something you print out, but it's less tangible than in the other two major industry sectors. There's a couple of things there as well. And talk about from a cultural perspective, you know, not taking advantage of it, but there's also a training perspective, or I say education. This is part of organizational changes. People have to understand why they should do things differently. And a lot of companies don't educate their people. So communication is important. What are we doing? Why are we doing it? That's part of cultural change. Education, which is Why should I care about it? What's important to me? There's still lacking of training that we often see as people don't know really how to use the system in the new way. People try to do training too late or not enough of it. So it's really under, let's say, not focusing on those things that will actually embed it and institutionalize it in the company. There's one other thing that usually is a major issue around implementations and failures is that's migration of data. Because there's generally a lot of data that already exists within the organization, and if it's not brought into the system correctly and cleaned and configured correctly, you may start with a new system with just, you know, crap. I mean, just a set of information that makes no sense whatsoever, or they've underestimated the effort and then they don't do it fully. So I would say those are the two biggest areas of issues. One is the educational component of organizational change, and then the data migration perspective. So one of the, one of the biggest buzzwords out there right now besides Internet of Things is social. Social product development or social media, social networking and other things. How do we take advantage of that, so to speak, in PLM, or what does PLM vendors need to do? And the way we look at it at SimData is social is a way of collaboration. It's a more free, free-flowing way of collaboration, less structured than we've tried to force in the past. And most companies really struggle with that. They think of it as, oh, well, that's Facebook or some other tool like that. It's like, well, okay, that's a way of doing social collaboration, but what makes sense within an organizational structure? How do you set up structures or governance structures around social? Because we think it's very important to allow people to collaborate freely within the context of a company. and sometimes even in the context of outside the company. But, it has to be managed in a way that one, allows for that free flow of ideas, but at the same time, allows them to protect their intellectual capital. Because, that's where the conflict often comes in. People want to share everything and, you know, certain things you don't want to share outside the company, for example. So, a lot of companies really, the kind of status is struggling with where do I draw the line? Do I let things get, what they would say is very loose and very ad hoc? And then, there's others that want to control it and not let anything happen. We think that actually there's a good balance there. To allow for people to join, you know, social clubs, so to speak, or collaborative efforts and dissolve those collaborative efforts, allow people to find those experts, find that information quickly, and do that in a more collaborative, open collaboration way, which is— would be more of a social way of doing it that we've learned from social media. We think there's a place within PLM, but the vendors are struggling with it, a lot of companies are struggling with it because these concepts are so new, and it's kind of different than what we've typically done in PLM, which is more about structured information. But if you think about information in general, especially out on the internet, there's a lot of unstructured information in companies. And that's— social has a lot to do with that. So how do we utilize the strengths of social and high levels of collaboration, at the same time focus people then to develop information which then can be reused, which then can be structured in some way? But it doesn't have to be tightly structured. It can be just indexed, for example. So there's other ways around it, other technologies, semantic search and other things that are trying to bring, let's say, knowledge to the equation to allow people to extract the value out of that information. So that's kind of the state of it as we see it right now. You have, I would say, in one way, a bigger level of differentiation today than you had 2 or 3 years ago, especially from the biggest vendors. So if I look at a Dassault and a Siemens, a PTC, for them that have been really head-to-head for many years, they're evolving slightly differently. You know, you got Dassault talking about the three spheres, you know, geosphere, product sphere, and the biosphere, and kind of extending out their capabilities around the 3DEXPERIENCE platform. A little bit different focus than like Siemens, which is more, I would say, closed-loop focus with a big emphasis on closing the loop from the factory back to the— so they talk a lot shop floor to top floor. Again, they extend out beyond that to maintenance, repair, and overhaul and other capabilities. Capabilities, but their focus is really this enablement of the whole manufacturing process and closing that loop very tightly and adding a lot of capabilities around systems engineering and others. So a little bit different focus than Dassault. And then you have PTC that's been expanding out even further with a lot of acquisitions like Internet of Things. They've done a couple acquisitions in that area like ThingWorx, for example, which is enabling them to— in one way they have a broader, maybe not as deep in certain areas than Siemens and Dassault, but a broader focus and some very interesting acquisitions, ALM as well, for application lifecycle management. So we're seeing this kind of movement that the big vendors, which used to be pretty similar in what they were offering, to really differentiate themselves. Then you have people like Aris, which have come on the scenes now, you know, they've been around for a number of years, but they're making quite a bit of headway in the market itself. People are starting to buy into their, well, open source, enterprise open source perspective. And there's subscription services around maintenance, very scalable solution. They've released recently some scalability tests that were, you know, quarter million or more users. So they're doing some things, again, differently, but again, building out a platform as well as the other vendors. And then there's a bunch of niche guys that are out there, some interesting acquisitions that have taken place. There's more, you know, more focus around the PLM space by a lot of companies like Oracle and Infor. You know, SAP is making a bigger dent in it with with their capabilities. So there's other kind of shifting that's going on in the market as well. And then at the same time, there's more people entering the market with real niche applications. But that's kind of how we see the market right now and some of the changes that are going on and how some are standing out in one way or another. When you get the system integrators involved and they see it as important— and Accenture is a good example of that through a number of acquisitions like PCO and, um, Pryon, for example, in the last year or so, building out expertise within their markets. You see this TCS, Tata Technologies, a number of the, you know, Geometric, a number of the Indian-based ones as well, Deloitte. I think it is an indication definitely of the maturing of the market, as there's probably a combination of things going on. One is the ERP world, where a lot of these system integrators made a lot of money on in the last 10, 15, 20 years, that's kind of flattened out. Still a good market, but it's kind of flattened out in some ways as compared to the rapid growth it had before. And PLM is then the next area of opportunity. I think also though, as they see PLM becoming more of an enterprise issue, again, it's more valuable for them to get into it. There's more work to be done, and of course there's more money to make as a result of that. To me especially, and I think to SYNDATA in general, is there's two components to innovation, two things that enable innovation. One is the availability of clear, concise, and valid information, because if you have bad information, you're gonna make bad decisions. You're not gonna be innovative. Except if you're very, very lucky. And the other one is time. You know, people, if they're just focused on like fighting fires, for example, they can't be proactive, they can't use the information to go think what's next, they're not going to be innovative either. PLM can help both of those things. So it can be an— we call this innovation platform, but it doesn't innovate for you, but it provides clear, concise, and valid information, and it has the workflows and other things that allow people to spend time on what they should be doing not the administrative things that really are non-value-added. There, then they have the time needed to go innovate. Now, there's another aspect to it which is outside PLM's control, and that is the culture of innovation. Companies, some companies don't accept failure, and innovation requires, in my opinion, requires the acceptance of failure, because often you learn more from the failure than you learn from success. And a lot of times innovations are on the surface look like a failure, but they actually may be positioned differently or marketed differently, all of a sudden it's a huge success. So there's, there's that cultural aspect is important as well, but certainly as an enabler of clear, concise, and valid information, and then streamlining the process and other things that give people the time, those two key things are key components to innovation. One of the things that I'd say I find frustrating in the implementation of PLM or understanding PLM strategy is I see a lot of industrial companies is going to a vendor first and say, "Vendor, tell me what I should go do." And I've been there. I've been on the industrial side. I came from an industrial, a very large multinational industrial company. And the vendors can show you what they do, but they really can't show you what you should do. And that's where companies like SimData come in as an independent organization. SimData's case, we don't sell software at all. We don't do implementation software. And we find that very important. And, you know, we've been around for over 30 years, so I think that's kind of shown that there's value in that. That as a third party, we don't have— our vested interest is making our clients successful. And it may require software, it may never require software for that matter. So I think that independence, my recommendation to all companies, and they don't have to get it from us, but think about your strategy is your strategy. And yeah, you can get an understanding of what could be done from the vendors, but you need to focus. As an industrial company, you need to own your strategy, you need to focus on what you should be doing. If you need outside help, there's companies like Symdata, there's others that are independent that can provide you that kind of outside expertise so that you can get there faster and do that at less risk because, you know, companies like Symdata has done this for many times over many, many years and we can help you and guide you to go do that. But we'd always suggest don't let the vendors define your strategy, you need to define your strategy. If you need help, go look at an independent company like Symdata to help you.