Researchers see tools segment flat, but demand for services up as companies expand product lifecycle management initiatives
Ann Arbor, MI September 5, 2003 The overall product lifecycle management (PLM) market was up slightly last year versus 2001, finishing 2002 at approximately $13.5 billion, as services proved to be a growth area for this segment, according to a new report out from consulting and research firm CIMdata.
In its PLM Market Analysis Report, CIMdata reports that about 67 percent of the PLM market comprised authoring and analysis tools, while 33 percent was for collaborative product definition management (cPDm).
CIMdata partitions PLM into two primary segments, cPDm, on the one hand, and authoring and analysis tools on the other. cPDm is focused on collaboration, management and sharing of product-related information, while authoring and analysis tools focus on mechanical and electronic and computer-aided design (MCAD & ECAD), computer-aided software engineering (CASE), and technical publishing.
"While the tools segment remained flat in 2002 at $9.3 billion, cPDm grew by 8 percent to reach $4.2 billion," said Ken Amann, CIMdata director of research. Driving this growth were services associated with PLM solutions, Amann said, noting that new license software revenues declined approximately 7 percent, while services grew 16 percent.
"Services continue to be the growth area for the PLM market," Amann said. "In fact growth of the services sector had outpaced new license software sales for several years as companies strive to take full advantage of PLM solutions."
Amann said this growth reflects the recognition in industry that the greatest benefits of PLM are realized when the solutions are carefully implemented as an integral part of a company's operational process and business strategy.
According to the CIMdata report, the scope of PLM implementations continued to grow, with many major companies beginning to integrate their partners and suppliers into a comprehensive solution. As PLM is deployed across the extended enterprise, integration with the business systems and processes of a company's partners require additional services. Business process re-engineering and cultural change management services are an important component of the overall services associated with defining and deploying a PLM strategy, and the maximum benefit of PLM is achieved when business processes are redesigned to leverage collaboration and information sharing across the extended enterprise.
Services provided by technology providers, as well as by system integrators, include valuable technical assistance with computing infrastructure, networking, communications, customization and applications integration. "These areas are absolutely necessary for installing and running the PLM software in conjunction with other business systems and applications," explained Amann. "User companies may not have the time, resources or expertise to adequately handle these responsibilities."
Beyond technical assistance, service providers also perform increasing levels of process evaluation and organization consulting, which is highly effective in leveraging PLM to achieve a company's particular business objectives, Amann added.
According to Amann, good service providers base their work on sets of best practices established through years of experience with similar companies, usually in the same industry. This is a significant value to companies struggling to find the best ways to improve their business operations. "Applying best practices and methods enabled with PLM technologies and solutions unleashes the full potential of a company's people and partners to deliver innovation of a business and its products," said Amann.
CIMdata's 2002 PLM Market Analysis Report provides an analysis of the 2002 PLM market, with specific emphasis on the cPDm portion of the market across a variety of segments. The report also identifies market trends and forecasts the market for 2003 through 2007.
CIMdata defines PLM as a strategic business approach that applies a consistent set of business solutions in support of the collaborative creation, management, dissemination and use of product definition information across the extended enterprise from concept to end of life, integrating people, processes, business systems and information.
PLM forms the product information backbone for a company and its extended enterprise. It is composed of multiple elements including: foundation technologies and standards (e.g., XML, visualization, collaboration and enterprise application integration), information authoring tools (e.g., MCAD, ECAD and technical publishing), core functions (e.g., data vaults, document and content management, workflow and program management), functional applications (e.g., configuration management) and business solutions built on the other elements and augmented with appropriate best practices methodologies for use.
