[From iSource Business, October/November 2002] Collaboration and information are key, and for PLM they are especially key to streamlining production processes, improving design and retaining customers. It's the latest way to tame your supply chain.
"Our organization's supply chain is more and more enabled with today's technology," says an iSource Business reader. "So, what's next?"
Answers to this question often depend on what analyst is doing the talking. However, it's notable that an often-used response to that question in this more realistic economic environment has become product lifecycle management (PLM).
Indeed, if companies live or die by the market value, timeliness, quality and sustainability of the products they produce then the highest priority for a competitive organization is the effective management of its products and services.
According to AMR Research, the PLM market in 2002 should cap off at a 31 percent expansion rate. "You're seeing a healthy, growing market [in PLM] because it's early and very important," says Kevin O'Marah, research analyst for AMR Research in Boston.
O'Marah contends that PLM is not in a "hot" growth phase, but rather it is "hot" in terms of the competitive and supportive nature of the technology. "PLM does not lend itself to wall-to-wall roll-outs," says O'Marah. "However, it is a software market with lots of user interest and plenty of worthwhile technology."
But PLM, unlike other emerging applications, has taken longer to catch on. As a technology, clear executive ownership is lacking in most manufacturing companies. By its nature, PLM thrives in a very cross-functional environment. "It's partially engineering, it's partially manufacturing, it's partially sales and marketing, it's partially R&D [research and development]," explains O'Marah.
"So there isn't a nice clean, executive owner, like a vice president of procurement, who normally would have bought a procurement application to support his procurement initiative. As a result, it's a bit harder to find the owner who can lead the charge to apply this particular technology."
Nevertheless, the software players supporting this market have not been daunted by this challenge. They realize that the key functional leaders must first be enlightened on the subject, which can be a challenge since even the various functional areas within the same manufacturing company will give you more than one definition to explain PLM. Most analysts boil it down to "a strategy with the goal of building a seamless, electronic-based process for managing the different phases of the lifecycle of a product, from concept to design to manufacturing to maintenance of the product in the aftermarket environment," says Jack Maynard, research director of Collaborative Business Solutions for the Aberdeen Group in Boston.
Today, PLM allows companies to go beyond simple computer-aided design (CAD) and build out a management process on behalf of the entire life of a product.
In Maynard's latest report on PLM, which is the fifth in a series, he pointed out that, "A manufacturer's core business is all about building product and establishing brand." He further added that, originally, "precious few of the high-flying market participants focused the available technology on addressing core business inhibitors and production accelerators needed in today's manufacturers to do what they do design and build products in a more streamlined and efficient manner."
Now, nearly two years later, he sees the software players in this area improving on their offering.
A Maturing Market
"The engineering and design segment of the PLM market is doing better than the PLM market in general," asserts Maynard. "But as PLM providers apply robust technology to core business practices in product lifecycle management the offerings can only get better."
Maynard points out that product lifecycle management is a 20-year-old term, but the software market serving this management process is much newer. "And the biggest struggle is being able to extend beyond the enterprise."
AMR's O'Marah adds that the technology continues to evolve. He cites PTC, MatrixOne and Agile as some of the strongest players in this space, with IBM/Dassault Systemes, EDS and TeamCenter showing strong roots in the engineering and design aspect of PLM. All these major players are still, as he puts it, "aggressively building out their footprint."
Web-based PLM system bom.com is also aggressively challenging some of the older players, in addition to a newer player called QRS. But when citing the "leaders" in the space, most people still make reference to Dassault and SAP, with the Pure Plays being PTC, MatrixOne and Agile.
Scratching the Surface
"For my view-at-large on PLM," says O'Marah, "we have really just begun to scratch the surface for the way enterprise-wide software will help the supply chain, and specifically in product lifecycle management. When we look back, this will seem like the dawn of time. We have miles to go, and PLM will be 10 times bigger."
O'Marah and AMR Research believe the growth rate in the PLM market will stay in the 30 percent range for the next five years. "It should be a $7 billion to $8 billion market in the next few years, even though it will close flat or at no more than a 1 percent growth rate at the end of this year."
Leading software suppliers will grow by maybe 10 percent next year, according to AMR Research.
And what should the major PLM providers prepare for and provide? "Provide tools that allow organizations to extend the PLM process beyond their four walls," says Aberdeen's Maynard.
Of course, the market continues to love the idea of the one-stop shop provider, especially in PLM with the many stages of the product lifecycle. Much of the current effort spent in PLM typically comes at the earliest stages, product design and rollout. From there, PLM escalates to the R&D and manufacturing divisions, which then connect with the supply chain, sourcing and fulfillment functions of the company. With companies pulling their own functional businesses together more seamlessly, the expectations will rise for a very robust and expanded offering from the bigger PLM enablers.
The primary goal of product lifecycle management is to "tie together all of the islands of product knowledge and expertise wherever and whenever they exist," says Aberdeen's Maynard. As a result, the key players must be aligned to support this goal. Today's market is revealing an effort to support this objective.
