More than a vision

By now, it is hoped most everyone in manufacturing is familiar with the concept of product life-cycle management, or PLM. Underpinned by Internet technology, PLM envisions collaboration with partners not only on design, but also the sourcing, manufacturing, and service stages of a product's life.

The first adopters of PLM-centered applications were large companies that already had invested in the latest CAD tools and product data management (PDM) systems, considered subsegments of the PLM market. The uptake by large enterprises made PLM one of the few bright spots in the sagging enterprise software market of recent years. But it also cast some doubts: would PLM become another tough-to-deploy system costing millions of dollars, sold around a grandiose vision rather than specific ROI?

PLM software can stand further simplification, say experts, but they also say PLM packages are becoming easier to deploy, opening up PLM to new users.

"The technology and the product suites are such that today a midsize company can bring PLM onboard much more easily than in the past," says Ken Amann, research director with CIMdata, an Ann Arbor, Mich.-based analyst firm. "The vendors have made strides in building in vertical-industry functionality and best practices."

Robert "Buzz" Kross, a VP with Autodesk, a vendor best known for its CAD packages for the small and midsize business (SMB) market, says PLM still faces a perception problem among SMBs. "We hear consistently that PLM is not on their radar," he says. "For these customers, PLM is [perceived as] for the Boeings and Fords of the world."

Autodesk and other vendors are addressing the need for simpler systems on several fronts. One is to make the PDM foundation of PLM less costly to deploy. Vendors also have built a whole range of collaborative applications in areas like sourcing and cost management, which leverage PLM's product record foundation.

According to CIMdata, PLM involves both authoring tools (i.e., CAD) and applications it calls collaborative Product Definition management, or cPDm. There are various types of cPDm applications. Visualization and digital mockup tools enable collaborative development, as do project management modules. PDM remains the "backbone" for the product record, but has changed over the years to become Web-centric, as well the foundation for extended applications. Other PLM niches include manufacturing process management (MPM) applications that organize information about the processes that will be used to build new products, and use simulation and analysis capabilities to arrive at optimal processes; and portfolio management modules that coordinate a company's product introduction efforts.

CIMdata predicts the cPDm portion of the PLM market will exceed $5 billion in 2004, and $9 billion by 2008, for a compound annual growth rate of 15 percent. It predicts slower growth for authoring tools, bringing overall PLM five-year growth down to 7.5 percent.

Other analysts also predict strong PLM growth. Boston-based AMR Research predicts 13-percent growth for PLM applications (excluding CAD) over the next five years. Most observers agree that to grow, PLM vendors will have to expand into the midmarket while also selling new functions.

"The keys to growth include industry solutions, but also an ability to deliver applications that address specific business problems, like cost estimation when responding to requests for quotes," says Michael Robinaugh, a global marketing executive with IBM's PLM group. IBM partners with PLM software vendor Dassault Systemes to offer PLM applications. Last year, it launched a solution called PLM Express aimed at SMBs.

"SMB customers want to implement a solution to a business problem, and initially, might not even know that PLM is going to be the answer," says Robinaugh. "They come to us with a [task such as] generating better cost estimates, or improving engineering change management, and we bring a PLM solution to bear on the problem."

The Express offering includes SMARTEAM PLM—Dassault's midmarket offering—and a menu of other options, including financing. Robinaugh says since the launch of Express last year, about a dozen customers have bought the solution, though other SMBs bought IBM's PLM offerings outside of the program.

Jim Heppelmann, executive VP and chief product officer with PLM vendor PTC, says PTC developed its Windchill "Link" packages with quick deployment in mind. The initiative is catching on with customers. For its fiscal second quarter announced in April, Windchill Link license revenue grew 32 percent sequentially and represented 56 percent of overall Windchill license revenue. "For us, seeing that Link number grow is extremely good news," says Heppelmann. "It means users are recognizing the value of simple implementation and low cost of ownership."

Heppelmann believes it's crucial to make the PLM tie to specific business issues. To aid this effort, PTC developed a "road map" that charts high-level drivers to dozens of PLM functions.

For example, says Heppelmann, globalization and outsourcing have become major drivers. To work more efficiently with contract manufacturers, PTC recommends applications that automate engineering change management and release to manufacturing, as well as more general collaborative development functions.

"Companies expand globally for different reasons—to get into new markets or pursue lower labor costs—but when they do expand, they often find that the processes that worked for them before are broken," says Heppelmann. "PLM knits those processes back together."

A recent Link win for PTC is Esselte's Creative Division, Scottsdale, Ariz.—formerly Xyron, a manufacturer of lamination products. The deployment shows how even smaller organizations are turning to PLM as they become part of more complex supply chains.

As Xyron, the division had annual sales of nearly $60 million. Esselte, a larger office products manufacturer, acquired Xyron, as well as a design firm called X Product Development (XPD), which had helped Xyron develop its products. While XPD had been a user of PTC's CAD solutions, it lacked PDM and project management capabilities, so it and Xyron added Windchill ProjectLink and Windchill PDMLink packages to accelerate product development efforts as part of Esselte.

PDMLink will manage the configuration and packaging requirements for selling through subsidiaries in 26 countries. ProjectLink—which supports real-time review and markup of 3D images—will speed communication between design teams in Arizona and plants in China.

Chuck Grindstaff, an executive VP with PLM vendor UGS, acknowledges PLM has been deemed difficult by smaller companies, but says that perception is changing as vendors "make it easier to get value right out of the box." On one front, says Grindstaff, UGS has built industry solutions for aerospace, automotive, high tech, and consumer goods. Another front, he says, involves unifying the flow of information between product record data and visualization.

UGS calls this approach Repeatable Digital Validation, or RPV. Basically, says Grindstaff, it allows users of UGS's software to automatically populate visualization tools with the correct data so that companies can start collaborating more quickly. "It used to take days or weeks to shepherd data into visualization, but it's all driven on the fly now," says Grindstaff.

Simpler solutions should appeal to midmarket customers in need of improved PLM processes. An AMR survey of 150 midmarket discrete manufacturers conducted last year found that respondents had functioning product development processes, but on a 10-point scale of product development capabilities, with 10 being highest, the average score was just 6.5.

Traditionally, PLM has been touted as a way to accelerate new product introduction cycles as well as so-called "time-to-volume," or full production ramp-up. Bryan Stolle, CEO of PLM vendor Agile Software, adds product cost management to these core PLM goals. "New products not only need to be on time, they need to be on margin," he says.

While PLM vendors have been busy broadening their functional footprints while also making core PDM and specific extensions more highly packaged, experts say the success of PLM still comes back to internal end-user factors such as senior executive involvement in PLM initiatives. Some analysts have decried the lack of senior executive ownership of new product introduction initiatives, but other studies indicate the importance of product development is sinking in. For instance, a 2003 study by consulting firm Deloitte Touche Tohmatsu, New York, found that manufacturers see new product launches as the top strategy for driving revenue growth over the next three years.

"PLM is more than a technology play—its success takes organizational and cultural change," says Amann. "But PLM brings fundamental value to manufacturers as a basis for differentiation, and more and more executives recognize that today."