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Paying for PLM: Justifying the spend
August 30, 2007
We have seen proof that PLM helps reduce waste in product development and engineering processes, freeing up resources. And many companies are reinvesting those resources on further innovation, which in turn helps them bring even more successful products to market.
Some of this innovation centers on developing new processes for collaborating with trading partners—both customers and suppliers. Streamlining partner communication—with tools like Web portals linked to PLM applications—can help avoid costly and time-consuming errors.
Web-based PLM applications also can support concurrent design processes—allowing everyone involved in the product development process to the ability interject their best ideas early in the design phase.
Aberdeen benchmarks show companies that are proficient at using PLM technology have reaped double-digit percentage improvements in the following areas:
- Increased revenue (average of 19% improvement)
- Decreased cost (average of 15% improvement)
- Decreased product development cost (average of 16% improvement)
Source: Aberdeen Group, Product Innovation Agenda (2005)
Such compelling numbers should make the decision to invest in PLM technology an easy one. But we find many line of business executives still struggling to get approval for such expenditures.
Aberdeen Group research indicates that a good percentage of leading companies—what we call the Best in Class—are justifying PLM projects as a means of executing a strategic vision. Other companies tend to force executives to present full business cases—with hard ROI numbers—to justify such projects. Often, that forces those executives who are convinced of PLM’s long-term value to put together a series of small projects—each with its own ROI numbers—to create a larger PLM program.
We will have more on the various approaches to justifying a “PLM Program” in this space. In meantime, feel free to download the Aberdeen Group report on the topic.
Posted by Jim Brown on August 30, 2007 | Comments (2)
