Value Gaps and PLM Sustainability
By Peter A. Bilello, President, CIMdata
Why should IT executives be concerned about sustainability of their Product Lifecycle Management (PLM) solutions? After all, isn’t PLM an engineering problem, or opportunity? The easy answer is, of course, that PLM is a strategy that best implemented at the enterprise level; and that translates into the realm of the CIO. Of course, such a shallow rationale applies to any broad-gauge technology, starting with Microsoft Office.
The question then becomes, how is PLM fundamentally different from the other sets of technology tools that also are in use enterprise wide? The deeper answer is that the tool sets from PLM solution providers offer ways to minimize the recurring demands from engineering for IT services and support. The reason this is true, lies in PLM’s basic difference from the other software-based strategies and systems that IT implements and supports at the enterprise level.
Most enterprise strategies and solutions—Enterprise Resource Planning (ERP), for example, plus Supply Chain Management (SCM) and Customer Relationship Management (CRM)—generate continuous flow of transactions in real-time. In sharp contrast to these enterprise solutions/systems, PLM focuses on an organization’s products and their entire lifecycle (from concept through retirement or disposal) and maintaining the single source of truth by enhancing communication:• Between the “silos of expertise” in engineering, as well as in manufacturing, field service, recycling, etc.; large enterprise have hundreds of silos. Even small companies are at risk of developing silos that communicate only reluctantly with their peers. • Backward in time to maintain the intellectual property (IP) of the development of previous products—engineering details, requirements and industry standards, compliance documents, and lessons learned in manufacturing and in the field. • Forward in time to the development of next generation and successive products. These three bullet points mean that PLM supports all phases ofthe product lifecycle. Lifecycles begin with concept development and actually reach beyond the “end” of product life. This is because so many products now are designed to be recycled or upgraded and remanufactured for reuse, and not just discarded. This requires centralized management of the product’s intellectual assets without regard to where in the enterprise these assets are created or used and reused, which PLM does.
"The expertise of a PLM consultant and value gap analysis can be invaluable"
The better the communication (digital and otherwise) between silos of expertise, the smaller the likelihood that product development will stumble thereby resulting in top-line and bottom-line benefits.
At this point, some CIOs may dismiss product development as a concern solely for engineering. Consider, however, that a steady stream of globally competitive new products is the reason the business exists. If these development initiatives slacken, every stakeholder in the enterprise from newly hired employees to the boardroom will suffer. And beyond the enterprise walls, pain will be inflicted on lenders, suppliers, customers, business partners, securities underwriters and many others.
Thus in simple terms, that stream of new products constitutes the sustainability of the enterprise in its markets, among its rivals, financially, and environmentally. This speaks of the same need for sustainability in PLM (and likewise in product development itself), as for the more in-your-face, “business critical” ERP, SCM, and CRM supported 24/7/365 by IT.
PLM sustainability and value gap analysis
The toughest challenge in any broadly based business investment at the enterprise level is determining and ensuring its sustainability—its long-term ability to deliver value to the business. With reach and complexity equal to or even greater than ERP, SCM, and CRM, PLM is no exception.
Sustainability is, of course, hard to predict, and the longer the timeframe the chancier the prediction, as CIOs know all too well.There’s no easy solution but there are some reliable pointers in value gap analysis, in grasping the difference between an investment’s promise and its reality.
Experienced CIOs will point out a pair of difficulties:• Evaluating an investment’s initial effectiveness is difficult enough, never mind long-term effectiveness. • Evaluating the sustainability of any investment initiative as sweeping as PLM.
The answers lie in PLM’s configurability and adaptability. All PLM solutions have been highly developed to ensure that customers have whatever they need to cope with the dynamics of today’s business environments while preparing for the inevitable upheavals of tomorrow’s.
Configurability achieves a sustainable PLM environment quickly while adaptability ensures that environment can be maintained over time. Sustainability can be evaluated methodically and objectivity and itshould be. The expertise of a PLM consultant and value gap analysis can be invaluable.
The basics of value gap analysis are laid out in Figure 1, which focuses on Investment Value possible and realized. CIOs can never forget the gap between technology promise and implementation reality. The bigger that gap the more time will pass before a company sees an acceptable return on its investment.
Less obvious, as shown in a CIMdata study, is that the gap between technology capability and actual implementation success is widening for many companies. The study, “Catalysts: Accelerating PLM Value,” pinpointed two additional value gaps. As Figure 1 shows, the gaps are between Technology-delivered and Vision-promised, and between Leaders and Followers. The gaps ink directly to sustainability.
Three value gaps that affect successful implementation are revealed in this time-phased chart of aggregate PLM capabilities.
The Investment Value Gap is the most important. But the gaps between Technology-delivered and Vision-promised, and between Leaders and Followers also can have major impacts, and can affect the Investment Value Gap as well. Source: CIMdata.
CIMdata studies and project successes have shown that PLM configurability shrinks the time needed for the enterprise to absorb new technology and begin using its new and more capable processes intelligently. This shrinkage makes getting to the desired “to be” state of operations (Figure 1’s uppermost curve) more of a journey and less of a slog.
As the world’s leading independent PLM strategic management consulting firm, CIMdata is directly concerned with overcoming the value gaps to reach investment success. This means pushing the threat of obsolescence (the flip side of sustainability) as far into the future as possible.
Sustainability and Effectiveness
The effectiveness of any investment is straightforward: the promised benefits are borne out operationally and financially, or not. Ascertaining sustainability is less direct: time frames and useful lives are much longer for sustainability than for effectiveness, and longer time frames means more (unforeseen) factors will have an impact.
“Future proofing” is the usual label for protecting investments against the imponderables of business and technology. The term means implementing technology so users need not worry about obsolescence due to disruption. The purpose of any new technology is, of course, business transformation. Thus any new technology that is not disruptive has little chance of success.
While disruption cannot be wished away it can be met head-on with configurability and long-term adaptability to close value gaps. Configurability and adaptability include robustness (embedded tools, solutions, and enhancements make PLM easier to install, use, maintain, and upgrade) and industry specific templates. PLM solution providers offer templates for aerospace, defense, automotive, consumer products, energy, food & beverage, industrial and machinery, medical devices, footwear and apparel, retail, and other industries.
It should be apparent that widening value gap means measurable investment success in business initiatives is more elusive than ever. Investment value gap may initially be widened by the time and costs of configuration. Our experience shows, however, that the gap narrows appreciably when more robust out-of-the-box business solutions are introduced.
The consequences of a PLM implementation failure are too costly, visible, and far-reaching in the hyper-connected and relentlessly competitive 21st century. The once acceptable out—pull the plug and move on, i.e., a failure of sustainability—is no longer an option. This is especially true in extended enterprises that have integrated decision-making and operations with suppliers, customers, business partners, marketers, and regulators.