Having successfully leveraged ERP platforms to automate key operational functions like manufacturing and sourcing, companies are now turning their attention to product lifecycle management (PLM) to retool the product development side of the business for greater efficiency and increased innovation.
Although touted as an enterprise application category, PLM is really a business process transformation to help manufacturing companies describe, manage and communicate information about their products or services internally and with external partners throughout the entire lifecycle. In the early stage, PLM focuses on customer requirements and traditional product design processes. Moving further into the product lifecycle, it automates and integrates these business processes and product-related data with those around sourcing, launch, volume production, maintenance and retirement.
Business process improvement for the product development organization has hit the radar screens of C-level executives for a number of reasons. In order to achieve sustainable growth in today's competitive global climate, companies are under the gun to deliver the right products to the right market in a timely fashion. In addition, top management is demanding increased visibility and accountability into how and where product development investments are made, while companies also cast a spotlight on customer needs in order to ensure more successful product launches.
"Companies have been investing in the operations side of the business because that was an area where there were better mechanisms in place to measure performance improvements," said Mike Burkett, vice president, PLM research for Boston-based AMR Research Inc. "The area that has seen less improvement is in product development and new product development introduction, and that's what you're seeing now."
This focus on business process improvement around product development is fueling steady growth in the PLM market at a time when the economy is stalled and corporate budgets are tight. According to AMR estimates, the PLM sector enjoyed 10% growth in 2007 to reach $12.7 billion, and that steady clip should continue at a 9% CAGR through 2012, when it's projected to hit $20 billion.
PLM market expanding and evolving
While PLM started out as a play among vendors steeped in the CAD and engineering world, the market has evolved to include a roster of well-known enterprise software vendors along with little-known best-of-breed providers. Companies such as Dassault Systemes, PTC, Siemens PLM Software and Autodesk dominate the engineering-centric PLM space, while giants SAP AG and Oracle Corp. have taken serious steps these last few years to beef up their PLM product portfolios.
Consolidation has also altered the PLM landscape in recent years. For example, Oracle's acquisition of Agile Software greatly bolstered the enterprise software vendor's once lightweight PLM story; while Autodesk, PTC and others have continued a string of small, strategic acquisitions that fill in key gaps and expand their PLM footprints in areas such as digital content creation, product portfolio management, 3-D visualization, and specific niche industries like footwear and apparel.
As the PLM footprint expands beyond engineering-oriented design tasks, integration with core business systems such as ERP and MES (manufacturing execution systems) become all the more critical. And the level of integration is not just a hand-off of data between silo systems; rather, it is defining business processes and automating workflows that make the sharing of product information seamless between all functions within a manufacturing company.
Ken Amann, director of research for CIMdata Inc., a PLM consultancy in Ann Arbor, Mich., said: "What's important for manufacturing is this has become much more than an engineering issue -- we're starting to take information originally created in that area and use it much more broadly."
Beth Stackpole is a freelance writer.