PLM: Processes, Potential And Problems
For solution providers steep in the traditional IT sets -- networking, security, storage, etc. -- why should you care about PLM? For starters, it's a $16 billion business and growing, according to IDC. According to ChainLink Research, 80 percent of a product's cost is determined in the design phase. PLM provides users with greater product development efficiencies that drive down development costs and decrease time to market. Just think of that sales conversation: "I've got a product that is going to save and make you money!"
The two leaders in this space, UGS and PTC, have great plans for growing their channels, particularly as they drive more of their technologies into the midmarket. UGS reports that its channel grew more than 30 percent, while PTC is saying its channel increased 24 percent. Each are investing heavily in enabling their solution providers and growing their reseller ranks, domestic and internationally. But they have several challenges ahead of them.
1. What is PLM, Anyway? You'd be amazed at the customer lists PLM vendors carry in their PowerPoint presentations. Boeing, Dyson, General Motors, Caterpillar, Reebok and more. However, PLM is a relatively new term to which many channel pundits try to peg as an extension of data management. Similarly, users and potential customers focus on PLM's CAD roots, figuring it as a back-room engineering application with no broader application.
Existing PLM resellers say the one thing they need from their vendors is greater marketing support to raise the level of end-user awareness. The traditional entry point for PLM sales is the engineering department, which previously bought CAD applications and modules. PLM resellers who've tapped into the IT department and shown CIOs and line-of-business managers the benefits of their applications have gained traction by selling into the broader business. Getting to have that conversation with IT, though, requires IT at least having some level of awareness about PLM. Otherwise, the current sales cycle -- which some resellers say averages around nine months -- will continue to get longer and more expensive.
2. Segregated Channels. The CAD/PLM channel is highly segregated from the conventional IT channel. Several PLM solution providers I've spoken with don't consider themselves VARs or IT resellers, even though they're selling software. In fact, one PLM reseller recently told me that his company stopped associating itself with the VARBusiness 500 because it didn't want to be seen as a reseller but more accurately as a PLM specialist. Others have remarked about being engineering specialists and technology consultants, not software solution providers.
This misconception is an Achilles' heel for the PLM channel. VARBusiness views PLM as a piece of the business intelligence universe -- a software component that works with ERP, supply-chain management, customer relationship management, and financial and analytics applications to provide businesses with deeper insight into what's happening across their operations. With the data yielded from these applications, management is able to make adjustments that produce efficiencies and, ultimately, lower operational costs and increase revenues/profits.
PLM is complex enough that resellers shouldn't feel compelled to take up a second specialty. However, if they don't sell themselves as part of the IT and business software channel, they may miss partnering opportunities with ERP and SCM resellers that could open new sales and revenue opportunities.
3. The "P" Should Stand for "Process." The obvious PLM opportunity lies in producers of durable goods -- cars, washing machines, clothes, airplanes, watches, laptops, etc. PLM is equally applicable to non-durable goods development, such as software, pharmaceuticals and chemicals. The ability to manipulate a product's design in real-time, determine parts that are reusable in other products, and develop specifications and marketing customizations is powerful. Where the efficiencies come from, though, is in the process of developing a product -- and that's something many midmarket companies don't have.
Here's a real-world example from a PLM reseller: A small manufacturer of oxygen and nitrogen producing equipment was suffering tremendous product failures and high scrap costs. PLM could provide the business better insight into the problems it was having and give it the ability to make fast design corrections. What the reseller found, though, was the company had no documented manufacturing processes. His biggest challenge -- and value-add -- was helping the company formalize its process so it could reap PLM's efficiencies.
Here's the problem facing PLM vendors: Many of their current and potential PLM solution providers don't have enough knowledge or skills in business processes. If the success of PLM is predicated on solution providers' being able to help their customers run more efficient businesses, PLM vendors are going to have step up and provide more than just technical training and support.
PLM vendors I've met with have high hopes for their channels and express a willingness to make the investments that will enable their solution providers to be profitable. The way I see it, enterprising and innovative business software solution providers have an opportunity to add PLM to their arsenal -- directly or through peer partnerships -- to provide their customers with more holistic business intelligence suites. Overall success, though, will only come if the PLM vendors drive a holistic view of their technologies and apply innovative thinking, business and marketing models to their emerging channels.