PLM Takes Center Stage At Enterprises

Executives at a major New York fashion house are sitting at a conference table pondering the hem of a skirt. Using project lifecycle management (PLM) technology, in-house designers, fabric suppliers and retailers have flagged a problem: Elaborate trim on the skirt will bump costs significantly, and the apparel company must make a decision: Hike the price of the garment or revamp its design.

Enterprisewide PLM software makes such early interventions possible. The technology is designed to track products--skirts, cars, aircraft parts--from inception to finish. Once considered mainly a way to share computer-aided design (CAD) files, PLM offerings now wrap in powerful capabilities, including data and document management, and workflow mechanisms. These new features have pulled PLM out of engineering and development shops to the forefront of enterprise change-management movements.

"A lot of change is beginning to happen because CAD is moving into other areas, and because PLM is more than CAD. As the market starts to shift, so do the departments you are selling to," says Kerry Grimes, vice president of Mid Market and Global Channel Sales at UGS, a leading CAD and PLM vendor. "Five years ago, I would not have said PLM was an enterprise application, but it's clearly the next power play in the enterprise."

Channel opportunities will skyrocket as PLM pervades new verticals and integrates more easily with ERP and other major business applications. Solution providers long adept at the intricacies of engineering and manufacturing processes are making new inroads. Meanwhile, major PLM vendors are tapping a fresh set of partners to break into new markets. Solution providers will play a crucial role in selling enterprise and an emerging class of midmarket decision-makers on PLM's value.

"VARs trying to get into the PLM market should focus on an enterprise-level approach and help company leaders understand the need for this product," explains Lewis Kennebrew, vice president of operations at ProductSpace, an Oak Brook, Ill.-based PLM reseller that offers integration and consulting services around products from PLM vendor Parametric Technology Corp. (PTC). "Typically, a top executive--especially one at a smaller company--couldn't care less about a CAD tool or product-development drawing capabilities. The software is just too expensive to be limited to the engineering process."

By no means is PLM still confined to corporate engineering and design shops, says Nikki Baird, a senior analyst at Forrester Research who watches business processes and application trends in the retail sector. "PLM supports iterative processes where the next step in the process may not be predetermined."

Baird refers to issues surrounding the costly skirt. "The designers have to decide if they're going to redesign the skirt without the problem trim or increase the sales price, or just find replacement trim to use. That's a fluid process with a lot more interaction," she says.

NEXT: Why working collaboratively is key.

Although CAD remains at the heart of many PLM bundles, the technology is branching out from there.

"Commonly, studies cite that 80 percent of a product's lifetime cost is determined during the design phase," says Bill McBeath, chief research officer at Cambridge, Mass.-based ChainLink Research. "About 15 percent of the cost can be tied to sourcing, while only 5 percent can be effected in the purchasing and service phases."

Catching potential problems early on is the name of the game, not only for PLM users in new markets but also for seasoned users. Major manufacturers are casting a wide PLM net across users both internally and externally, UGS' Grimes says.

"PLM is spreading to new sectors, but perhaps just as important is the evolution of traditional users," Grimes says. "Companies like Boeing are changing...Now, more components are coming from suppliers, and Boeing is faced with making those parts work together. This requires integration and collaboration."

Collaboration is definitely the key to corporate change management--a huge factor in PLM's move from its CAD confines, according to Hardeep Gulati, Oracle's senior director of PLM product strategy.

"When workgroup products allowed executives to save and share documents, the whole PLM market evolved into one based on product solutions. Vendors began making this more of an enterprise play," he says.

PLM use among enterprises has boosted the technology's cachet.

"Collaboration within an enterprise lets departments such as finance participate in product development," says Buddy Raines, CTO of IBM's PLM division. "For instance, finance can see early on the product's pricing structure and link that to costs. In the field, marketing departments and others can begin developing support materials."

The rise of enterprisewide PLM has software vendors such as IBM, SAP and Oracle investing heavily in the technology. IBM is sinking $40 million over the next three years into the development of new PLM solutions.

The vendor cites staggering figures, projecting PLM sales will swell from $65 billion in 2005 to $90 billion within about two years. IBM's second-quarter earnings validate the trend: The company reported double-digit growth in PLM sales and now boasts more than 20,000 PLM customers. About 40 percent of those users are SMBs, according to company execs.

A Plethora of PLM Plays

SMBs may present VARs with the best chance to enter the PLM market. "The base of adopters is definitely broadening. The largest source of growth is the usage of PLM in the midmarket," says Jay Muelhoefer, general manager of PTC's PLM Online Demand Solutions.

Resellers can play a big role in getting new PLM adopters started, observes John Stark, president of PLM service provider John Stark Associates. "A certain amount of preparatory work is needed before PLM can be used--defining and documenting the steps of an engineering change management (ECM) process, defining roles, defining documents, such as engineering change orders and defining data items and fields," he says.

As the saying goes, "Where there's mystery, there's margin." Where PLM is so dependent on identifying and defining processes, it could open a new vein of lucrative services and training engagements for solution providers.

"There's also a need to train people in these new processes," says Stark, author of "Product Lifecycle Management: 21st Century Paradigm for Product Realisation." He says resellers are ideally positioned to help with these activities. "They know the application, and they know how their customers work," he adds.

VARs may also want to consider another strategy--coming up with ways to help product companies bring smaller suppliers into the PLM fold, IBM's Raines says. "We tend to focus on tier-one and tier-two suppliers, so there's fertile ground for resellers to help us move PLM to the wider ecosystem."

Broader PLM reach will also help resellers that specialize in certain verticals unfamiliar to major PLM vendors. "The need for value-added processes lies in our need to create new products for particular markets and to find the gaps in existing products to address new sectors. VARs can help capture the voice of these markets," says Oracle's Gulati.

While PLM's evolution almost certainly will create opportunity for more VARs, not all of them are new to the technology. "Although the PLM VAR community is small, it has been quite active," says Tom Schorr, head of PLM vendor Dassault Systemes Americas' Channel Management Team. "The typical PLM VAR is specialized in the product-development space. As PLM expands outside of product development, we're seeing interest from VARs in traditional consulting and reseller segments--from ERP resellers, for instance."

According to UGS' Grimes, seasoned CAD and PLM resellers are also changing as the technology integrates more tightly with ERP and other enterprisewide software offerings. "The face of PLM resellers is changing with the solution. These companies now tend to mirror those resellers active in ERP and CRM [customer resource management] efforts," he says.

NEXT: PLM's learning curve

As the PLM VAR pool grows, the most successful resellers will be those who understand the intricacies of product design, predicts Michael Topolavac, CEO of Arena Solutions, a PLM service provider in Foster City, Calif.

"VARs interested in the PLM sector of the market will need to have team members skilled in manufacturing and engineering processes, and be able to perform business-consulting services," he says.

Because of the complexities associated with manufacturing and engineering, VARs entering the market should tread lightly, warns Mark Silvestri, CEO of PLM consulting firm Life Cycle Solutions in Avon, Mass. "The technical depth and breadth required within the VAR organization makes the delivery of a PLM solution a difficult task," he says.

While it's true that design and manufacturing are complicated, PLM solutions are getting simpler. "The technology is now becoming easier for VARs to understand, and many are playing catch-up," ProductSpace's Kennebrew says.

One example of a streamlined PLM offering is Teamcenter Express, a version of UGS' flagship application that's designed to help midsize companies rapidly adopt PLM capabilities. The product also makes use of standard Microsoft platforms to allow instantaneous creation of PLM databases, according to UGS.

"We're focusing on collaboration and the sharing of distributed data," UGS' Grimes says. "Other vendors in this space are taking a more data-management-oriented approach."

Other PLM vendors are also busy churning out simplified, Web-based versions of traditional products. Arena Solutions, for instance, now offers PLM as an on-demand service that enables SMBs to unfold enterprisewide PLM applications through a subscription fee instead of using hardware and software components.

"Manufacturers can now afford to implement a PLM solution that was previously too cost-prohibitive for them," Arena Solutions' Topolovac says.

NEXT: PLM gains traction in major markets.

PLM Gains Traction In Major Markets, With Brand Names

Product lifecycle management once held the reputation as a stodgy, highly technical solution set holed up in product design and engineering shops. Nowadays, solutions are penetrating fresh markets, from telecommunications to fashion and apparel.

Major brands including Nike, Timberland and Reebok are incorporating PLM solutions in product design, according to Lewis Kennebrew, vice president of operations at PLM reseller ProductSpace in Oak Brook, Ill. "When it comes to apparel companies, PLM becomes not so much about engineering but about art, fashion and design," he says.

Garment production doesn't often make use of 3D renderings, as CAD does. Instead, familiar design software takes center stage, according to Hardeep Gulati, senior director of PLM product strategy at Oracle. "In retail, design is often done in Adobe [Systems], for instance, with Adobe Illustrator or any kind of design and authoring tool."

Indeed, Adobe is finding its way into more PLM plays, according to Mike Morel, the company's director of manufacturing solutions. "Adobe Acrobat 3D allows companies to convert 3D designs from major CAD applications to PDF," he says.

Within the manufacturing sector, PLM adoption is broadening, as the technology takes hold in smaller electronics and medical companies.

Oral-hygiene products and showerhead-maker Water Pik is a notable PLM user. The company has adopted SofTech's ProductCenter PLM solution to streamline product development, according to PLM consultant John Stark of John Stark Associates. "Water Pik has 42 business-process applications built with ProductCenter to support engineering, operations, human resources, finance and other areas of the company," Stark says.

As PLM use proliferates across industries, so do reseller opportunities.

"There's a lot of verticalization that VARs can provide," Gulati says.

NEXT: Where PLM fits in the enterprise software family.

Where PLM Fits In The Enterprise Software Family

To distinguish product lifecycle management (PLM) solutions from other enterprise software offerings such as ERP, keep in mind that PLM is tightly tied to products and not transactional business operations.

"PLM solutions are designed to handle the complex, unstructured and quickly changing data associated with product design and teams composed of internal and external users located around the world. ERP is targeted at handling financial or inventory data that's transactional in nature," says Jay Muelhoefer, general manager of PLM On-Demand Solutions at PTC.

Yet PLM and ERP usually dovetail within the enterprise, says Nikki Baird, a senior analyst at Forrester Research. "PLM and ERP must work hand in hand. As soon as a design is settled, ERP picks up the specifications and helps find the right sources, manages the manufacturing plan and manages all the logistics of getting the pieces to market."

On the other hand, figuring out the differences between PLM and supplier-relationship-management (SRM) solutions can be a bit tricky. "Supplier management is one of the best practices that cross-functional teams must have when dealing with the whole lifecycle of a product," says Bill McBeath, chief research officer at ChainLink Research. "During the engineering phase, you should have sourcing capabilities at a very early [point]."