PLM in economic downturn – Is there a place for second-mover innovation?

How PLM can continue growth in today’s downturn economy? I think, this is time to get back and talk about PLM user adoption. I’d like to raise this question in a very specific way – is there an opportunity for second-mover innovation in PLM today? In today’s market situation, second-mover innovation can open back-core PLM areas and allow the delivery of PLM systems (or components), leveraging all research done previously by the first movers of PLM innovation, who are the majority of PLM vendors.

 Second-mover advantage occurs when a firm who follows the lead of the first-mover is actually able to capture greater market share, despite having entered late. First-mover firms often face high research and development costs and the marketing costs necessary to educate the public about a new type of product. A second-mover firm can learn from the experiences of the first mover firm and may not face such high research and development costs if they are able create their own similar product using existing technology. A second-mover firm also does not face the marketing task of having to educate the public about the new project because the first mover has already done so. As a result, the second-mover can use its resources to focus on making a superior product or out-marketing the first mover…the notion that winners are always the first to enter the market is a misconception. (Wikipedia entry)

Examples include Obama (vs. Hillary), Nintendo (vs. Atari), Oprah (vs. Donahue), and AMD (vs. Intel). Second-movers are able to capitalize on the work done by others and create innovative products at a lower cost. The “early bird may catch the worm” but later birds can dominate marketing and distribution.

Assuming that we are ready to research existing PLM spaces for second mover innovation, what should we focus on as the ultimate functions/components of a PLM system? Presently, I see, Bill Of Material Management as the top candidate for second movers. Most of PLM starts and ends with the management of Bill of Materials. The ability to manage multiple Bill of Materials is a requirement of all customers interesting in PLM-like deployment. 

If the idea is to re-invent the Bill Of Material portion of PLM, what should be improved, in my opinion?:

 Bill Of Material definition: The ability to craft any Bill of Material without a preliminary definition. The Data Model for BOM needs to be open. 

User experience: Flexible rule based user interface, similar to Excel, plus the ability for customization

Multiple Bill of Material synchronization and rules: The ability to manage and synchronize more than one BOM.

Data acquisition: Multiple ways to acquire BOM data – from CAD systems, from other PDM/PLM tools, ERP etc. Practically, BOM can be created from any place.

Bill of Material module encapsulation: To invest into SOA and interoperability of BOM implementation with the rest of the systems in PDM/PLM, and the extended domain, ability to use BOM module with various collaboration systems such as SharePoint, Lotus family etc. 

By doing that, BOM will be converted from existing rigid definition and implementation to modern tools, capable of handling Bill of Materials in various scenarios and user cases. 

I believe implementing such a “back to roots” strategy will allow the creation of significant market advantages for increased user adoption of PLM. Second-mover innovation is relatively cheap and can leverage all market investment done by PLM companies to date. 

Who will do it? This is an open call… 

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20 Responses to PLM in economic downturn – Is there a place for second-mover innovation?

  1. Interesting way to look at the market conditions. I think you are right that the time is right for second mover applications within the market. That said I would not always call them PLM systems. As you point out these new solutions will address point problems, but do so in an open web 2.0 way.

  2. Chris, agree, second movers probably will not re-use PLM tag, and web 1-2-3 :)… probably will work better. Time will show!… Oleg

  3. Tom says:

    Hi Oleg,

    I also think you are correct. What you are describing is happening. There are many smaller PLM vendors that have similar capabilities to the “1st movers”. Aras Corp’s PLM software is based on a modern SOA architecture and was developed by a much smaller organization at a dramatically lower cost. It has the BOM capability you described now. One other interesting twist is the Open Source aspect. This has the potential to put extreme cost pressure on the “1st movers”.

    Disclaimer: I’m working for Aras Corp.

  4. Tom, Thanks for your comments. What is foundation of open Bill Of Material and ability to acquire BOM from any sources?

  5. Tom says:

    The BOM is a “live” XML structure held on the server, with a web services API that lets authenticated users modify the structure in
    real-time. Changes can be done via a UI, or programmatically thru the web services, so that, for example multiple CAD sessions can be transacting BOM changes on the shared BOM XML structure automatically.
    The system keeps snapshots of the BOM after every edit transaction (Aras calls these generations) to allow rollback. Each BOM item is coded with the source of the transaction, and time/date stamps to allow traceability and auditing. It’s common to have Mechanical CAD, Electronic Design Tools and multiple manual BOM editing sessions to happen concurrently, and the single BOM XML structure is a mash-up of
    all the BOM sources… evolving over time until the collaboration results in a BOM ready for more formal release and change control.

    Innovator can read and write to federated databases via it’s SOA. There is a tutorial on federating here:

    http://www.aras.com/university/TechNotes.aspx.

    Fully documented access to the data structure and methods is part of the open source release.

    Again one of the cool things is you can just download it and see for yourself. Getting a basic install up and running is very easy.

    Tom

  6. Tom,
    What you explained sounds like normal BOM behavior. I can find it in ENOVIA, Arena, TeamCenter and other systems. What is special? May be I’m missing some of your points?
    Regards
    Oleg

  7. Tom says:

    Hi Oleg,

    I may have misunderstood your orginal comment on BOM’s. I thought your were specifying what was needed. I think Aras does most/if not all of what you identified and certainly has much less invested in development. What it can do may or may not be significantly better than the first movers, but, its SOA allows easy implementation of new concepts.

    Time will tell how much market share Aras is able to capture.

    What are your thoughts on open source within the PLM space. Do think it can get traction? Does it provide lower the barrier to entry for innovation?

    Best Regards
    Tom

  8. Hi Tom,
    What I see as second movers (and this is, of course, not only applied to PLM :)) are re-development of well-known application domains in the way that will significantly improve usability, performance, user adoption etc. This is sort of innovation around very well-known requirements. Why I choose Bill of Material, since this is very typical for PLM/PDM application space. You said, Aras can do most/if not all. I’m sure we can find another 10-15 good systems doing Bill of Materials. But in the end people are using Excel, which means we still have place to innovate around known requirements. Does it make sense?
    Regards
    Oleg

  9. Tom says:

    Yes, it makes sense. I’m would not be surprised if Excel is the largest PLM app in the marketplace. I’m not sure if this is a technology problem or an education problem.

    Best Regards

    Tom

  10. Tom,
    You are right. Excel have massive deployment. It’s not about education and technology. I think this is issue of user acceptance, easy to use and confidence of the fact you can manage it. – Regards, Oleg

  11. [...] this post, I want to expand on a topic in my previous blog post about second movers innovation. Some of you commented that this is an exact Apple business model. So, I started to analyze PLM [...]

  12. Will says:

    Hi Oleg,
    Thought you might be interested in Ed Miller’s forthcoming webinar looking at PLM use in a downturn. It takes place on Wed 3rd June – http://www.marketkey.co.uk/plm_webinar_1.php
    Thanks
    Will

  13. Will, Thanks a lot! I’m aware about this seminar and we are working closely with Ed. Regards,Oleg

  14. [...] PLM in economic downturn – Is there a place for second-mover innovation? [...]

  15. [...] pains of file management, will PDM be popular again? Time ago, I had chance to discuss second mover innovation. For me, second movers are perfect example to learn from experience, talk to customers and [...]

  16. [...] me to think again about second-mover innovation. I had chance to discuss second-movers before in my post “PLM in an economic downturn – Is there a place for second mover innovation?”. [...]

  17. [...] 18.PLM in economic downturn – Is there a place for second-mover … Jan 22, 2009 … First-mover firms often face high research and development costs and …. second movers are perfect example to learn from experience, talk to … http://plmtwine.com/2009/01/22/plm-in-downturn-is-there-a-place-for-second-mover-innovation/ [...]

  18. [...] 8.PLM in economic downturn – Is there a place for second-mover … Jan 22, 2009 … First-mover firms often face high research and development costs and the marketing costs necessary to educate the public … Atari), Oprah (vs. … http://plmtwine.com/2009/01/22/plm-in-downturn-is-there-a-place-for-second-mover-innovation/ [...]

  19. [...] 18.PLM in economic downturn – Is there a place for second-mover … Jan 22, 2009 … A second-mover firm can learn from the experiences of the first mover firm and may not face … Second-movers are able to capitalize on the work done by others and create …. GMail and CAD PLM Cloud – Does it Fit Together? … http://plmtwine.com/2009/01/22/plm-in-downturn-is-there-a-place-for-second-mover-innovation/ [...]

  20. [...] 10.PLM in economic downturn – Is there a place for second-mover … Jan 22, 2009 … First-mover firms often face high research and development costs and …. second movers are perfect example to learn from experience, talk to … http://plmtwine.com/2009/01/22/plm-in-downturn-is-there-a-place-for-second-mover-innovation/ [...]

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