What is the Next Big Deal in PLM services?

implementation-serviceDell’s $3.9bn acquisition of Perot Systems few days ago drove me to think about PLM and Services for some time. Of course, services are not related to cool PLM technologies, functionality and strategies. However, looking on analyst data, services are earning a significant portion of the overall PLM revenues (ref to CIMData).

I want to figure out few interesting observations around PLM services:

1. PLM Service organizations are closing gap between PLM vision and practical PLM implementation for customers. In the end, after all presentations, meetings and planning sessions, PLM services come to customer and “connecting dots” by adding functionality, integrating systems and improving usability of the systems where it is possible.

2. PLM Service organization is huge experimental space for gathering PLM knowledge and expertise, incubation ideas and technologies. In my view, PLM service organization becomes unique place to discover all advantages and disadvantages of PLM technologies and product. In many cases, these organizations is orienting on multiple or combined vendor offerings. You can learn a lot from the standpoint of how to make PLM work for customers.

3. PLM Services is one of the major destructive factors for PLM products and portfolios. This is another side of the coin. PLM services see vendor’s product as a platform to generate services. In many cases, PLM services abandon or re-implement standard functionality available in PLM systems.

4. In many situations, PLM services (or VAR/partner) have much more influence on what customers are doing than PLM vendors. By accumulating knowledge about customers requirements and expectations, PLM service organization can significantly influence ever decision made by customers.

What is my today’s conclusion with regards to PLM Services? Despite “love and hate relationships”, in most of the cases, I see PLM service organization as a very positive entity in PLM business landscape. PLM service organization needs to be involved more and get higher status as PLM eco-system builder and knowledge incubation. At the same time, we need to think how to convert PLM services into new product portfolio facilitator in PLM zone and not as a consumer of PLM platforms.

Best, Oleg.

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4 Responses to What is the Next Big Deal in PLM services?

  1. Sanjeev Badhwar says:

    While I agree with most of the comments posted by Oleg, I do not think the ‘tinkering’ by service provides should be regarded as ‘destructive’. The service providers are called VAR’s – Value Added Resellers. So by their very nomenclature, they are supposed to customize and increase value of the product for the client. The service provider would be doing a big disservice to the customer if he is unable to provide enhancements in functionalities or do customizations as per the customer’s business needs. A non-operational PLM will only bring disrepute to the product vendor. The Service providers are much closer to the customer than the product vendor, and understand the customer’s needs well. The product vendor creates a a one-size-fits-all generic product, which is tailored by the service provider to fit the requirements of the customer. It’s a win-win situation.

    The VAR’s indeed have a large influence on the customer in deciding which PLM they should go for – and this unfortunately at times may have some covert intentions, based on the VAR’s own predilections and competencies.

  2. Sanjeev, Thank you for your comment. I agree with your definition of “Value Added Resellers”. However, to keep the balance you mentioned is not always simple task. So, my characteristics of disruption more related to “reality”, and not to something that supposed to happen. Best, Oleg.

  3. Sanjeev – I like your thinking, but unfortunately, I believe there are two main philosophies out there for service providers and VARs:

    1) maximize revenue from a handful of clients
    2) maximize number of clients, expect reasonable revenue from each

    I believe the first philosophy can lead to the destructive behavior that Oleg described (although there is no black and white in this area, IMO). Those providers that see every client as a limited engagement with a focus on specific results have a healthy attitude. They want to add value on top of the software, not show clients how to circumvent/reinvent the software. But it takes a heavy-dose of truth-telling, and confidence in your abilities to have a lot of relationships like this: you have to be willing to tell clients what they don’t want to hear sometimes, you have to add real value, and you have to focus on results.

    Oleg – I believe that the key values that service providers can add to PLM are education and process improvement. Those are the two biggest gaps between customers and software vendors. Software vendors have great tools, but not everyone understands them (but many service providers do). Many customers have outdated processes and perspectives, but software vendors are software experts, not necessarily business process experts (despite the tendency of software companies to align with industry verticals).
    I’ll offer a personal case-in-point. I have been advocating an item-centric PDM approach to my clients for 5 or so years now. 5% – 10% of my clients are showing an interest and taking some action. I am not reaching enough of them, but the education that I have done with them, and the discussions I have had with them about their processes are the keys. Those discussions have brought them to the table and expanded their PLM vision for their organization. I think this is what service providers can do (beyond providing the technical skills required to deploy today’s complex PLM software) to add big value to PLM.
    Consultants offer another interesting twist in the area of process improvement, too. I think consultants are a bit like honeybees in the cross-pollination process. In the same way that bees share the pollen of one plant with another plant, consultants carry ideas (in this case, PLM best practices) from one client to another and, more importantly, from one industry to another.
    One more case-in-point, related to cross-pollination. Using the concept of audit trails in regulated industries and the concepts of batch printing tools, we recently delivered a solution for a client where hardcopy prints were tracked in an auditable fashion so that shop floor supervisors (for an aircraft manufacturer) could track down (and recall) outdated revisions of drawings floating around on the shop floor. This was a great example of ideas from a medical device manufacturer impacting solutions for an aerospace company.
    Please excuse the long comment, but I thought this was a really interesting prompt, and of course it hits close to home. :)

  4. Jonathan, Thanks a lot for your great insight! I think, you articulated very well two possible customer related strategies in services. However, I think in modern – face-twitting time, role of service providers as education should be switched to virtual world. Best, Oleg

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