PLM vs. ERP – Don’t Manage Innovation!

I was reading Tech Clarity insight “Evolving Role of ERP and PLM“. The topic of PLM and ERP is not new. However, I was always looking for detailed analyzes of PLM and ERP functions and roles in the organization, especially taking into account latest technological and social trends. You can find the report on this link. It provides 15 pages of analyzes, and, I think, this is the biggest publication from last time I had chance to see about PLM and ERP together.

Below my notes, emphasizing points of agreements and disagreements with Jim’s report:

Distinct roles of ERP and PLM
The roles of PLM and ERP are blurred in the organization. For the last years ERP companies successfully acquired and developed their PLM portfolio. So, their presentation of PLM as “Yet another app in ERP portfolio” was quite successful. PLM fights ERP heavily on their ability of manage product and engineering data. Unfortunately, instead of becomes an ultimate product and engineering data shop, PLM is running upstream by trying to establish themselves as “Innovation Management”… This is something that made me feel bad. Don’t try to manage innovation! You just cannot…

Design and product data management
The need for design and product data management one is clear for me.This is undervalued zone. What exist today as a mainstream PDM is only top of the big iceberg. I think PLM needs to get back to the roots and fix PDM topic. Otherwise future crash is the only question of time. PLM needs to define themselves as “product data unbreakable”. Not what happens today, in my view.

Cross functional processes.
There are no PLM or ERP processes. There are “organizational processes”. Therefore, the process’s problem cannot be resolved in PLM or ERP separately. The step toward BPMN can be good for PLM. It will set up openness to the right level and will establish a spot for process improvement in the organization.

PLM and ERP integrations
This is a hugely disappointing topic. The PLM/ERP integration reminds me ball in the air when both players are trying to keep him flying and not landing.  Demand for data integration is huge. I’d expect here some technological thinking and not process-organization. Until now, this is in complete ownership of services and smaller partners developing specific integration application.

Where does PLM stop and ERP begins?
Don’t even try to put this border. To establish this border is the same like to establish gatekeeper on the firewall between engineering and manufacturing. In my view, this is a huge mistake. We need to work toward removal of this wall by using appropriated technologies, methodology, collaboration and social application.

What is my conclusion after all? I can identify two PLM trends. (1) Cross organizational processes. By ability to connect and interplay different organizational process, PLM can be in unique role in the organization representing a product-oriented activities. (2) Future design excellence, 3D tools, consumer-oriented experience.

PLM and ERP need to stop fighting in the organization. As a first step, PLM needs to take the next level in the organization and embrace a cross-functional processes and organizational needs that cannot be served by any of existing systems.

Just my thoughts.
Best, Oleg

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49 Responses to PLM vs. ERP – Don’t Manage Innovation!

  1. Craig Rode says:

    Oleg,
    I disagree with your assertion that innovation cannot be managed. It may be because we disagree on the meaning of the term “innovation”. Certainly, one cannot create a formula to make the light bulb go on. Creative moments occur naturally, spontaneously, and unpredictably. However, it’s what happens to the notion that pops into being at those moments that determines whether innovation is achieved. If you ever had an idea and discussed it with someone else, and that discussion led to an improved idea, you were managing your innovation. Innovation management is a process by which ideas are captured, vetted, exposed to larger audiences to be discussed, improved, killed or promoted, and stored for future reference. Note, it is not a process by which ideas are created…that’s still individual creativity. However, just as PLM software automates the activity of managing product information, innovation management automates the already existing activity of kicking around ideas to see if they’re good and can be improved.

  2. I, too, disagree with the assertion that innovation cannot be managed. Innovation is not mystical, even though it is certainly easier for some folks to think innovatively than others.

    However, I believe the Thinking Process can effectively be applied to innovation. However, in a for-profit organization the questions driving innovation thinking should be somewhat different more focused than is generally assumed.

    The questions to be asked and the responses formulated into Thinking Processes logic trees should be along these lines:

    1. What innovative breakthroughs would be most likely to increasing Throughput (i.e., revenues less truly variable costs)?

    2. What is keeping us from achieving those breakthroughs? (Might be technology, shortage of R&D funds, or countless other things. But until you address those constraints to achieving the Throughput-increasing innovations logically and in a systematic approach, you’ll just be playing a lot games with numbers and words. You are not likely to uncover a breakthrough in breaking the constraints except by chance.)

    3. What should the change (the change that delivers breakthroughs or innovation) look like to our organization? to our channel? to our customers? to the end users?

    4. How do we begin the process of effecting the required change for breakthrough innovation?

    If you believe that any part of business is totally “mystical,” you will never develop a “process.” Mystical mojo cannot be managed; only processes can be managed and innovation can be, I believe, guided by a process — the Thinking Processes, specifically.

    Read more at http://www.geewhiz2roi.com. Thanks.

  3. Craig, The idea to create “innovation management” as a process to capture ideas, review, discussing, etc. is an interesting one, and I had chance to see such software presented. In my view PLM is about to manage design and product information. In the context of PLM vs. ERP comparison (and this is what Jim’s paper was about), my point was not to go with PLM systems as a system to manage innovation. I prefer “enabling innovation”, which contains making multiple information available, capturing ideas, capturing opinion and feedback of users. Only when you will have all data available, you can claim “innovation management”. However, “idea management” process/software can be in place too. For me, the best one is EverNote or Gmail- need to be available in every place and every minute, since the idea you just had – gone in the next minute :)… Best, Oleg

  4. Richard, Thank you for your thoughts!. “Innovation” and how to make the organization “innovative” are questions that I started to hear more and more in various contexts. And, I definitely see a very positive movement towards various ways to transform “innovation” into the “process” or how you called it “thinking process”. There are some very interesting examples of applications, the proposal for processes and videos (I had chance to see some of them from Microsoft, and they are making a lot of sense). You can take a look on my previous comment to Craig from Microsoft and maybe even take a look on this link about Innovation Process Management – http://www.microsoft.com/project/en/us/process-management.aspx. However, in the context of Jim’s research, I hesitated to agree on association of PLM primary position and the role of manage innovation. Innovation is a much broader term, in comparison to the product development and manufacturing. PLM definitely can enable innovation, but not monopolize an “innovation role” in the organization. Thanks for the link – will take a look on this. Best, Oleg

  5. Oleg,

    You are right when you say that it does not matter where PLM starts and ERP begins. What really matters is that the solution you’re using (be it ERP with PLM functionality, a suite or PLM and ERP integrated) brings benefits to all the people using it.

    Unfortunately, in manufacturing there is a disconnection between the design team, the production department and the rest of the company (sales, purchasing, etc). A good PLM/ERP product should make them all work together and collaborate.

  6. Gabriel, Agree with you. The “border” between PLM and ERP domains is something that prevents companies from doing business in development and manufacturing. If you can connect it better than today can be successful in my view. Best, Oleg

  7. [...] Roles of ERP and PLM in the manufacturing industry. First, thanks to Oleg for his feedback an continuing the ERP-PLM conversation on PLM Think Tank. Oleg made some very good points and provided some good research on the research. But in the spirit [...]

  8. Jim Brown says:

    Oleg,
    I posted a reply on ClarityonPLM to your post. My post is in the spirit of healthy debate. In good fun, I used a Myth Busters theme.

    For all that choose to read it, please recognize that I respect Oleg’s opinions – even when we disagree.

    Best,
    Jim

    Mythbusting ERP-PLM Integration

    http://tech-clarity.com/clarityonplm/2010/mythbusting-erp-plm-integration/

  9. [...] PLM vs. ERP – Don’t Manage Innovation! [...]

  10. Bruno says:

    Hello guys, I’m new on this blog.

    I am working for a while around PLM things (well… for about 15 years). My background is from CAD-CAM world (mainly Dassault Systemes). We tried in the pass to develop answers to some specific PLM needs such as MPM technologies than pin point specific problems. As far I can tell now is this focus on specific needs is due to a non-understanding of ERP world. I guess for ERP guys, the same thing happen. They do not understand the perspective of PLM people. Reason why the two “way of thinking are not melt in one single approach.

    PLM and ERP must be one.

    One of the biggest weakness of ERPs, is the lack of support for innovation: design process, iterations, life cycles, etc. They are managing frozen and ready for production data. On the other hand, PLM softwares are not covering all the perspective what make a product. That include all steps between marketing and customers.

    We realize 4 years ago when trying to adapt our know-how to SMEs (again, my background is from Dassault where we were working with majors…). We realize that to answer SME needs and be consider as a valuable solution, we need to offer PLM software that includes ERP functionnalities….

    Notice that I am saying PLM including ERP modules.

    In my perspective, we must develop PLM software data backbone (in our case, we have a process centric approach) that includes ERP data models such as order, price requests, quoting, customer, suppliers, sheduling ….

    By this way, we can easily integrate high value PLM software required during each step of the product life cycle

    Up to now, Our felling was good. We are well accepted by SMEs and our PLM software is replacing already installed ERPs at customer site. Yes, PLM can be an alternative to ERPs.

  11. Bruno, Thank you for your insight! I agree with you – ERP and PLM are living in separate worlds. However, the connection is a product, they are both responsible for… If I understand you correctly, for SME, there is no chance to implement both ERP and PLM. So, your decision is to provide one package. From my side, the advantages of such a solution will be probably the best integration PLM+ERP. On the other side, the disadvantage is following singularity in implementation. I wonder how possible to create applications or solutions that bounded together, rather un-separated big apps. Does it make sense to you? Best, Oleg

  12. Oleg:

    I have my own ideas, but I’d like to hear yours: Describe for me (us, the readers) your view of how return-on-investment is achieved with the implementation of a PLM solution. Be as specific as possible as to the following:

    1. What needed to change that the PLM solution augmented?

    2. How did the PLM solution contribute to a) increasing Throughput? b) driving down inventories or the need for new investment? and/or c) reduce operating expenses or hold-the-line on operating expenses while supporting significant growth in Throughput?

    Thanks.

  13. Richard,
    1. In my view, the keys for effective PLM implementation are flexibility and data management. These are two major elements that pretty much essential for any PLM. Since PLM by nature is very integrated with the rest of the applications and systems in the organization, their ability to integrate is probably the next fundamental thing.
    2. I think, the major PLM influence in the organization is on how the product-lifecycle processes can be managed. It starts from product data (i.e. Design Re-use and optimization) and continues with process optimization (i.e. ECO processes). If data management and integration done well, you can get a significant ROI by ability to manage cross enterprise processes. However, I have never seen such processes deployed out-of-the-box…
    I’d be interested to hear your thoughts…
    Best, Oleg

  14. Oleg:

    The point I am driving at is that PLM (like every other “improvement”) should have only ONE GOAL in a for-profit organization. That goal is to help the organization MAKE MORE MONEY tomorrow than it is making today.

    MAKING MORE MONEY should be prioritized in the following order:

    First: Increase Throughput (either by increasing revenues or reducing truly variable costs)

    Second: Reduce Inventories (or drive down the demand for new investment)

    Third: Reduce Operating Expenses or hold the line on operating expenses while support significant increases in Throughput

    I can think of several ways PLM may be able to aid in accomplishing any one of these three changes in operational metrics. However, I’d like to hear your experience, beginning with the FIRST PRIORITY – Increasing Throughput.

    Thanks.

  15. [...] I think I owe Innovation Topic to my readers. A couple of weeks ago, I stated “PLM vs. ERP: Don’t manage innovation“. I took time to think more and read your comments. Thank you all for this great discussion. [...]

  16. Richard, I agree with your priority. Think about design re-use. With only that impact PLM can easily to increase throughput in the organization. How many time organizations created something new instead of re-use something existing already? I can continue with examples, but this one is the best, in my view. Thanks for your comments and discussion! Best, Oleg

  17. MSP says:

    PLM in todays market have well established in terms of global collabarative innovation and single plm platform. All PLM vendors have moved over to SOA based architecture for easy integrations with ERP.PLM products have the capability to develop out of box solutions to meet organisation processes.Business case mapping in intergation using 3rd party tools facilitate tight integration but lack in robustness. Next generation PLM is to provide robust bi-directional integrations with ERP.

  18. Dear MSP, Thank you for your comment! I agree, robust bi-directional integration with ERP can be a very important feature. However, problems with PLM integrations (as you called it “lack of robustness”) are results of PLM development towards a so – called “single PLM platform”. It brings lack of openness and complexity in integration. In many cases, PLM tends to develop a protective approach with regards to the data. In addition, out-of-the-box processes combined with SOA approach resulted in constantly broken interfaces with behavior changes between versions. Development cross-organizational business processes is much more important than just bi-directional data exchange between PLM and ERP. Just my thoughts… Best, Oleg

  19. Bruno says:

    You’re right Oleg,

    MSP didn’t mention any example… In my business (MPM), I never encounter any easy integration with ERPs. Our software is very well designed and implemented (I am pretty sure of that), we are able to fulfill easy integration with PDMs (from TeamCenters (the best?) to PDMWorks (the smallest). PLM required (of course) very good integration interfaces but the diversity of software is so high that no single technology (or approach like SOA) works… Customers (SMEs or big OEM) are not always using the softwares as they were designed (true for PLMs and for ERPs)… As an integrator and software vendor, you must accept this fact and adapt your integration to the “real life”.

    Integration is everything except magic.

  20. Awadhesh Parihar says:

    Well, Friends, since I worked on both sides of the world (PLM, ERP) had a chance to get up, close and personal with this debate. Bear with my views, if it helps the discussion

    PLM fundamentally owes its origin in attempts to manage product design data, and ERP owes its existence to MIS (MRPI/MRPII..)or even before that in automating the accounting ledgers to keep track of spend/earnings at whatever level of granularity one could muster.

    This was when, you sell everything you produce (golden days of mass production) and hence your CSF (critical success factors) could be in ‘throughput’, ‘waste reduction’, ‘economic order quantity’ and so on. Think of it, NPDI (New product development and Introduction) failure rate in american manufacturing economy was reported to be 75% and 3 trillion dollar locked in direct material costs, as reported in one of the articles in AMR few years ago.

    So, what has changed? You dont sell all that you manufacture! you manufacture what you can sell! And that is ‘Product’. So focus suddenly has come back to ‘Product’ away from ‘supply/demand’ rhetoric.

    Someone, introduced the concept of demand driven supply networks (DDSN), and product, demand and supply they all meshed in a futurstic venn diagram! With us being clueless as to what Product got to do with supply (and there lies the catch!!)

    Coming, back to the topic of PLM/ERP integration – business necessity is created due to the way these applications evolved, not much keeping pace with the changing business environment and both have worn out their welcome many times over..

    Technology, in the meantime evolved pretty much rapidly with my nice little socket program and shared memory areas transforming themselves into web services and so on. Telling us that SOA is the panacea, it will help you leverage all your IT investments in sofar, with any manner of services you like. Wish I knew, what services I had and what I need to connect to give the semblance of business processes being orchestrated!

    If only, one could conclude this topic – but let me make attempt by saying the below
    a) state-of-the-art in PLM or ERP is not what we are discussing right now, we need to discuss the business processes and metrics
    b) A design engineer or manufacturing engineer, both are equally important to the business, hence they both need to have good systems to perform their jobs and shouldn’t be asked to antagonize each other, as the applications wants them to.
    c) As for PLM, please lets concentrate on Product and the associated metrics (well its not through put, its ‘time-to-market’, and its ‘time to volume’ and demand indicators are ‘product performance’ etc.). As for ERP, lets get the supply/demand equations working in tandem with the global businesses we are today. Single instance or multi-instance, my SAP needs to work for me
    d) As for technology vendors, dont watch it from outside, your innovations are pretty much required to make this a better world and the best way to do it, to commit on business outcomes. SOA means nothing to me, unless it does something for my business.

    Apologies, for a lengthy discourse, but I guess I forewarned :-)

  21. Bruno, I agree with you- there is no magic in integration. The biggest problem is a high level of diversity, and it makes integration between PLM and ERP very complicated. In all cases where I had chance to see successful PLM-ERP integration, it was a result of dedicated work of people together with very customized integration techniques. Best, Oleg

  22. Awadhesh, Thanks for your insight! My short conclusion is that the question of innovation is not that one you want to ask. In your view, the ugly truth is that PLM is about Product and ERP is about supply/orders. In order to manufacture you need both (regardless on what is more important). Since integration between them is a nightmare, the result is unpredictable. Did I get it right? Best, Oleg

  23. Bruno says:

    Hum…

    To answer Awardhesh:

    Making a distinction between ERPs (Supplies, orders, …) and PLMs (innovation, engineering, product def, …) might by OK for OEMs. They have big ERPs and a huge number of people to manage PLM strategy. I’m not so sure that making this distinction is right for PLM vendors if they want to sale to SMEs… We must remember that the number of SMEs is much bigger that the number of OEMs.

  24. Awadhesh Parihar says:

    Bruno
    Everyone needs to innovate, be it SMB, OME or startups. I guess its more for SMBs to find and further their niche.

    I need to have a product and a good one, to generate markets for it, manufacture and sell. So, whether we make distinction in terms of applications (PLM, ERP) or not, innovation we need to foster.

    Choice of applications where innovation, design and development of product needs to happen is secondary. Now, PLM applications have supported design activities, conventionally not necessarily the full cycle of innovation.
    So, we need to keep the conceptual distinction in mind (of iterative nature of design and transactional nature of ‘production’) and implement them in whichever application that get the job done.

    What are you specific choices of applications for SMBs, in your experience?

  25. Awadhesh Parihar says:

    Oleg

    Innovation, design and development of product is iterative in nature and needs a different category of applications than those attuned to transactional needs (sell, buy, report). That distinction is important, when we have to talk about ‘fostering’ innovation

    Applications, technology considerations need to address this need. If they do not, we need to supplement information thats lacking in one system by integrating it to the other.
    So, if ERP can support product innovation, we wont need integrations. But can it? I am yet to find out how to make singular design BOM in SAP, while I can make multiple Planning BOM easily in SAP. There are z-customization of course (and this is adding complexity and beaurocracy like you said in the other blog) to get the same functionality, but question is ‘was it designed for the said function’?

    Sorry, can’t make it easier as the topic is complex..

  26. Awadhesh, I’m not against innovation. However, I assume innovation in all fields – product development, manufacturing execution, shop floor and supply chain. Therefore, it sounds odd to say – PLM is about innovation and ERP is about execution. I feel more solid to say – PLM is about Product and ERP is about Business Execution. It sounds better. Do you think ERP designed to support Product Development? I assume people can argue and there is no full board agreement about that? Does business execution require innovation? I’m sure it is… What I agree completely is that topic is complex :).. Great discussion! Best, Oleg

  27. Bruno says:

    In my point of view, PLM is simply more than a software type but a “philosophy”. An ERP can become a PLM if it is developed to manage innovation. An sale order for example, has life cycle, it has history and it can be logged on it. Eventually, you can build what if scenario…. It result result in the ability to enhance business process by reusing good practices. Current ERPs are not PLM because they are limited to execute a frozen production plan.

    Oleg, you give the example of execution (MES). Well, of course it must be part of PLM. MES retrieves high value information to compare the “planned data” with the “real data”. With an integrated MES you can pin point problems and ameliorate your process. Again, this (from my point of view) is inside the PLM sandbox.

  28. Awadhesh Parihar says:

    Oleg,
    I guess, I need to explain the context in which I used the word ‘innovation’. Please read it as ‘Product Innovation’. Executional innovation, in the likes of Kaizen, Six Sigma Initiatives etc. are beyond the realms of this discussion

    My distinction was PLM stands for ‘Product Innovation’ and ERP for ‘transacting all business processes downstream’. Innovation, if we go by semantics, is definitely a universal term

    A great product sells (product innovation), Defect free product available in the stores at the time when customer wants is, is the result of executional innovation.

  29. Awadhesh Parihar says:

    Hi Bruno
    Yes indeed, PLM is a concept. But a sales order lifecycle management, just because it has a lifeycle (and so does any business entity), isn’t PLM. Correct me, if my understanding of what you said is not right!

    And ERPs dont just execute frozen production plan, but they do make and remake the production plans. How do you say about the whole cycle of aggregate, master and material requirement planning process (MRP II) executed in ERP. I wouldn’t trivialize the importance of ERP and existence of a superlative science behind ERP packages.
    In fact whole aspect of demand forecasting and capacity planning executed in ERP packages, is something, which has been the driver behind the rise of mega enterprises. PLM just came to the fore when mass production ceased to be the production philosophy of choice, having reigned for several decades
    And to that, say thanks to the power of discerning buyers who started making a distinction between ‘good’ and ‘not so good’ products.

    Now, as I see, MRPII needs to add ‘product characteristics’ to its demand forecasting engines (than just volume, territory and time) and tell PLM to come up with what customer wants.

    I would think that terms such as BTO, ETO, Mass Production, Mass customization, Configured to order etc. need to go away, and a new term needs to emerge, which just says, my customer wants this, please provision (any names for this?)
    I would recommend a stupendous treatment to such topics in the book written by C.K Prahlad (and M.S.Krishnan), “The New Age of Innovation: Driving Cocreated Value Through Global Networks”.

  30. [...] haven’t had chance to be part of this discussion you can check out the following post – PLM vs. ERP: Don’t Manage Innovation. During the last couple of days, I had chance to have an additional discussion on the [...]

  31. Bruno, Thanks for your comment. It is interesting how you define PLM as a philosophy. I’d not be going so far… Actually, my answer on this in the following post – PLM and The Collapse of Complex Societies (http://plmtwine.com/2010/04/12/plm-and-the-collapse-of-complex-societies/). My thoughts are that we need to simplify PLM and get to the mainstream level. What is going now is just taking it to the next level of the complexity and disconnect it from potential users. Also, I think PLM need to stop fighting for TLA (three letter acronyms), but saying it belongs to PLM too :)… This is what may happen as a result of this – http://plmtwine.com/2010/03/05/the-ugly-truth-about-plm-erp-monkey-volleyball/. Just my thoughts… Best, Oleg

  32. Awadhesh, Thanks for bringing the clarification “product innovation”. I think this is a right one when you really want to speak about innovation in the context of PLM. Actually, I tried to expand it in my PLM Innovation Metrics post earlier today – http://plmtwine.com/2010/04/14/what-are-the-metrics-for-plm-innovation/. Best, Oleg

  33. MSP says:

    Most of the PLM vendors originated from the CAD->PDM background, consider Windchill, Matrix or Teamcenter. Auto and Aero industries which started with PLM to Design , maunfacuture and market their product. They have strong CAx model which most of Engineering and Manufacturing companies leveraged there data transfer across the systems with PDM and innovated with PLM for collabaration. Other PLM vendors approach was to provide only project/ portfolio management few being Agile. Now PLM has totaly redefined its importance as Program management product which is basically a non- PLM functionality.

  34. Bruno says:

    I agree with all of you(MSP and Oleg).

    My point is simple: PLM has its origin from PDM-CAD people. I think the culture of these people is very important and very valuable. Applying that culture to rewrite the way we think production bring new way of doing things. We are currently working in that direction.

    Oleg, I agree that the “war” of “trigram” (TLA) must end and we must simply say that we’re doing PLM (in all its aspects). Unfortunately for us, PLM is not an acronym well known….

  35. MSP, Thanks for your comment! You are right, originally vendors came from CAD/Design space. However, I see them doing changes and adding modules. Program Management is one of them, and it sounds very important one. They also leverage the best connection with CAD data they own. Best, Oleg

  36. Bruno, Thanks! I am especially happy we are in agreement of TLA-peace-talks :).. This is something that make a huge influence on customers. They so confused with TLA-oriented presentation. Life can be much easier without it. However, we need to pay “old marketing taxes”… Best, Oleg

  37. [...] Focus: The Integrated ERP-PLM Strategy, helps further the conversation. I should also point to a good discussion on Oleg’s PLM Twine generated by my last research on ERP and PLM, there are some good comments made [...]

  38. Jim Brown says:

    Oleg (and others interested in this topic),
    I had the opportunity to do some more research in this space, and just published a paper on “The Integrated ERP-PLM Strategy.”

    See my post related to this here: http://tech-clarity.com/clarityonplm/2010/closing-loop-product-innovation-erp-plm/

    The post also includes a link to the paper if you are interested. I look forward to your feedback.

  39. Bruno says:

    Hello Jim,

    I read your white paper and I agree with it.
    We agree that PLM and ERP brings good added values.

    My point that I want to add is for SMBs. Integration becomes a very tough problem for small businesses. It is pretty hard to get the most from PLM values if incorrectly integrated to the selected ERPs – “Innovation is Queen but Integration is the king” (a quote from you).

    I think one way that must be looked by soft. vendors is a PLM software with all ERP-MRP standard functions…. (not an integration but a real merge of the two concepts).
    ;-)

  40. Jim Brown says:

    Bruno,
    I was surprised to see my old quote from you, although I think I said integration was the Queen. And I got in some trouble for that being a sexist remark anyway, so I don’t use that one very much any more. ;-)

    Do you think the most likely source for a combined PLM-ERP (Innovation-Execution) solution is by extending PLM? Or extending ERP? It seems to me that the footprint of both is so big today that it would be hard to handle it via extensions. It seems more likely that either best-of-breed integration (pre-integrated by the vendors or a third party) is a more likely scenario. I have known some companies that try to do both, but are really more focused on Configuration Management than new product development, engineering, etc. Of course there are ERP vendors building / buying their way into PLM, such as SAP and Oracle (see http://tech-clarity.com/clarityonplm/2010/who-will-disrupt-entrenched-plm-vendors/). But those are probably not going to be the first choice for smaller manufacturers given cost/complexity.
    I don’t see anything happening quickly other than a best-of-breed approach, and the development of integration from vendors. Are you aware of anything that is a combined solution today?
    Thanks,
    Jim

  41. Jim, thanks for your comment and link! In my view, the topic remains hot, because the integrated PLM and ERP today are still a more myth than reality. Practical implementations are relying on a significant amount of work that needs to be done in the company on the level of data and process management. Best, Oleg

  42. Bruno, What you are saying, practically means – you cannot really integrate ERP with PLM with low cost (which is what SMBs are looking for). So, a single system is what need to be done for such cases. In my view, this is what SAP actually had in mind. They got wrong with implementation, in my view. Salesforce.com experience can be a good one when you think about the future of integrated PLM+ERP software for SMB. Another interesting vendor to watch in this “integrated space” is Workday with their integration on demand strategy. I agree with you- Integration is the king. You cannot innovate without that. Best, Oleg

  43. Jim, I think, the main point is the cost of PLM-ERP integration. With what is available on the market today, people will try to get one PLM+ERP in a single box. Does it make sense? I heard many times from customers: “PLM-ERP integration is so expensive, we’ll not build one this year….” Best, Oleg

  44. Jim Brown says:

    Oleg,
    Yes, the cost is the issue. Companies that have integrated other applications recognize that it can be costly to integrate, and also costly to maintain the custom integration through releases of each of the integrated applications.

    But I have seen a shift in the priority of ERP-PLM integration, which I believe has three primary drivers:
    – The use of ERP and PLM individually has matured, and manufacturers are more comfortable with each of these applications
    – The pace of change has increased, making manual integration approaches like “sneaker-net” or “swivel-chair” integration more limiting
    – Integration is getting easier from a technical perspective. It is still not trivial due to the need to align semantics and workflows (and yes, data ownership and flow), but the old days where we couldn’t even get the data extracted or couldn’t move it from one box to the other are largely behind us

    So it is a cost-benefit analysis where the cost has dropped and the benefit has gone up. While that might not change the priority for everybody, it certainly has brought integration priority further up the list.

    Jim

  45. Jim, I agree with you. There is a shift towards understanding importance of PLM-ERP integration. It mostly comes from the standpoint of business values. And it comes to big companies first. In my view, cost is so high today, that few SMBs (including OEMs and Tier1) will be able to afford it. Thanks for commenting! Best, Oleg

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