The “New Normal” Wake Up Call for Enterprise PLM

I came across the interesting blog article in CIO online “Why the New Normal Could Kill IT?” by Thomas Weilgum earlier this month. The article filled some of my niches related to thinking about future disruption of PLM I had with Jim Brown. If you had no chance to read my previous posts related to my and Jim’s discussion you can take a look on the following links - Will Google App Disrupt PLM? and  Is PLM Customization a Data Management Titanic?

I made some write up when reading CIO article.

Look at ERP systems, for instance. These are the financial, administrative and procurement backbone of every organization. ERP spend gobbles up huge chunks of the corporate allocation pie. So how are ERP software suites viewed today? With about as much love as Toyota execs have for “unintended acceleration.” In a recent survey, 214 business executives stated the inability to easily modify their ERP system deployments is disrupting their businesses by delaying product launches, slowing decision making, and delaying acquisitions and other activities that ultimately cost some up to $500 million in lost opportunities.

Complexity Hinders Software Success. “Two-thirds of survey respondents say the enterprise IT environment is more complex than it was five years ago,” notes the survey report. “The proliferation of technology combined with intricate organizational dynamics has raised the level of business IT complexity to the point of holding back software success.”

Just before he left Sun Microsystems (JAVA), Tim Bray, the former director of Web technologies, had this to say (in a blog post) about the current state of enterprise systems: “Doing it wrong. Enterprise systems, I mean. And not just a little bit, either. Orders of magnitude wrong. Billions and billions of dollars worth of wrong. Hang-our-heads-in-shame wrong. It’s time to stop the madness.”

With regards to the last one made by Tim Bray, remember Tim’s move from Oracle to Google and his intro notes here.

It made me think about some of PLM problems, their position inside of the overall enterprise apps forest and potential future steps. There are two fundamental problems in enterprise software that fits very well Thomas’ analyzes – absence of flexibility and huge cost of change. Actually, I see them very complementary. The overall enterprise PLM strategies moved into the direction to expand PLM in the additional domains for PLM by focusing on multiple business processes. However, enterprise PLM stacks in my view with implementation of the technological platform they made. Moving between multiple legacy apps, changing data models, adapting new features and apps to the latest releases of the software – this is my short list of the most common PLM problems in the enterprise.

So, what is next? What is the chance that the enterprise PLM apps will be covered by volcanic lava of existing enterprise problems. What will be enterprise PLM silver bullet on the way to become “new normal” and not “old legacy?”.  My take on this in the following three areas:

1. Invest into flexibility of PLM platforms.
This is probably sounding crazy for enterprise PLM techies. PLM vendors invested  a lot in the platform work during the last 3-5 years. However, I think, life around moves much faster than re-engineering of enterprise PLM platforms. New enterprise and cloud platform players are coming with very disruptive proposals about how to provide a new type of the apps for enterprise organization. And, the top on the list is cost of change in the existing enterprise PLM/PDM data backbones.

2. Focus on Games and 3D.
Think about cool. 3D and Games are cool, and we are experiencing it in our everyday life in consumer space. Why it should be different in product development, design and manufacturing?. So, move to the new apps and technologies in this domain.

3. Validate new business models.
The current enterprise licensing models need to change. Companies are dissatisfied with high upfront license cost and value, they are getting from enterprise apps. Investment into subscription and other busienss models (like freemium) can be an interesting turn for enterprise PLM.

Just my thoughts…
Best, Oleg

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10 Responses to The “New Normal” Wake Up Call for Enterprise PLM

  1. Mike Barber says:

    What is Enterprise PLM if not flexibility and reduction of the cost of change but that’s a product oriented statement not the underlying infrastructure that you reference as the “absence of flexibility and huge cost of change” for Enterprise ERP. Even now major ERP companies are touting SOA and flexible integration but most vendor integration frameworks are designed to provide integration points with legacy applications when communicating with the their own solution not as an enterprise wide integration across all disparate applications. The question is, “Where are we in the IT lifecycle of providing the right information to the right consumer at the right time and at the right cost?” I’ve always dealt with the layered thinking of EAI infrastructure adapting disparate data, feeding a business process engine that feeds the presentation to the consumer. This to me is fundamental. The wake up call in my mind is to get back to basics within the confines of a new business delivery model. We need to apply the original premise of PLM’s flexibility and change management to the delivery model.

    I see the freemium model applied everywhere today, not just the web. I have more free apps on my iPhone that have premium offerings. It just creates more questions for the CIO, “Why not ERP and PLM?”, and “When will the vendors wake up to a new licensing model?” and for the vendors to answer, “Who will be the first to embrace it?” I don’t have the answers but I think your blog is asking the right questions.

    Just my thoughts,
    Mike

  2. Oleg,

    This is a great post and I agree with the issues huge cost to change and also with the lack of flexibility. These are both real issues. Huge costs include implementation (especially driving more common business methods), migrations of data as well as implementation of software and retraining of resources. This all comes into play when thinking about taking out a system out and replacing it. I think much of the problem stems from the SW suppliers attempting to do everything in the PLM space and not honing their ability to integrate and be the best in the niche area that made them famous. All companies need to expand market share but in the world of enterprise applications integration is the key to success for the companies that implement. This is the opposite success factor for the companies looking to maximize profit on SW so the model breaks during implementation. Companies need to replace and integrate carefully the core systems necessary to make data easily available with minimum log ins and user confusion of what data belongs in which system. Many of these systems claim to do everything (some things they do poorly) so much overlap exists between systems that confuses users and wastes money. Openness is very elusive in this industry yet mature businesses need openness and flexibility to ensure that the business process and underling data can be managed properly across multiple platforms. I think the writing is on the wall…. there are many disruptive technologies in play that may leave some of the slower platform suppliers behind when it comes to integration and flexibility at the next level. Integration technology will drive a layer that will reduce closed monolithic thinkers to small players over time. Think Kodak and film.

    So I agree with your points #1 and #3 but I am not sure I fully understand where your going with #2. I do think games are cool except when my teenage nephews mop the floor with my old outdated reflexes….. I guess I may be just like a legacy system…… to your point!

    David

  3. Mike, Thank you for your thoughts and comments! I love your take related to EAI. The original intention of EAI was to synchronize data between application silos. However, I think the complexity of mapping creation (or mediated schema) made these integration efforts very costly to create and maintain. With regards to SOA etc. – I think that key in flexibility is combination or cost and ability to make a change. I see it very disproportional for most of PLM systems on the market.
    With regards to business model – I think freemium is the way to go. However, I heard an opinion that combination of free and software value is somewhat hard to understand in the business environment. Companies will try to avoid free. But, in my view, we are going to observe a significant shift towards various new business model taking into account current economical situation. So, it will become a new normal for enterprises.
    Best, Oleg

  4. Dave, Thanks for your comment and insight about a flexibility, cost and enterprise system! Fully agree. With regards to “Games”, I think, new generation of workers is coming with the different type of behaviors and “game” behavior (whatever it means a video game, mobile game, etc.) is something that going to change in the fundamental way an interaction between users and enterprise systems. How do you see that? Are you still in the “legacy” mood? :) Best, Oleg

  5. MarcL says:

    Oleg – Great post, as always. Points made are very real and the economic situation seems to be driving the “stop the madness” idea in executive management at global companies (finally).

    Flexibility is critical to competitiveness – when I hear people say ‘only Out Of The Box’ the concept seems absurd to me… putting in ent software that locks down processes that never change goes against every principle of continuous improvement and winning business strategy I know.

    What we’re betting on at Aras is that companies have to change constantly to compete in today’s marketplace. Making applications that support complex processes and are highly flexible at global scale without impeding upgradability is the fundamental underpinning of our PLM system.

    In fact, we ‘put our money where our mouth is’ by doing all upgrades no matter how much customization as part of our subscription (i.e. no added consulting costs – major & minor releases). Sounds crazy, sounds too good to be true – how can Aras do this?

    It comes down to advanced technology. Web architectures are real, yet very few of the developers at ent PLM sw companies understand how to do it, they just don’t ‘get it’.

    Combine that with the open source business model that gets rid of all the PLM licenses, and we think it’s a powerful combination the Fortune 500.

    I as well am too old to comment on the gaming/cool aspect, so will refrain from commenting on this other than to say that am sure user experience will evolve dramatically over the coming decade.

    Just my 2 cents…

    MarcL

    http://www.aras.com

    P.S. Important difference between Freemium model and open source / no license model. In Freemium the sw is typically ‘crippled’ free version with licenses for full featured version (i.e. an up-sell structure). Whereas, the open source model Aras uses we provide the enterprise production-ready system for download at no charge (no timeout, not crippled) – everyone gets the full functional version and can use forever without ever paying a nickel. We make money selling OPTIONAL subscription packages, consulting and training (i.e. like Red Hat)

  6. Marc, Thanks for your thoughts and comments! In my view, Aras business model has indirectly impact cost of change in PLM systems. Due to open source licenses, companies are able to maintain changes by themselves inside of the organization without the use of special development licenses. However, it still cannot resolve technological aspects related to the cost of change in the enterprise PLM. The flexibility of the systems and tools they provide to manage business processes are lack of capabilities to learn existing processes in the organization and as a result, to provide the starting point for business process implementation. With regards to “freemium”- I don’t see a difference between OPTIONAL packages, and what you call full featured versions. Freemium is not necessarily demo or cut of functionality- it is just “free” and “premium” modules. The definition of these modules in PLM is an interesting challenge. I don’t see vendors are doing it today.
    Best, Oleg

  7. Oleg, Responding to the “legacy mood” frankly I have been playing them since the dawn of time (computer time)….. (Pong, Atari, PC games like Space Quest, Wolfenstein, DOOM, and now HALO1-3) so I have a good understanding of the space. I see the youth of today engaged in everything on-line from communications to entertainment. On-line is a lifeline to younger people today from PCs to iPhones. So the interfaces of the future have to allow interactive information exchange like IM, groups, status tweets and the like. Think Twitter feeds of engineering change notifications or user status indicating what someone is working on with a link to the results when completed. People across the enterprise can choose what to subscribe to. These functions over time will become more mainstream in the engineering IT environments as the older guard gets on board and we have more comfort outside the social aspects by IT and management. I heavily use LinkedIn, MySpace and Facebook to communicate with the younger generation in my family and to run my photography business collaborating with photographers from the US to Europe. I do this to understand the benefits. I actually see long term that teams of people will gather through social network like connections and bid jobs working with companies who post requirements to a groups to “friends” Project Management Leaders. Groups will come together and execute the job requirements and then go to the next job. You will be able to find the right people to form perfect teams through networking. This way will develop over time and companies only pay when they need it and people will work when they want to. Right now I collaborate with other artists on Photography projects using this method, it is not mature yet but I see the seeds in the ground. This is the world in 20 years in my opinion, maybe I will be a retired legacy system by then but I hope my drives are still spinning!

    Take Care,

    David

  8. David ,Thanks for sharing so interesting insight on social+game environments! I can say, we are very much on this same page. Just two comments from my side- 1/you can dig into some previous blog posts on plmtwine to explore social PLM ideas – (i.e. http://plmtwine.com/category/social/; http://plmtwine.com/category/social-media-and-tools/). 2/photography is my hobby for many years, may be one day in the future, I will be able to invest more time in that – http://www.attractiveuniverse.com/photography/oshilovitsky/oshilovitskyIndex.php). Best, Oleg

  9. I will need to take more time to read and study the social media articles further. Time is always a challenge as you mentoned with your photography. If your interested my photography my site is http://www.queptography.com!

  10. David, Thanks for discussion! Take your time. I’ll be glad to discuss on or off line. I’ll take a look on your photo site. Best, Oleg

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