How To Disrupt PLM Price with Technologies?

My post “How To Manage ECO Without Paying $1’500 Per Seat” raised a very interesting discussion on Zero-Waite State blog about PLM price. Thanks Stephen Porter for doing that. I recommend you to get inside and have a read. This post made me think about the future of PLM price trajectories and an impact of technologies on the future of PLM price.

The Future Disruption

I hope you had chance to read the book by Chris Anderson – Free: The Future of a Radical Price. I’d call it the modern “Bible of Free”. One of the important points, in my view is the following – “information and technology cost is trending towards zero”. As part of this, my own believe is that we are going to experience an influence of this trend, including an influence of free-price-market in various fields. The potential weak elements in the chain of highly priced software products are those that have a serious customer dissatisfaction or a very high price/value characteristic. What happens with PLM? In my view, this is a definitely weak chain. The complexity, over-promising during a sale process and history of acquired products and companies created a place that needs to be disrupted. I can see potential PLM disruptors PLM disruptors – Open Source (Free Distribution) of Aras, few on-demand products and PTC SharePoint business. The last one is trying to ride SharePoint adoption and Microsoft strength in the enterprise market. Who will be more successful in the future PLM disruption? A very interesting question…

PLM Technology Weakness

Where I see a weakness in PLM technology we have today? The current technological approach was born 15-20 years ago. We are continuing to SQL our future. The development of most of PLM technological platforms are balancing to co-exist between existing customer commitments and future product development. Platform fundamentals are the same regardless on the type of user interface or modern marketing terms. This technology is vulnerable in front of new development that happened during past ten years in Web 2.0. To understand the scope of the last ten years and the potential influence is very important.

What is my conclusion? When Stephen is asking – The Price Is Right?, I’m thinking about sales lessons I learned in the past. The right price is one customer will be ready to pay. Since PLM sales these days are not similar to sales of iPhones and iPads, I think we have a problem. We won’t be able to solve it since the problem is not in the price, in my view. The problem is broader and related to all main components of PLM delivery to customer – price, technological complexity and high price customer need to pay by installing, customizing, modifying software and training people. To make PLM cheaper, to provide a more flexible PLM pricing model, or even give PLM away can definitely provide some pain-relief, but will not give a radical change to the industry.

Just my thoughts.
Best, Oleg

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6 Responses to How To Disrupt PLM Price with Technologies?

  1. Very Nice article Oleg,

    I think you and I are thinking along the same trajectory. The key is to remove the price from the discussion on focus on value. This isn’t easy to do. When people buy Iphones and Computers and TV’s they obviously rarely talk about value. It goes back to the article I wrote on conveying PLM value, http://www.zerowait-state.com/blog/240-plm-perspective-if-the-glove-doesnt-fit-you-must-acquit. It’s emotional not rational and the problem with PLM is that its a rational decision to purchase so pricing comes into play. Good stuff.

  2. Hi Oleg,

    Very interesting post! And I’m glad to hear that you see our SharePoint business as potentially disruptive…we do too, obviously! I do agree with your point that the real discussion should be value, not price. In my view, focusing on price leads to commoditization of the industry – and I disagree with Ian Murdock’s view that this is a good thing. Commoditization suppresses innovation, and innovation is really what the PLM industry (and the CAD industry, for that matter), needs right now. I think there’s a good parallel to your example of the cell phone industry – incremental improvements may moderately increase user satisfaction (and keep competition focused on price), but it is innovation that creates value (and makes price an afterthought)!

    It’s this focus on value and innovation that is driving our development on Microsoft SharePoint. To me, there is a real distinction between capitalizing on the success of a product like SharePoint by building an add-on that rides the wave with it, and a true understanding that rapid growth is a reflection of a need in the market and a change in the way that organizations behave. If you check out the product announcements we recently made at our user event (http://bit.ly/dkNtLx), you’ll see that we’re looking beyond just adding “web 2.0” features and functions to product development – a to a future of an *enterprise* (not just a PLM product) that is doing business differently.

    I would love to hear your thoughts!

    Best,
    Erin

  3. Stephen, Thanks! I don’t know if you had chance to read my “FREE and COOL” blog post couple of months ago… http://plmtwine.com/2010/02/02/free-and-cool-trends-in-cadplm/. I can see two possible way to remove price from the discussion. 1-to make it free; 2-to make it cool, so people will buy it for any price. The last case is iPhone/iPad sells and some other products. Some people are buying “branded TV” and others are focusing on “value buying”. I think, the question of price/value will be forever. One of the problems in today systems is complexity and high cost of implementations. It kills all values… Best, Oleg

  4. Erin, Thanks for your comment and insight. The main reason, why I see SP development as a disruptive is because it creates a significant improvement in the ability of PLM to expand the influence in an organization. Wide adoption of SharePoint may help. Example, if ProductPoint uses SP as a foundation platform, it can cost much cheaper than a standalone PLM product with the same functionality. This is a technological benefit as I see it. The obvious danger is if PLM will sell the same ideas (or products) on top of SharePoint. In the end user doesn’t care about SharePoint- as you said, they want to focus on values. Just my thoughts… Best, Oleg

  5. Hi Oleg,

    Thank you for your response. I agree that the opportunity for SharePoint is to extend the reach and influence of PLM…but not just because it is inexpensive (and I don’t think that ProductPoint will ever be interchangeable with Windchill). I think PLM can’t stay the same – we will continue to see a shift towards a truly social business. Using a social computing platform/portal like SharePoint to break down the barriers between traditional enterprise buckets means that we focus less and less on hand-off points between “collaborating” groups (PLM/ERP, engineering/manufacturing/service, etc.) and more and more on a truly “collaborative” end-to-end organization where the whole company is invested in product development processes. I think THAT’s where the real value is hiding!

    As always, I enjoy reading the blog!

    Best,
    Erin

  6. […] titled “The Price is Right or is it?” and Oleg Shilovitsky’s follow up “How to Disrupt PLM Price with Technologies?” generated a lot of response and discussion and made me start to think about what type of price model […]

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