2011 ERP Slowdown. Will PLM Gain Benefits?

January 15, 2011

I read the article in Yahoo News – ERP investments to slow in 2011. According to the Forrester research, many companies are holding back their plans to run ERP implementation. Also, many companies are running ERP systems that two releases back from the current release. Here are few interesting quotes:

The number of companies planning to invest in their ERP (enterprise resource planning) systems will drop slightly this year, according to a Forrester Research report, even as IT spending overall is expected to rise.

Roughly half of ERP customers are running product releases that are two versions behind the current one, according to the report. But expiring support windows and related price increases will spur more upgrades over time.

I found it interesting. My hunch, customers are reluctant to make huge investments and big implementation plans. They are more interested in what Enterprise 2.0 and multiple Web Technologies and Social initiatives can bring. The time for huge ERP programs is going to end. Therefore, the appearance of Oracle Fusion Apps this year will be specially promising. Will it be able to pump a new air into ERP implementations?

At the time ERP can be troubled, what will happen to PLM mind share vendors? Vendors like Dassault, PTC are rolling out huge programs with new releases and features. At the same time, customers are getting "cold feet" when thinking about a grandiose move to platforms like V6 (Daimler case).

What is my conclusion? My view is that customers are stopping believing in big programs and multi-year investment in enterprise programs. ERP is associated with such a level of programs. End of the story, in my view. The new way of business making a-la salesforce.com is coming. So, it reflected in customer decisions. In the past, PLM vendors got to think about taking some market from ERP folks. It sounds like time is coming. What is your view?

Best, Oleg

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PLM Compound Data and Google Collaboration

January 14, 2011

I made a short note today. Google enhanced the capability of Google Docs with embedding video playback. Navigate your browser to the following Google blog describing how to realize it. In addition, you can take a look on the document providing the specification about what video formats are supported.

The importance of rich media content is increasing over the time. Google improves their capabilities to share content. It can be an interesting option for people who considering Google Apps as an option for collaboration inside of organizations. It made me think, Google Doc can be in the future enhanced with the ability to embed players like JT-Openand 3DVia to provide even richer content. The upload procedure is pretty simple. You just upload video to your Google Docs. When you open document, the players automatically turns on.

One question remained not answered. The ability to search these videos and rich media content can be a powerful capability. Google is not saying a word about that.

What is my conclusion? Collaboration tools like Google Docs and Google Apps are increasing their power to support more scenarios beyond basics only. They have an option to challenge specialized tools coming from PLM vendors in a near future. In my view, this is kind of alarm for big PLM bears…
Best, Oleg

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PLM Integration Failures

January 13, 2011

There is one topic that always raises lots of controversy, in my view. I’m talking about integrations or even more specifically about PLM-oriented integration. I want to point on the following two articles I posted previously about PLM integrations:

PLM Integration Gotchas
PLM and Enterprise Integraton Game

I read Reasons Why PLM Integration Fails?" article on the To-Increase Blog. To-Increase is a company from Netherlands specialized in the Microsoft ERP products (Dynamics AX, NAV) and product configuration software e-Con. Read the article and make your opinion. The author is making point of various difficulties related to PLM integrations. Here is my favorite passage from this article:

A fundamental risk within any manufacturing firm, especially a firm with global operations, is the risk of information becoming siloed within individual teams. For example, if information concerning a flaw in the development of a product is available only to the engineering team, and kept from marketing, there exists the risk of gearing up product launch tasks too quickly – resulting in wheel spinning at best, and a significant loss in resources at worst.

In much the same way, if a PLM system is implemented – but not integrated with all other systems related to manufacturing processes (think Enterprise Resource Planning systems, think Manufacturing Execution Systems) the risk exists for information to be siloed in one system.

PLM Integration and Competition

The focus on PLM-ERP integration is interesting. These are two systems that very often are trying to establish a dominance in a culture of manufacturing organization. Are you PLM or ERP driven? What system "owns" Part or Bill of Material information? Who is authoring BOM? I heard such statements many times when talked to customers during implementations. The integration point is often becoming a competitive advantage. I believe for To-Increase, integration with other products is a significant competitive advantage. Manufacturing companies would be thinking twice before deciding what system will drive product development processes.

Partners and Integration Complexity

Integration is not a simple task. You need to have enough technological and process knowledge as well as technical skills to make it work. In addition, you can rarely find two identical integration solutions. Each manufacturing company will have their own practices, systems and specifics. Because of such high level of complexity, software vendors are trying to rely on partners to deliver an integration solution for end users.The ability of partner to deliver integration becomes a key in the ability to make an overall implementation success .

PLM Integration is hard. The cost of implementation is high. The cost of failure is even higher. Vendors are pushing integrations out of the scope of their deliveries. Partners, like To-Increase can provide a significant advantage by helping customers to make integration happen. These are realities of ERP and PLM implementations.

What is my conclusion? Integrations are important and complicated at the same time. Integration failures are one of the main sources that can cause overall implementation failure. The reliance on services increases the implementation cost and creates dependency of customers on implementation services. I’d expect software vendors to re-think their view how they can make integration easier. It can be a significant differentiation factor in future PLM systems. Just my thoughts…

Best, Oleg
Freebie. Nobody paid me to write this article.

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Manufacturing Companies and SaaS Business Opportunity

January 11, 2011

I had a chance to watch Jason Green’s video interview by TechCrunchTV Sarah Lacy. Take a time, watch and make an opinion. I found interesting to listen to Valley VC, which is strategically focusing on cloud and enterprise opportunities. This is not a common trend, in my view.

Take a look on the following video.

This is not a first time I’m writing about a cloud opportunity in the manufacturing market. Navigate your browser to few of my following “cloud posts” if you had a chance to miss them: PLM and Cloud: Hold the Promise? and PLM and Pragmatic Cloud- Do Less. However, this video made me think about few interesting trends I wanted to share with you.

B2B and Cloud Services Trend
One of the important trends I can see in the enterprise cloud market is the development of B2B cloud services. Why it is interesting, in my view? It provides an alternative way to just pushing enterprise customers with enterprise product suites converted to the “cloud or SaaS model”. Business Services can become an interesting and disruptive approach for enterprise market.

PLM on the Cloud
I have a mixed feeling about PLM and Cloud. Definitely, few mindshare vendors already made (or planning) to make plans for cloud offering. The top two companies here are Autodesk and Dassault. In the past, PLM industry had few companies moving towards SaaS/On Demand. Arena Solutions as well as PTC/IBM bet on their future with Cloud/SaaS infrastructure. The biggest problem I can see in this domain is the replication of existing products, portfolio and plans to the cloud. This is not how I can see manufacturing and engineering software need to be developed.

Bottom Up Approach
I can see an interesting opportunity in development of manufacturing services, which has an opposite philosophy to the current mindshare PLM and ERP vendors. Existing enterprise and PLM models are very top-down oriented and assume a significant agreement about how a system needs to be implemented and how data need to be managed. Development of business services can be an interesting approach to provide an alternative solution on the market.

Freemium Business Models
Another aspect of SaaS and Cloud business is in implementing new  business models. Freemium is one of them. Normally, people see “Free” as an option that can be used only for a consumer market. The complexity of enterprise implementation and high potential cost of free services, it seems to be a wrong option. However, I can hear Jason is talking about 10-15% convergence rate in enterprise freemium models. It can shake business modeling canons and create a significant opportunity in the market.

What is my conclusion? Thinking about PLM Reset 2011, I can feel it is a time to re-think common practices of SaaS applications. Companies have tried to replicate existing software and shift the delivery towards the cloud. This is a wrong approach. The biggest potential of cloud will be in the combination of new approaches, technology, delivery and business models. Just my thoughts…

Best, Oleg

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PLM App Store and The Future of Sales

January 10, 2011

Talking about App Store is not a big news nowadays. Companies in CAD, PLM and other companies in enterprise market segment are talking a lot about app stores. However, no specific actions were made and identified. App store is definitely consumer market invention. Thinking more about the topic, is it really true for a long run?

I was reading the article “Amazon preps upmarket US Android app emporium“. The article made me think about the future of sales channels. Android is just a use case and weak development chain, since Google wasn’t very successful in development of their own app store. Amazon is a very sophisticated sales machine. By inviting developers on their App store, Amazon is creating an opportunity to become a sales channel. In the past, Microsoft was a very successful company focusing on developers, and it seems to me Jeff Bezos learned this lesson from Micorosft. CAD/PLM (and not only) software providers will be looking for alternative ways to sell their products to businesses. Amazon can be an interesting option to become a department store to market, sale and (what is very important too) to deliver applications for business too.

What is my conclusion? For the moment, enterprise/business application developers are actively using two paradigms – direct and indirect sales. However, in current market conditions, online sales channel with no religious dependencies to a specific platform (opposite to Google and Apple) can be an attractive option for application providers thinking about how to sell their products to a small business. Just my thoughts…

Best, Oleg

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Beyond PLM New Year Resolution

January 10, 2011

Hi Everyone. I never posted New Year Resolution before. However, I decided to make this change and post Beyond PLM New Year resolution for 2011. I want to thank all you for helping me to shape Beyond PLM blog by participation, asking questions and writing comments. I will do my best to make 2011 even better by development of new ways to run discussion on my blog. So, this is my Beyond PLM 2011 New Year resolution.

1. Keep a controversial informative discussion about Engineering and Manufacturing software.

2. Discover new trends and opportunities related to Product Lifecycle Management.

3. Publish Beyond PLM think tank posts daily.

4. Develop 140-char message oriented discussion on Beyond PLM

5. Get at least 5 hours sleep regularly (this is probably won’t happen :) ).

I’d like to wish everyone a successful and prosperous New Year!

Best, Oleg

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SolidWorks Lifecycle Management

January 8, 2011

Bertrand Sicot appointed CEO of SolidWorks. In my view, it becomes a corporate news of this week. I think, almost all CAD-affiliated bloggers wrote something about this event. The death of SolidWorks by Develop3D is the article you definitely need to read. My favorite article was SolidSmack’s interview with Bertrand Sicot and Jeff Ray. This is my favorite passage from Josh Mings’ interview:

About this change, I don’t see a big reaction in the user community. (Few of the users I work with could even name the former or current CEO of SolidWorks much less, even care.) Jeff took the company one direction, for the most part, aligning it with Dassault and positioning it for growth in that context. Bertrand, being the second person hired on with Dassault Systemes, I believe will follow that strategy. In that sense, DS SolidWorks Corp. stays separated from the customers. Whereas before, with Jon Hirschtick and Johnny Mac, it felt more personal, like a friend was running the company. My one hope is that Bertrand gets a sense of this. Go ahead, finish pushing SolidWorks into DS, but remember the roots man, remember the roots.

The notion of “roots” is one that important, in my view. Thinking about corporate changes, I’m always getting the association with the “lifecycle”. So, I decided to put some thoughts in the context of SolidWorks lifecycle.

Platform: Past and Future

SolidWorks was born on Windows. It was an ultimate match going back in 1995. However, nothing stands still in the world of computing platforms. To be able to react, SolidWorks will have to re-born on the cloud and adopt to other platforms. As I mentioned in my PLM Reset 2011 article, polygamy is one of the trends today. Microsoft’s dominance is going down. Obviously, SolidWorks will have to follow this trend

From Parasolid to DS Kernel

Another element of SolidWorks fundamentals – Parasolid Geometrical Kernel. The kernel belongs to Siemens PLM – a high profile competitor of Dassault. Some signs of changes in this direction were identified a year ago by Deelip.comduring SolidWorks World 2010. It confirms the fact SolidWorks is switching a geometrical kernel and moving to DS/CATIA kernel. It is another revolutionary shift in everything SolidWorks need to accomplish.

From PDMWorks to V6

SolidWorks has many PDM and PLM partners developing various PDM options and applications. However, PDM Works / Enterprise is the flagship PDM product for SolidWorks. What happens in this space? According to the announcement DS/SolidWorks made on the SolidWorks 2010, SolidWorks is going to develop a set of new applications on top of new DS V6 platform. Some of them were previewed that week. This is the third fundamental shift in everything SolidWorks will try to accomplish in PDM space.

What is my conclusion? I definitely can see a new chapter in what SolidWorks needs to accomplish in coming years. The potential fundamental changes coming from multiple directions – platform, geometry, PDM. I tend to agree with Josh – remember the roots is important. Just my thoughts…

Best, Oleg

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PLM, Cloud Mashup and Terminological Games

January 8, 2011

One of my twitting buddies, Jonathan Scott, re-twitted the link to the following article – CIO Strategies: The Private and Public Clouds Mashup. I found it quite interesting. Have a read and make your opinion. The topic of cloud is trending. Companies are trying to position themselves on the cloud map. The terminology proposed in this article confused me a bit, so I decided to put some thoughts and clarifications on top of that.

Cloud and Virtualization

Internet and virtualization are two fundamental technologies that made cloud possible. The ability to accumulate large computational resources, allocate them dynamically and use broadband to access them, created so called cloud paradigm. At the same time, large IT organizations started to use virtualization technologies to improve resource utilization. Hosting data centers and large IT are using practically very similar technologies to make resources available.

Dedicated, Private, Public

At the very fundamental level, a dedicated physical box (server) is what provides you with computational resources. You can share this box by virtualizing these resources. Multiple virtual environments can run on the same physical server box and serve the needs of a specific organization. In this case, this server becomes your "private cloud". The same physical box can host multiple virtual environments and serve multiple organizations. In this case, it becomes a "public cloud".

Cloud Security

Security is a very popular topic when you discuss cloud options. However, if you think in terms of physical boxes and virtual environment you can clarify the security topic. The combination of firewalls, physical machines and virtual environments can potentially allow you to run identical "cloud" environment from a hosted data center (i.e. Rackspace) and from your corporate IT data center.

CAD/PLM and Cloud

Some of CAD/PLM providers are playing "cloud game" these days. Dassault and Autodesk are definite leaders in this game. PTC is engaging IBM to provide "cloud-y future" in a way of hosted Windchill. Siemens PLM is waiting to see where cloud will be going. Understanding of system architecture supported by CAD/PLM vendors together with dedicated, private and public cloud concepts can give a good idea what PLM companies mean when they talk about "cloud". Soon you probably will be able to ensure better security conditions when placing your CAD files on the network located servers rather than on you company servers, local hard drives and USB-sticks.

What is my conclusion? I found private vs. public cloud terminology really confusing. In my view, cloud is a big virtualization game. Companies are using multiple technologies to provide the ability to pull resources in a different way. The higher level of virtualization can provide you flexibility in resource and cost. At the same time, you are losing the control of physical resources. The control of dedicated server is the border that differentiates between private and public cloud. You can run a firewall on the virtual environment regardless on where the physical server is actually located. Data centers and hosting providers are playing a game trying to confuse customers with different cloud terms. Just my thoughts…

Best, Oleg

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Mobile, Photo, Video and Manufacturing Collaboration

January 6, 2011

Mobile communication is evolving. Lots of new things happen. iPhone was a revolutionary device that introduced back-end camera and allowed to share photos and videos. During the last six months, we have seen a massive introduction of front-end cameras on multiple devices. In combination with back-end camera, it opens the whole world of new opportunities.

I’ve been watching the following presentation by Brian Pokorny during the Web Summit 2.0 in San-Francisco. I found it interesting. Watch that and make your opinion.

This video made me think about a possibility to improve communication and collaboration in manufacturing organization. The opportunity photo sharing creates is related to the potential communication and content sharing. Picture worth thousand words. Today, email communication is mostly “word” oriented. People are talking about social communication, which should come and replace email collaboration. Photo and video can create a new dimension of communication.

What is my conclusion? Email is sticky. Email runs companies. However, everybody understood the inefficiency of the email. It is hard to kick an email from the comfort zone. Web 2.0, social systems, etc. – it is all about how to improve to communication and collaboration. Photo can be the next step and additional powerful dimension. Just my thoughts..

Best, Oleg

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PLM Reset 2011

January 6, 2011

Winter break is a time to make a traditional "lesson learned" or "next year" blog posts. I wanted to come with some thoughts about what I see happens in the industry and where the biggest shift is going to happen. The name "PLM Reset" comes to my mind as the most appropriate. For the past couple of years, I’ve been listening to quite many stories about how PLM was implemented in many companies. These stories made me think about a strong need to clean up the table of PLM implementations. Something that can improve PLM value proposition and make implementation more efficient.

Enterprise Trends
I can see few important enterprise trends happen now: cloud solutions, mobile enterprise, social and polygamous. All these trends will have a major influence on the future development of engineering and manufacturing systems as well as opportunities in this space.

Cloud Solutions will be one of the enterprise trends in 2011. IDC forecast IT spending will hit 1.6 trillion this year with 13% growth coming from software and services. The biggest growth will be in public cloud services. Cloud is not peripheral solution anymore. In 2010 Google proved that Google’s solutions are secured enough to serve GSA. Additional announcements came from Microsoft and other vendors involved into providing of cloud solutions. In my view, cloud can become a classic disruption story for the enterprise industry and software for engineering and manufacturing (including PLM) can take a significant benefits from that.

Mobile is a definite trend. I can see a tremendous success of iPad, iPhone and other devices. It leads to a lot of additional opportunities and changes in the enterprise landscape. All these devices are not completely ready for enterprise. However, the future development in cloud computing will make them connected to the enterprise cloud grid in a seamless way.

Social is another interesting story. I’ve been writing about social trends many times during the past year. In my view, "social" will be proliferating in organizations and will create a new connection system that will help to communicate in an organization. I can see a significant value of social component to improve PLM collaboration.

End of Microsoft’s dominance is another trend. Until now, most of the software used by enterprise were developed either in Redmond of Redwood Shores. Not anymore. We can see a significant growth in Apple adoption. Businesses are less interested in maintaining existing applications and looking how how to try something new that can help them to solve a problem in a different way. We will see also a massive adoption of software coming from employees.

Building a Simple PLM
In addition to the enterprise trends mentioned above, I can see a strong strive of enterprise organization to simplification. For many years, the complexity took a king role in the business of enterprise organization. In PLM, the complexity was a factor to justify high cost , services and implementations. The traditional PLM mind share in the enterprise – we need to have a complex solution to solve complex problems. Wrong! This is something that will be changed very soon. A very long time ago, Mark Twain wrote – “If I had more time, I would have written a shorter letter.” The simplicity is very thought. However, there is no other option these days. It needs to be understood by vendors and customers.

What is my conclusion? In my view, PLM is definitely in the position to re-born. All trends I mentioned above plus a demand for a simpler solution will lead customers to hit "reset" button. "Business as usual" is not an option anymore. The disruption of cloud and influence of other trends will impact PLM and make a future move towards introduction of new solutions in 2011. Just my thoughts…

Best, Oleg

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