Finally, my vacation over and Beyond PLM is back to normal. While screening materials, the following title caught my attention: ERP vs. PLM: What’s the difference? WhichPLM? is sharing a free copy of BMS whitepaper with this catching topic. A relatively short publication (7 pages including the cover and contact page) will take you to the explanation about what is ERP and what is PLM with examples about roles of these systems. Navigate to the following link, download the document. The whitepaper was available at the time I visited it without any registration. Have a read and make your opinion. In the beginning, the white paper quote Tom Shoemaker (PTC VP Marketing) by saying:
PLM is to your intellectual property, what ERP is to your physical property. In other words, PLM focuses on the planning before you commit to making a product, and ERP take over from there. Both systems, however, often require customization and their functions could overlap from one company to the next. For instance, some PLM platforms have been expanded both upstream and downstream, thus taking overlap. Some functions formerly thought to be the domain of ERP.
However, the following passage is the most remarkable, in my view:
The type and brand of data management software that you use will determine how PLM and ERP function. Some will allow for extensive integration between the two, other systems may be able to perform all necessary functions on their own without integration. Some systems are customizable and scalable, others are “out of the box.” How Your company implements these systems also determines, to a large degree, how they will operate.
The discussion about differences between PLM and ERP in this white paper reminded me one of my old posts from the last year – PLM vs. ER: Weird or Different? Even so, I discussed few very specific differentiations, in my view, it becomes less relevant in a business word. Companies are making their choices on what system will dominate (PLM or ERP) based on the multiple set of criteria. The choice of the implementer as well as broad IT platform becomes more and more important. At the same time, implementation of both ERP and PLM system can skyrocket the overall investment in the implementation.
What is my conclusion? I think we are going to face an increased competition between ERP and PLM vendors in a near future. The overlap between these two domains becomes more and more obvious. With the increased business objectives, PLM companies and stepping into the ERP territory in the spaces related to business aspects of PLM. At the same time, ERP companies are increasing their ability to handle and maintain engineering and product design data, which will put under a big question mark the potential implementation of PLM. Just my thoughts… What is your take on this? I’m interested in your opinion.
Best, Oleg
Oleg, you make some interestig points. However, instead of thinking of the two solutions as overlapping, I would say they are complementary. A recent ebook puts it this way: “As companies realize the respective strengths of both technologies, there will be a move towards the integration of ERP and PLM. An ideal integration scenario will leverage the PLM system to manage and update all the digital product data and processes often captured in a complete BOM. The ERP system then can focus on the operational aspects of the physical product.” The ebook covers how manufacturers can find the right balance between the two solutions. Here’s the link to it: http://bit.ly/g8Uuzh.
If ones market is dominated products that are absent of much technology, where time to market isn’t important, which for the most part are commodities, & margins are gained by supply chain efficiencies, ERP for PLM is a feasible approach. ex. silly bands, sticky notes, bottle caps
If products are differentiated by their technology, balance sheet is effected by time to market, and sourcing strategies involve complex systems that have the potential to cause product failure, PLM is imperative.
I appreciate your posts and learn new perspectives from most of them, but there is no debate here. If the ERP companies thought it was possible & feasible to evolve their transaction based systems to address these issues, they would invest in this space. Their acquisitions do not lead me to think this is the case.
Christa, thanks for your comment and link sharing. Thinking about “complementary” is a good and positive. However, I’d like to make 2 observations: 1/ historically, both PLM and ERP companies didn’t invest a lot into the integration and standard creation. 2/ in tough business conditions PLM and ERP may find themselves in the position of expanding their business leveraging “overlap between systems”. The “ideal integration scenario” never happened, because vendors haven’t seen the business benefit it this. Take a look on one of my older posts – http://plmtwine.com/2010/03/05/the-ugly-truth-about-plm-erp-monkey-volleyball/. Best,Oleg
Trevor, Thanks for sharing your thoughts. I think ERP vendors understand the limitation of their technologies to work closely with a product lifecycle in the way PLM system can do so. However, not to play in this game can be a potential tactical decision. To let CAD/PLM companies to figure out what is the future successful approach and acquire or mimic that. Just my thoughts. Best, Oleg
Erp and Plm have been complementary and becoming more and more integrating each othe contexts and processes.
however there will always be this pure distinction about transaction based(erp) vs state change/cad collaboration based(plm).
Erp has been evolving faster towards plm technically and easier. Plm can only integrate with erp infrastructure and may be offer some kind of better handling of certain processes.
This makes one foresee some Erp aquiring some cad/plm provider or the other way around …. Will this make the initial question still valid ?
Interesting discussion. If we would assume an PLM vendor building more functionality to replace or do certain parts of ERP, which customer would listen to them? I think it is easier for ERP vendors to add some functions in manufacturing, requirement management, configuration management, classification then the PDM vendors building a billing, transaction and production planning section including the financial administration requirements. In my view the big question in ERP vs PLM always lays with “who owns the master data”. In my view the masterdata is always owned by an ERP (if there is one). “PLM” or more a downscale set of this called Product Data Management (or even just Engineering Data Management close to the cad system) should connect and deliver the “missing” information to the ERP Master Data Set (item attributes). ERP Vendors will never be able to keep up with the Authoring Tool developers in CAD, Documentation and such. What do you think?
Agree, CAD-collaboration vs. transaction positioning is still valid. ERP vendors developed (SAP) and acquired (Oracle) some PLM functionality. However, the question is still valid, in my view. I can see how ERP-PLM functionality will evolve. At the same time, PLM vendors can challenge large ERP vendors by more focused and cost-effective solutions. Just my opinion. Best, Oleg
Jeroen,
Thanks for commenting! I think, the question “who owns data?” is fundamentally wrong one. The approach of “locking data” is still very popular and widely used by many enterprise software vendors. However, I believe the world is moving toward better openness where benefits will belong to companies helping people to use data. PLM vs. ERP challenges themselves to control product and manufacturing data. For the long run, it causes their customers to spend more time and money on “integration projects”.
Some of my thoughts on these topics are here:
http://plmtwine.com/2010/03/05/the-ugly-truth-about-plm-erp-monkey-volleyball/
http://beyondplm.com/2011/07/06/pdm-vs-plm-implementation-gaps/
Best,Oleg
Hi Oleg,
I tend to agree with you IF data is really locked up and not accessible.
That is an interesting discussion that many blogs and forums are spending time on. However, first of all the data should be owned by their “owners”, in other words the company that bought the plm system. The only reason a “data lockup” tends to get in the way of a customer strategy is if they consider their current system approach inadequate for the purpose they bought it – (It is a pity that this happens a lot due to many different reasons) thus wanting to change or leverage the data elsewhere in the enterprise. Means that a PLM system needs to provice a open API (as part of the standard product) or a standard export funcionality in case of changing systems. On the other hand if you turn your comment about openess a bit further, a completely open data pool is risky enough for a company, isn’t that why they look at PLM in the first place; “Controlled Data Repositories and Processes”?
Jeroen, I agree. Obviously, data can be “owned” by system / users. However, the question I’m asking, is more related to the “availability” of data and system openness. The question of “controlled data” you’ve raised is another interesting one. In many situations “control” over data simply becomes a requirement to use a particular system to access this data. Just my thoughts. Oleg