PLM and Zero BOM errors: the devil is in details

September 10, 2014

zero-bom-errors

To manage Bill of Materials (BOM) is not a simple job. Often you can hear a simple definition of bill of material as a "list of component needed to build a product". However, in reality, BOM is much more complex and contains information about product structure, the ways product is manufactured, maintained and even disposed. The variety of requirements coming from multiple departments make BOM a complex information entity. Because of diversity of disciplines, organizations and tools BOM traditionally managed as a separate structures related to design, engineering, manufacturing, support, supply chain, etc. Mistakes in Bill of Material management are costly and painful to companies. It can lead to wrong material orders, shipment delays, regulation issues and many other problems.

My attention was caught by few examples of PLM vendors emphasizing their ability to support "zero BOM errors" in their BOM management solutions.

First example came from Dassault Systems ENOVIA. Navigate to my post – PLM, demolished silos and closed BOM loop. You can get more information also in recent Razorleaf blog covering ENOVIA conference here. According to ENOVIA, errors are coming from synchronization or design and engineering BOM. Therefore "zero file solution" strategy developed by Dasasult System ENOVIA will lead to zero BOM problems. Here is a passage from both articles:

The zero error BOM (Bill of Materials) demands a zero file solution. 3DEXPERIENCE brings the zero file world into the engineering environment; what we do is to connect directly to product data, not to files”.

Dassault spent significant time at the event returning to the theme of the business benefits of ENOVIA, describing a “Power of Zero” mantra across ENOVIA’s capabilities (for example, “Target Zero BOM Errors”). ENOVIA CEO Andy Kalambi offered a nice overview of how these “Power of Zero” themes connect the direction of the ENOVIA product line with the business needs of ENOVIA’s customers.

Second example came from Arena Solutions case study – How Nutanix Reduced BOM Errors to Absolute Zero. You can download case study for free by registering on the website. Interesting enough, the problem of "Zero BOM errors" is completely different here. It speaks to collaboration and access of BOM by multiple people in a team or even different organizations suppliers. Here is an interesting quote from case study that outlines that:

“Our suppliers now access the same BOM and revision, and we have had zero wrong BOMs built since the system was implemented. Configuration integrity is assured… Change management was a nightmare,” said Sangster. “With several people making changes and suggestions to uncontrolled documents there were multiple revisions of the same BOM flying around the ether. No one had any trust in the data, so many local copies abounded based on the ‘mine is right’ premise.”

The devil is in details. When you plan how to implement BOM management, you need to work on multiple use cases. Bill of Material has multiple point of failures. I mentioned two in my post today – 1/ synchronization between design and engineering/PLM tools; 2/ collaboration and change management scenarios. I can see many other use cases. When you plan a solution, it is important to focus on a specific problem you want to handle. At the same time, when vendor speaks to you about "Zero BOM error", don’t hesitate to ask questions. Same buzzwords mean different things sometimes.

What is my conclusion? BOM management is a complex domain. It is hard to underestimate the value of having correct BOM without error. BOM errors are costly and to manage consistency of BOM is one of the most important objectives of PLM solutions. At the same time, BOM has multiple points of failure. This is a note to PLM implementers and IT people to focus on important scenarios and not to take "Zero BOM mantra" as silver bullet that solves all problems. Just my thoughts…

Best, Oleg


Will future PLM order parts for makers?

September 10, 2014

makers-plm-order-parts

Have you heard about "makers"? If you are in manufacturing business, you probably should pay attention to that. You may hear about "makers movement" these days as a new industrial revolution changing the way people are making stuff. I can recommend you Chris Anderson’s book to read more about that.

New digital technologies are going to change the way we design and manufacturing products. It appears today largely as a new group of manufacturing entrepreneurs, startup companies and small manufacturing firms. PLM vendors are not very successful in providing solutions for SME companies. Historically it was a tough call for PLM vendors. It was too competitive and confusing with major PLM business – large OEMs and suppliers. With new manufacturing eco-system, the situation is getting very interesting. One of the objectives of PLM is to help company to innovate and delivery new products fast. It sounds like a very compelling reason for new manufacturing startups. Read my earlier blog – Why Kickstarter projects need PLM? This is an opportunity for new PLM solutions. However, it looks like something that PLM vendors are missing for the moment – PLM and Manufacturing Startups: Potential Mismatch? We have a complexity of new manufacturing products, multiplied by a complexity of new type of manufacturing processes. It looks like an existing enterprise software doesn’t fit very well a new and growing eco-system of manufacturing companies.

Let me take an example of PLM and ERP system breakdown. The traditional split between PLM and ERP is usually presented as "innovation vs. transactions". PLM system is responsible for engineering part of the business and takes hands off from ordering by moving business process to ERP. This is works well for traditional manufacturing companies. However, PLM v ERP interplay is a very challenging and complicated process in every company. Would it be the same for new type of manufacturing entrepreneurs? This is a good question to ask… I’m pretty sure that new manufacturing companies can question a need to have multiple systems- they will be looking for some sort of intelligent online solutions that can easy interplay together and cover both engineering and manufacturing piece.

My attention was caught by Fortune article – In B2B e-commerce, Alibaba has solved the one problem Amazon can’t. Read the article. I found it very interesting. It is not about PLM. However, I captured a passage that speaks about B2B and supply chain communication.

But there is one true giant in the category: Alibaba, the Chinese retail darling that last week revealed plans for a $21.12 billion initial public offering, which has dominated in B2B e-commerce. I was reminded of this over the weekend while listening to Planet Money’s entertaining explainer of the Alibaba wholesale market. Through Alibaba.com and 1688.com, the company provides to people everywhere access to the Chinese supply chain. This means tinkerers, builders, entrepreneurs, and small businesses can order custom motors and parts from Chinese factories without having to travel there, find a scout, and forge a relationship with a manufacturer before doing business. It opens up the world of international suppliers to people who wouldn’t normally have access to it. They can buy in bulk through Alibaba, which acts as a trusted third party, vouching for the transaction.

It made me think about a potential of PLM software to get connected to online e-commerce systems to process orders and even more- optimizing product design and engineering solution based on that. It probably sounds crazy. However, who knows… Many things that we knew as a separate parts in the past, now unified as a single products. Think about iPhone, which replaced many existing devices. Today’s Apple Watch and Apple Pay announcements are hinting about future transformation of well-known habits. There are some other examples as well.

What is my conclusion? I like to quote Mark Andreessen for the conclusion – "Software is eating the world". There are lot of traditional system breakdown that are going to be transformed and disappear in the future. What looks like a right split between product innovation (PLM) and order-transaction (ERP) today, can be challenged in the future. So, who knows? Maybe tomorrow PLM systems will order parts from Amazon B2B e-commerce web services? Just my thoughts…

Best, Oleg


The end of debates about out-of-the-box PLM?

September 8, 2014

plm-out-of-the-box

PLM implementation discussions are usually brings lots of controversy. Vendors, analysts, advisers, service companies, customers are all involved into implementations. It brings different and, sometimes, conflicting interests. In my view, one of the most debated topic in PLM implementations is related to so called ability to implement “PLM Out-of-the-box”. I’m not sure who first used that term. I think, it came out of PLM vendor marketing trying to demonstrate how easy and quick PLM implementation can be done. However, since then, the debates about “PLM Out of the box” had never ended.

Two other related topics are customization and configuration. For long period of time, I didn’t differentiate much between these two terms. However, modern enterprise software lexicon (and PLM vendors are in a full compliance with that) will define “configuration” (opposite to customization) a process that doesn’t require to write a software code for PLM implementation, but only use some elements of PLM user interface to configure a system. It probably turns all PLM implementation into “customization”, since writing programming scripts (using VB scripts or JS) is a widely used practice during all PLM configurations.

But let me get back to OOTB topic. I covered PLM OOTB few times in my blog. You can navigate your browser and read PLM Out-of-the-Box: Misleading or Focusing? published almost four years ago. From my latest posts, I can recommend you to take a read of the following article – Why My PLM won’t work for you? My attention was caught by an article that looks like trying to end all debates about PLM OOTB.

Aras Corp. published an interview with Dr. Martin Eigner who recently joined Aras’ board of advisors. In a very short published interview Dr. Eigner dots the i’s and crosses the t’s in the debates about out-of-the-box PLM and customization. Here is a main passage I captured. It has a strong Aras marketing flavor, but to quote it is important to bring a full message:

Dr. Martin Eigner: The kernel PLM functions are very similar from all competing PDM / PLM solution providers and from functionality it’s not a big criteria to differentiate each other. The user interface, performance and customization is important. Customization is very important because I do not believe even for small customers that you can buy PLM solution out of the box. That is a dream. You have to customize it. The real differentiator of existing PDM systems is the amount of money and capacity to customize a PLM solution. So I think usability, performance, upgrade capability and how easy it is to customize and maintain the customized solution are the most important points. They have the strongest impact on the total cost of ownership. I think in all these topics [performance, usability, upgrades, and customizations] Aras is leading. There are independent tests which show the system’s performance. We did internal tests at my university and found Aras to be the easiest to customize and upgrade. That is a big difference to the competitors. Customization is the most important aspect of PLM. Out-of-the-box works for no one.

I’m not in full agreement with Dr. Eigner about the fact you have to customize every PLM implementation. However, there is one point, which I think it is very important and I liked how Dr. Eigner emphasized that. It is related to the ability to maintain a customized PLM solution. This is one of the key differentiators of something I call a sustainable PLM platform. Customized legacy PLM is data management titanic in many implementations. Companies have to spend resources to maintain the solution, which is in most situation cannot support latest version of PLM platform provided by vendor.

What is my conclusion? Sustainable PLM platform. This is should be an important element of every PLM strategy these days. Modern business environment is very dynamic. Customer are looking for an agile way to implement business solution, adopt it to a new requirements as well as to maintain existing configuration. In my view, the concept of OOTB PLM should be revised with modern open architecture approach, which can simplify configuration, customization and sustainability of existing solutions. Just my thoughts…

Best, Oleg


CAD, PLM and Top 500 cloud app vendors list

September 5, 2014

top-cloud-apps-cad-plm-500

The cloud is growing. Few years ago, some of us had a concern if cloud is fad and it will over fast. Since that time, we can see many new companies in cloud space as well as many companies turned their development efforts completely towards the cloud eco-system.

If you like research, ranks and comparison of vendors, you may find the following list of vendors interesting. Apps Run The Cloud web site published the list of Cloud Top 500 Applications Vendors. You can see list of companies and detailed information about top 50 vendors for free. More detailed information requires subscription.

I’ve been trying to see what companies from CAD/PLM space made it to the list. Here is the list of companies with rank (assigned by Apps Run The Cloud) and domain (CAD or PLM):

120 – Autodesk (CAD)

158 – Altair Engineering, Inc. (CAD)

291 – Dassault Systems (PLM)

377 – Arena Solutions (PLM)

407 – Siemens PLM software (PLM)

What is my conclusion? Cloud is here to stay. The question is not "why the cloud?", but "how and what cloud vendor to choose?". I’ve been blogged about it before – PDM/PLM: Why the cloud? Wrong question… The growth of cloud software is fascinating. The fact 3 top CAD providers are in the list confirms the commitment of companies to cloud strategies and development. I didn’t find few names from CAD/PLM domain that I expected to see. I hope we will see more analysis and comparison of cloud strategies and cloud platforms in CAD/PLM space.

Best, Oleg


PLM Chat and Twitter Product Checklist

September 4, 2014

plm-group-chat

Collaboration is critical functions in PLM applications. To unlock the potential of social collaboration for engineers is a dream of PLM vendors for the last few years. At the time people may see Social PLM DOA, I don’t see the opportunity to improve communication and collaboration as a lost one. We certainly passed what I called Social PLM 1.0 era. In my view, absence of ultimate "single social function" made first wave of social PLM products to fail. I can see future opportunities in PLM social mobile applications and some other directions I want to discuss today.

Noise vs. signal ratio was too high for most of social collaboration products. This is true for many "uncontrolled" social communication models based on "following" people, groups or even products/project data. However, direct chatting has no problem of noise. If you can control the way you can take a communication (or discussion) to a closer list of subscribers, it will solve the problem of noise. I explored this idea last week in my post few days ago – Do we need PLM walkie-talkie?

The following WSJ.D article caught my attention yesterday – Twitter’s Product Checklist: Better Search and Group Chats? Twitter financial chief Anthony Noto exposed some ideas about Twitter’s product roadmap. I touched the importance of search in my 2 years old article about future PLM user experience. Today I want to speak more about Group Chat. In my view, this feature is very interesting. Here is a passage from the article that speaks Twitter group chat idea.

The CFO also hinted that group chats might be in the pipeline. Direct messaging, Twitter’s private chat function, has traditionally been put on the backburner. Because Twitter’s service is public in nature, the role of private messaging has always been a subject of debate within the company. Over the last year, amid the explosion of messaging apps, Twitter has given direct messaging a more prominent role. Noto suggested direct messaging might become more social.

Today, users can only send a direct message to one account at a time. But if, say, Noto tweeted about a football game and a couple of his “college buddies” replied to it, “I’m not sure I want to have (that) conversation in front of my boss and the rest of the 271 global users. I might want to take that to a private setting which you can do through direct messaging. Today you can only do that one to one as opposed to one to many. So that’s an example of innovation around sharing or expression that we can pursue over time.”

What I found very interesting is a mix between open and close communication channels. Most of products in engineering collaboration field today today can do one of them. However, to make both and to create a user-controlled switch between them can be a neat feature.

What is my conclusion? Communication and collaboration space is hot. We are overloaded with information. Search can solve the problem of getting right information from your archives. However, search cannot solve the problem of getting right real time information and optimize communication between people. Private chatting applications are booming these days. But we haven’t seen one that fits engineering domain. There is no silver bullet in collaboration domain. To find right combination of features and experience for engineers can be a tricky job. I can see it as a opportunity on the table for existing PLM vendors and startups. Just my thoughts…

Best, Oleg


PLM revenue model comparison

September 4, 2014

plm-revenue-models

These days, innovation is coming not only in technologies and products, but also to business models. We are observing one of the most significant shakeouts of business models in enterprise software. Companies want to buy software differently and it is obviously raising many questions in front of established PLM vendors and startup companies. What is the right revenue model? How to sell PLM software tomorrow?

I want to refer to some of my earlier blog post related to PLM, licensing and software models – Faltered licenses and future PLM business models; PLM innovation and packaging trajectories; ‘Alte Zachen’ PLM and New Business Models and The future battle for upfront PLM cost.

The demand of customers is faster ROI. It clearly impacts the transformation of business models. In addition to that, in a modern dynamic business environment, customers are looking how to predict cost of future growth or shrinkage in software licenses usage. It brings a question about sustainable "usage based" business models. The variety of business models is much larger these days. Many of new models are coming from internet companies, SaaS business models and consumer applications.It made me think about possible revenue models and the way PLM vendors are using them today. So, here is my list of 8 revenue models and analysis of their usage in the industry. I tried to order them based on how I see adoption of these revenue models in engineering and manufacturing software.

1- Value

In my view, this is the most widely accepted revenue model for PLM products these days. The fundamental assumption in the fact PLM brings significant value. So, vendors are charging customers with the assumption usage of PLM products brings significant cost saving or PLM product is mission critical to customer, so customer has to buy it.

2- Product lines

This is another widely adopted revenue model in PLM (and enterprise software) world. Customer is buying multiple products together. The objective of the vendor is to maximize total revenue. In such situation the combination and revenue from specific products can be irrelevant.

3- Volume revenues

This model is mostly relevant in large PLM deals. When a large OEM is buying 1000s of licenses, vendor is typically using a special "volume prices". The name of this model is different in every case, but the fundamental assumption is the same – to provide discount for customers paying a significant amount of money. Sometimes, vendors are using floating licensing to limit the number of concurrent users in the system.

4- Services

The fundamentals of this model – product is free. Customer pays for services – installation, setup, configuration, implementation, data import and many others. This system is mostly used with a combination of previous models and rarely used a main revenue model for PLM vendor.

5- Features

This is a revenue model in which customer is paying for "specific features". In the past, such revenue model used for enterprise software with high and very diversified features set. I can see less usage of such model nowadays – most of vendors are trying to avoid the complexity of packaging and pricing related to such model

6- Subscription

This is growing revenue model these days. After huge popularity among internet companies, the adoption of subscription models is growing in enterprise software and PLM as well. Typically customers are paying subscription fees on annual basis. The customer advantage is low entry cost. The vendor challenge is slow revenue growth compared to traditional licensing.

7- Freemium

This is a variation of free model. In freemium model, customer is getting part of product for free and pay for premium part of the product. Even this model is heavily associated with modern internet startup and SaaS products, I can see elements of this model in existing PLM product offerings. The most widely adopted is when PLM vendor is providing "read-only" part of PLM product for free and charge only for licenses that allowing to user to "enter" or "edit" data.

8- Product is free, revenues from advertising

The most common model used by internet startups and companies. Facebook and Google are probably on the top of the list using such model. I’m not aware about PLM vendors using such model. However, I can think (probably) about some vendors in the business of product catalogs providing their online services for free and charging for ads.

What is my conclusion? In today’s world of PLM software vendors are looking for new business models. One of the reasons – customers are looking how to buy PLM differently. The perception in the market – PLM is too expensive. Current revenue and business model was developed to satisfy needs of large customers back in the days vendors were selling huge packages of PLM software that required multi-year implementation contracts, support and maintenance. The today’s reality is different. Customers are looking how to solve their business problem using agile software and business models with fast ROI. At the same time, PLM requires significant investment in process organization and company transformation. Because of that, customers are looking for "predictable" licensing models that will allow them to grow PLM implementation in the future. It is an interesting time to be on both sides and I can see lot of changes in the future PLM business and revenue models. Just my thoughts…

Best, Oleg


What the Dropbox price drop means for engineers and cloud PDM?

September 2, 2014

engineering-cloud-storage-pdm

Cloud storage is an interesting place these days. In my article CAD companies and cloud storage strategy few weeks ago, I discussed the aspect of cloud storage business. Cloud storage companies want your data and for that purpose they will make it very easy for you to sync your data into cloud storage.

Dropbox just made another move and simplified their cloud storage pricing model. Navigate to the following Business Insider article to see some interesting aspects of comparison between cloud storage providers. The most interesting part of the article speaks about specific cloud storage features – view only, password protection, time expiration and remote delete.

Dropbox’s new Pro plan also offers a few collaboration features, including “view-only” permissions, which is helpful for freelancers and contractors that want to show mockups to their clients without letting them make any changes. Dropbox Pro also lets users password-protect their links to any folders or documents, and even apply expiration dates to those items. As PCWorld’s Zach Miners points out, this would be useful for wedding photographers that only want to allow access to a particular album of photos for a limited time. Finally, Dropbox Pro will also let you delete any Dropbox files from a lost or stolen device while keeping those same files backed up in Dropbox’s cloud, which will be a relief for many who have ever worried about losing sensitive data on a misplaced device.

1TB is a lot of data. Even if you think about heavy CAD files, it is a lot. My guess 1TB can cover a storage for CAD and related Office files in many companies. But features differentiation is more important in my view. Dropbox price drop and attempt to introduce important features made me think about future trajectories of cloud storage and how it will related to engineers and growing number of cloud PDM solutions.

1- Cloud sync. Cloud storage will be free very soon. It will not be a differentiation factor to decide what solution to choose. The ability to bring your data to the cloud and bring it back at the time you need in a secure manner will be a key thing to evaluate. You can see how Apple, Google, Microsoft, Dropbox and other vendors are trying to simplify the cloud sync story for their eco-systems. So, think about your tools (CAD systems first!) and they way you work with your data before deciding to sync your files into one of major cloud storage service. To simplify data sync for CAD and other tools can be a first place to show advantages of cloud PDM.

2- Data access control. This is another fundamental functionality. Engineering data contains lots of dependencies. People are re-using the data between projects, working in teams and with different outsource providers. To support access control schema that can support individuals, small companies and teams in large companies can be a challenging task. This is a place where cloud PDM vendors can show a second advantage vs. generic cloud storage providers. For many companies, this is a showstopper to move into cloud solution.

3- Viewing service. It is extremely important to view files and data remotely without downloading file(s) to your computer and mobile devices. Engineering data stored in a very specific formats. To be able to access this data when it located remotely in the cloud can be a third important advantage of cloud PDM tools.

What is my conclusion? The time to pay for cloud storage is almost over. The next battle in cloud solutions competitive race will require to show functionality specifically tuned for engineering data. Cloud sync, access control and viewing is top 3 elements of any cloud PDM solution. The solution that will get it right, has a chance to win cloud PDM competition game. Just my thoughts…

Best, Oleg


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