Cloud PLM and IT Basic Instinct

January 27, 2012

The amount of publications about PLM and cloud is growing. This is not surprising me. There are two reasons to that. Cloud is clearly hyping. Second – major player such as Autodesk is making their move towards the cloud. Carl Bass, Autodesk CEO announced that today’s technologies allow to Autodesk to come with a reliable and affordable PLM system. Almost at the same time, during DSCC 2011, Bernard Charles is announcing that DS invested about $2B in the development of the most sophisticated online cloud platform in the word (he was talking about Enovia platform).

I was reading ECN article Seeing Past the Clouds – PLM and what’s What? by Eric Marks. The article is speaking about trends in the cloud PLM and four possible strategies: public, private, community and hybrid. I can clearly understand the difference between public and private (read one of my previous posts – PLM Cloud: dedicated, private, public). However, the concept of community cloud is a bit complicated, since it is point on how cloud services will be used, rather on if it goes to public servers and multitenant opposite to private server placement. At the same time, I found the passage about "hybrid cloud" the most interesting. Here it is:

And lastly there are “hybrid clouds” where a private cloud can extend onto a public cloud for specific activities and on an as-need basis. The benefit of a hybrid approach that incorporates a public cloud is that it provides extra performance scalability for the private cloud that would be in use.

I can clearly see how it can make a difference. I’m sure you’re familiar with Basic Instinct movie. Let me make an association with IT. The basic IT instincts are control and cost. As I’ve been told by IT people in one of the manufacturing companies in Mid West – if the cloud is be more cost-effective for effective for us, we will be moving towards the cloud. Otherwise we stay in our racks. Hybrid model allows to keep IT on premise and extend to cloud in order to have a cost effective expansion and scale. It sounds like something that can keep everybody happy and, at the same time, it is clearly Trojan horse that cloud providers will put in organizations. As soon as such solutions will be running in production, rest of the game for cloud providers will be to leverage the economy of scale and not to blow up "security" red-herring.

Another passage from ECN article practically confirms that.

According to Edward Quinn, Mevion Medical Systems IT Manager, “to do this, Mevion is leveraging a “hybrid cloud” in order to be able to scale quickly and efficiently to distributed cloud data centers at far less cost than purchasing expensive equipment or renting/building out corporate data centers. The IT department can leverage the advanced international infrastructure already in place by leading cloud computing companies and activate and pay only for the services that its business needs.”

What is my conclusion? There are many reasons why companies can decide to move towards the cloud – better collaboration, ease of install, mobile, and many others. However, the cloud fundamental is about how to drive costs down using the economy of scale. PLM won’t be an exclusion from this game. In order to move towards that, vendors need to pass "IT police" in every organization. Hybrid cloud looks like a good weapon leveraging IT basic instincts. Just my thoughts….

Best, Oleg

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PLM Cost and Enterprisey Clouds

December 30, 2011

PLM is a costly piece of software. Software licenses, installation, implementation, support, services. All these components of PLM software make the decision of manufacturing companies to adopt PLM software questionable. In the past, out-of-the-box solutions promised by software vendors claimed to decrease PLM software TCO. However, it was only a promise. These days "cloud" perceived as something that can make this change. If you listened to Autodesk Buzz Kross recently, you probably noticed the following passage from Autodesk Nexus 360 announcement:

"Our approach to PLM is a sharp contrast to the decades old technology in the market today," said Robert "Buzz" Kross, senior vice president, Manufacturing Industry Group at Autodesk. "Autodesk 360 for PLM will enable customers of all sizes to achieve the full promise of PLM with a scalable, configurable and intuitive solution.

The following slide presented a month ago during AU 2011 shows that Autodesk approach is to provide much more affordable PLM solution.

Cloud and IT’s bluff

I was reading blog article by David Linthicum. One of the topics discussed there was related to efforts made by cloud providers to provide solutions acceptable by enterprise companies. The questions of security and data replications are probably on the top of the list by many providers. One of the solutions mentioned was Google’s high availability data replication (so-called high-Replication Datastore). At the same time, according to David, introducing multiple "enterprisey" features can remove a potential to provide affordable enterprise-cloud solutions. Here is the passage:

The problem I have with this process is that much of what’s valuable in the world of cloud computing is the simplicity and cost advantage — which is quickly going away as cloud providers pile on features. The good news is that enterprises won’t have an excuse not to move to cloud computing, and adoption will accelerate in 2012 and 2013. However, as cloud offerings appear to be more and more like enterprise software, the core cost advantage of cloud computing could be eroding.

What is my conclusion? The key to make cloud solution cost effective is to keep the right balance between enterprise IT requirements and capabilities of cloud-based software. Some of these "enterprisey" cloud requirements are reasonable, and some of them are typical "red-herring". We are going to watch the process of balance finding in the next few years. Just my thoughts…

Best, Oleg

Image: scottchan / FreeDigitalPhotos.net

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PLM, ECO and Cost of Change

December 21, 2011

Cost is an important topic. Period. Everybody agrees with this statement. I can even say many companies investing a lot in their ability to calculate and predict the cost of product. Compared to that, cost of change is much less exposed. However, cost of change can be even more destructive for the overall cost of the product you manufacturing and the business. Recently, I’ve been spending some time analyzing how companies are managing changes and how PLM systems are supporting them. I decided to put some thoughts about change management and cost calculation.

Cost Standard and processes

There are several policies or standards you want to have in your company when it comes to cost management and change processes. Change cost policy – usually specify the changes that required cost calculation (or not) and company payback period. Cost calculation document. You want to have it in the way that allows you to follow up it from the historical perspective as well as an instruction how to do so. The important question of every PLM implementation is how you are able to automate cost of change calculation and embed it in the overall change process.

Is there something you can call "average cost of change"?

The perception of people in any company is that cost is expensive thing to have. At the same time, it is hard to come with a range of how much an average change cost. $1K-5K is a range you might be hearing. But it is too broad. Another point of confusion is to conclusion out is included in this cost – engineering services, labor, equipment, etc.

Cost Calculation Classification

I can classify all changes into four groups: cost reduction, product maturity, product development, others. Depends on what type of change you are estimating, actually change cost calculation can be different. If you estimating change that marked to save cost or time, you absolutely need to calculate the cost. However, if you making a change that related to product maturity, you probably can skip some cost of change calculation. Taking right assumption can significantly improve the speed of change processes, which is an essential part of every manufacturing organization.

What is my conclusion? Change management is one of the most complicated discipline in product development lifecycle. To measure it right and tack the history and metrics of changes together with cost calculation is tricky and very important. I haven’t seen ready out of the box implementations that can do so. Main reason – system customization is complicated to have all information in PLM system. Sometime, if cost calculation is complicated, you can calculate profit erosion. What is your practice and experience? Speak your mind, please. Do you have any examples you can share?

Best, Oleg

Image: jannoon028 / FreeDigitalPhotos.net

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The Enterprise and PLM will rock 2012?

December 18, 2011

As usual, at the end of the year, there is a time for blog posts with predictions, opinions and future trends. Last 2-3 years of technological boom were around consumer applications – social, web, mobile. These are three major application field that developed many technologies of the past years. How it may impact enterprise and PLM?

I was reading thebarefootvc blog earlier today – 10+ trends: recap of 2011 and what’s next… One of the trends mentioned in the context of 2012 was Enterprise. This is my favorite passage:

The Enterprise: The last few years have focused on consumer usage and adoption of technology. However, large companies are recovering from the shock of the 2008 collapse and re-aligning to the New Normal. Technology can play a role through cost reduction and creating efficiencies (virtualization, cloud computing) as well as top line revenue enhancement (utilizing data and social media for better customer service and sales strategies). New financial services and healthcare regulation will also create the need for related IT solutions.

It made me think about PLM in 2012. Few important events happened in the end of 2012. One of them – Autodesk entered PLM. This is an important move. Autodesk means "volume". Consumer market is also about volume. Volume means broader adoption and lower prices. Volume is about Toyota and not about Lexus. Second is a broader adoption of the cloud technologies. For many enterprise organizations now it is a question of "when" and not a question of "why".

What is my conclusion? 2012 has a potential to become a year of PLM rock stars. Cost will be one of the most important factors of PLM in a near future. Cloud technologies and behemoths like Autodesk will be playing a significant role in this process. Just my thoughts…

Best, Oleg

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What is PLM Software Associated Cost?

November 7, 2011

Buying enterprise software is different experience from busing consumer goods or even automobile. Direct cost (licenses) is very often is a small fraction of the overall cost. So-called Total Cost of Ownership (TCO) is combined from multiple elements – licenses, maintenance and support, implementation, etc. Few days ago, I was reading an interesting article in Redmondmag.com – Study: SharePoint cost high due to inadequate skills. The article is talking about what is the associated operational cost of SharePoint. I found the following numbers in research made by Osterman Research interesting:

Theaverage cost to manage SharePoint is $46 per user per month, according to a "State of the Market" study by Osterman Research, which surveyed "more than 120 IT executives, managers, and staffers at mid-to-large enterprises." The study, conducted via an August survey, was commissioned by Seattle-basedAzaleos Corp., a provider of management services for e-mail, collaboration and unified communications, based mostly on the Microsoft stack.

What is my conclusion? Actually no conclusion today. I wanted to ask your advise. SharePoint is obviously not a PLM system. However, the nature of problems SharePoint is solving for many organizations is very similar – content management and collaboration. I was thinking about some comparison and tried to find similar numbers for PLM systems. What is the cost PLM system operation? What does it included? Is it a meaningful component of your PLM operational budget?

Best, Oleg

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What if… “PLM on the cloud” succeeds?

May 24, 2011

Push aside our fear about security and PLM on the cloud. I was reading Washington Post’s “Video Viewing on Netflix Accounts for Up to 30 Percent of Online Traffic“. The following link leads us picture comparing web traffic coming from various providers. Video is king on the web.

CAD files, visualizations and other heavy weighted stuff. It is not lightweight Twitter 140 chars status updates or Facebook low resolution picture sharing. Cloud service providers from Amazon to Google and Rackspace are building data centers to accommodate the future of cloud applications. It made me think “What if PLM on the cloud succeeds?”, what will be the cost of this solution? CAD and PLM companies are starting to offer solutions to share data on the cloud for better collaboration and data exchange. I wrote about such a type of the solutions before.

The following quote from Wash. Post article is interesting:

Last week, Cable One introduced metered prices for U.S. customers that include 50 to 100 gigabytes per month. According to its Web site, the company (owned by The Washington Post Co.) will charge customers 50 cents for each gigabyte beyond the caps, but it will continue to offer a flat-rate monthly plan also.

Beginning this month, AT&T began limiting data usage to 150 gigabytes for DSL subscribers and 250 gigabytes for its UVerse broadband customers. Users will be charged an extra $10 a month if they exceed the cap. Comcast also has a 250-gigabyte cap for its broadband users.

What is my conclusion? The PLM on the cloud conversations is always about the security and never about the price and cloud usage. I don’t know if my drawings will be stolen faster on cloud. The question what if the transfer of my drawings, models, animations and rest of the stuff on the web will be costly. It might be significantly more costly than today’s software licenses. What is your take?

Best, Oleg

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CAD, PLM and Product Cost

February 7, 2011

Cost is important. Period. About 70% of product cost is defined during the design phase. So, to have PLM helping you to predict a product cost and drive it down can be a very important feature and benefit of spending the time to implement your PLM software and set up right processes. However, to get an enterprise view of cost is not a simple task in manufacturing companies. Last year, I wrote – PLM and Enterprise View of Product Cost. Since then, I had few very interesting conversations about a product cost related issues.

Who is working on this?

I wanted to find recent examples of tools (CAD, PDM, PLM) dealing with cost calculations. I found few examples and references of PLM vendors doing “costing work”. Agile, Dassault, Siemens did some work. However, I didn’t find visible public references related to the cost integrations into their product suites. I know two vendors – aPriori and Akoya, focusing on cost issues. I thought, PTC InSight is planning to provide a solution for cost visibility. However, for the moment, more focuses on environmental problems. The following two videos present slightly different aspects of cost calculation.

SolidWorks World 2011 Demo Preview (thanks deelip.com for capturing this video during SolidWorks World 2011) presents future SolidWorks cost calculation capabilities. The important element of this implementation is the level of integration of costing functions into the design environment.

Obviously, SolidWorks’ focus is on part manufacturing-design aspects. SolidWorks solution is not up to solving enterprise cost scenarios.

Then another example comes from aPriory video. aPriory is a company developing Product Cost Management software. Watch the following video to get a glimpse of understanding how stuff works.

This video made me think again about integration with various tools and information related to the cost. This example is more focusing on multiple aspects of product cost and not limited to “design environment” only.

Cost: Important, but NOT transparent

I can hear two voices related to the cost. One – cost is (obviously) important. The ability to control cost is absolute. The enterprise software (in general) and PLM specifically needs to solve the problem of cost analysis and visibility. Second voice says, cost is not transparent in an organization. The transparency of cost is not obvious and there are multiple interests a company to make cost transparent. Part of them is coming from work with suppliers, part of them is coming from manufacturing.

PLM Software Fails, Excel Wins

I can hear “Design for Cost” more and more often. At the same time, I don’t see products in this space demonstrating strong functionality and capabilities to solve costing problems. When talking with customers, I’ve heard about the complexity of the costing problem and inflexibility of solution. Most of the solutions, I’ve seen relies on our “PLM buddy” – Microsoft Excel to solve any problems.

What is my conclusion? I think, costing is another place where MS Excel has huge market dominance. Software vendors slowly, but started to understand the importance of vertical cost integration. The solution in this space is not obvious and requires significant effort in data integration. So far, I’ve seen little activity in this space. Just my thoughts…

Best, Oleg

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PLM SharePoint Thoughts

October 22, 2010

I’ve been attending SPTech Boston Conference today. Navigate your browser on this link. You can get some information there. Microsoft is rolling SharePoint 2010 out, and I wanted to understand what traction it takes in the community of developers. To understand that I spent couple of hours on the SPTech Exhibition.

SharePoint Collaboration

Collaboration remains one of the most popular words in SharePoint field. The companies on the exhibition can be classified into to two groups: 1- Administrating SharePoint; 2- Collaborating with SharePoint. Compared to my previous SharePoint conference, I can see a definite trend down of companies helping people to install, configure and maintain SharePoint. Does it mean stuff became easier for the last 1-2 years? No, I don’t think so. I think people just learned a bit.

The second group of companies is focusing on how people can collaborate with data and documents. SharePoint remains a strong player in this domain. Nevertheless, multiple vendors are working to make it more usable and more attractive. In the context of engineering software, it related to two fields – Viewing Solution and Document Sharing. Viewing solutions were presneted by few companies – adlibsoftware, Atalasoft, BAInsight, Surfray and some others. Most of the companies in this space, are working on formats of multiple document and struggling complexity of engineering documents. I will spend more time in coming weeks to learn more what these companies are doing.

The Google Wave Miracles

The very interesting things happen in what I call “after Google Wave” age. I can see companies coming with the nice ideas that very similar to the original Google Wave ideas. Google was very ambitious in their plans. Most of the products I’ve seen are similar, but trying to provide a niche solution. However, the following product was kind of different and interesting. VIZit from Atalasoft Inc. came with the early beta of Vizit Social eXchage (VSX). They are extending SharePoint with a very interesting feature – social discussions around SharePoint content. I found it kinda cool. You can mark any piece of content in document (i.e. PowerPoint, Acrobat PDF, Word) and organize discussion of people around this topic. The product is still in beta. You can contact company using the following link.

The Cost of Free SharePoint
My last portion of SharePoint thoughts are indirectly related to Open Source SharePoint PLM solution announced few weeks ago. You can see more details in my previous blog about that – PLM SharePoint: Silver Bullet of Fierce Criticism. I think one important point was missed in previous article related to the SharePoint based PLM solution – solution cost. I want to thank ArnoldIT for sharing the link on SharePoint Price Calculator (the link was live when I published it). I think you can find it interesting. It shares some numbers and details related to SharePoint 2010 licensing. Here is the example I run on this sample:

What is my conclusion today? SharePoint is continuing to be interesting as a product that drives people and organization. The diversity of solutions on top of SharePoint is high and Microsoft continue to hold big gaps in functionality allowing to partners to develop decent solutions. At the same time, the price of “Free SharePoint” is far from free. The complexity of SharePoint solution is always beyond the average. You should consider it before you move… Just my thoughts.
Best, Oleg

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How PLM can Remove Business Waste?

September 17, 2010

I’ve been attending Technia PLM Innovation Forum early this week in Stockholm. My conclusion from this forum is that all organizations are looking how to optimize their performance. The organizational objective is to keep their margin model. The margin model is something that very fundamental to every organization. To change margin model is one of the most complicated changes. In order to keep margins, organizations need to find ways to optimize business characteristics that can help them to keep this margin model in changing outside conditions. One of the possible ways to do is to review your wastes? Waste removal has a direct implication on margin model and overall profitability of an organization. Can PLM help you to improve your situation and help to remove your Business Waste? I identified three potential business wastes that can be handled by a successful PLM implementation:

Process Inefficiency
The bad process organization can kill any organization. How to optimize? A lot of business wizards and software geeks are trying to resolve this problem. A whole discipline – Business Process Management and Optimization was developed to handle it. However, the successful process implementation is a very complicated task. PLM implementations can bring pain relief in this space. Look on the following few pics. Processes is really complicated story:

However, the focus on how to make process implementation more dynamic is very important. Future will not be well-defined. In the future we will need to face ad-hoc process optimization. This is going to be a big deal for PLM vendors. 2-3-year implementation plans are not an option anymore.

Increased Cost
To manage cost is very complicated task. However, to understand a cost is extremely important. What tools can help you to do it? ERP and other financial tools are controlling 20-30% of cost. Rest is defined during product designs. Can PLM help? Definitely! To have cost-related decisions embedded into a product development process, can be a next frontier for PLM implementations.

Low Productivity
The last, but very extremely important. There are two aspects – organizational productivity and personal productivity. PLM is mostly focusing on organizational productivity these days. Team collaboration, data management and access. However, PLM Is under-serving personal productivity segment. This is where I can see the next focus. To improve personal productivity, we need re-consider lots of things – data availability, devices and mobility, flexible process changes, etc. This is a big think, in my view.

What is my conclusion? Coming decade is going to change a lot in the business of many companies. The question how to improve productivity and remove waste becomes more and more important. Will PLM companies be able to propose solutions to solve these problems? A very good question. I have no answers today.Do you?

Best, Oleg

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PLM, Design Quality and Cost of a Product

February 9, 2010

I want to continue the topic I started yesterday about Value Engineering and discuss how PLM can be potentially used to manage cost of a product. In my view, cost is a very sensitive and complicated topic in the organization. When PLM is normally mentioned as a tool that allows us to manage and optimize product cost, in practice I see the cost topic as pretty complicated. Before discussing what practices I can apply in PLM to manage product cost, I want briefly review product cost components.

Product Cost Elements
There are quite many cost elements. I made some diagram to figure out them below. The main total product cost combined from Direct cost and Indirect cost. The major part of direct cost is material cost. Additional components of direct cost are purchased parts, labor and tooling. Indirect cost combined from Overhead, Selling Expenses, profit and discount. Direct and Indirect costs together can be presented as a product list price.

There is additional cost classification terminologies that apply to elements I just mentioned. Manufacturing cost is  combined of variable and fixed cost. Total cost combined from manufacturing cost and selling expenses. Finally, there is the selling price combined from total cost and profit.

Product Cost, Design Cost and PLM
If we will analyze all cost elements and compare it to the design cost, we can learn that design cost is insignificant in comparison to the manufacturing cost. And this is a very important observation, in my view. On one side, design cost, itself is very small. However, on the early design stages, we have a very significant impact on manufacturing and total product cost. It means that by improving design cost, we can get significant improvements and decrease product cost. It also means, that if the company is using PLM system that allows to estimate a final cost of the product on the early design stages, it can be huge benefits and can influence overall product design and manufacturing.

What is my conclusion today? I think, cost analyzes is something that should be considered as an important part of PLM system implementation. PLM has a potential to become a system to handle all cost related data and provide total cost estimation based on current design options. From what I know, such implementation happens rarely today. My hunch is that PLM implementations and technologies today are struggling to integrate systems that responsible for the cost related information – design, ERP, requirements, supply. I’d be interested to hear what are your practices in the cost management during design phase and later? Does it seem as an important issue for you?

Just my thoughts.
Best, Oleg

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