The Role of Business Intelligence in PLM

October 5, 2011

Business Intelligence (BI) is a fascinating combination of words. Each time I hear about BI, I’m confused a bit. The formal definition of BI is very complex. Here is the extract from Wikipedia and, in my view, it is too long to be explained to a human. You can navigate to the following Wikipedia link to read more.

Business intelligence (BI) mainly refers to computer-based techniques used in identifying, extracting,[clarification needed] and analyzing business data, such as sales revenue by products and/or departments, or by associated costs and incomes.[1]. BI technologies provide historical, current and predictive views of business operations. Common functions of business intelligence technologies are reporting, online analytical processing, analytics, data mining, process mining, complex event processing, business performance management, benchmarking, text mining and predictivepan> analytics. Business intelligence aims to support better business decision-making. Thus a BI system can be called a decision support system (DSS).[2]

For many years, I thought about BI as a reporting mechanism or set of tools. The number of vendors in this space decreased significantly after mega acquisitions that were made in this space by Oracle (Hyperion), SAP (Business Objects) and IBM (Cognos). Few more acquisitions in this space were made, but today I don’t see a dominant pure-BI player that competes with large three I mentioned above.

Is there a role BI can play in PLM? CIMdata recently published a white paper "The strategic value of Business Intelligence in PLM". The paper sponsored by eQ BI Technology – an interesting outfit playing with BI technologies in the domain of product development. The whitepaper is available for free and you can download it from CIMData website. Navigate to the following link (note- you have to be a registered user of CIMData. It is free, but I found CIMData website user experience a bit complicated). What I can learn from CIMData pages, in a nutshell, can be summarized as following.

1. To analyze information in manufacturing company is important, and it is not a simple task.
2. Decision makers need to have various types of information reports
3. Many of the available solutions in this space are complicated and not easy to deploy and use.
4. The value of a potential solution that can bring a decision-oriented information can be significant.

Here is an interesting passage from CIMData paper:

Personnel at all levels need concise, timely information tailored to their task needs, regardless of whether they are a designer, a project management or a senior executive. To address the torrent of data that is being created by multiple business systems, companies are using business intelligence and analytics solutions that provide users the right information, in the context, for their needs. This is especially important for product development and PLM. BI solutions gather, aggregate, analyze and disseminate information with historical, current and predictive views of that information to facilitate decision making.

CIMData wasn’t the only analytic company in PLM space researching Business Intelligence topic. Jim Brown ofTechClarity discussed the value of BI in PLM in his whitepaper – Business Intelligence Extending PLM value. This paper was published back in 2009, but I found it quite relevant today. Jim is talking about multiple options of BI applications that can provide a return – connecting engineering and services, improving project timeline, identify cost saving opportunities and many others. Here is a passage from Jim’s conclusion about BI:

PLM implementations have matured to a scope and state that offer significant potential value from mining the underlying data. Accessing this information can help identify exceptions, manage and improve processes, and identify strategic trends that may uncover significant insight and value.

What is my conclusion? BI is clearly addressing the right problem. However, it seems to me, the approach of BI is a bit outdated. My hunch there is a segment of BI market that will pay big money to analyze their business data. The two companies CIMData brings in their whitepaper – Lockheed Martin and ATK Space are probably these types of companies. However, for many companies’ BI – means an expensive addition to existing ERP systems (result of Oracle, SAP and IBM acquisitions). If I will try to think about BI in simple language, I’d be still using word "reporting". eQ BI (company mentioned by CIMData) is providing reporting solution for TeamCenter. To extend reporting solutions of existing PLM tools can be a reasonable next step for BI in PLM. Just my thoughts…

Best, Oleg

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Posted by olegshilovitsky

Innovation On The PLM-ERP Edge

January 30, 2010

This post was born as a consequence of on-going conversation with Jim Brown of TechClarity. Jim and I have a long history of discussions on different topics offline, and we are in agreement on many of them. However, in spirit of what Jim called “healthy debates”, I’d like to open our conversation online. I’m sure it will be beneficial for us, and I hope you will find it interesting and practical in the context of thinking about strategy for PLM and ERP implementation planning.

If you haven’t seen our previous posts, I’d recommend you to go and read them first in order to have a taste of context:

PLM vs. ERP – Don’t Manage Innovation!

Mythbusting PLM/ERP Integration

PDM/PLM and ERP are two topics and domains that continue to magnetize huge amount of the attention. In my view, it was true for the last 20 years, and it continues to be true these days too. In the spirit of getting away from three letter acronyms (TLA), I’d like to put below one of the best references on the way to present discrete (or manufacturing) concurrent engineering positioning from the David Ullman’s book: The Mechanical Design Process.

What I like in this process is that it clearly presents the level of the connections in manufacturing enterprise, including logical dependencies between three major domains – Design, Production and Business.

ERP and PLM Domain
In my view, PLM was born in the middle of the Design domain, in the beginning as a system to manage Product Form (CAD) and lately by systems and modules to manage materials (BOMs), functions and facilitate connection with outside domains. The best example I can bring here is the ability of PM to connect market requirements with business needs. If you will ever have a chance to see a successful integration between business/market models (i.e. Sales Configrator) and PLM, you can see how it can be beneficial. So, within the time PLM outgrows Design domain and spread out into some functions related to production and business. In parallel ERP, was “an accounting child”, born to calculate, forecast and provide clear answers on how health your business can operate. Started from Sales, Finance, Prices, Costs and Risk, followed by successful development of MRP and MRP-II topics and, finally, becomes ERP as we know it today.

Roles of PLM and ERP
As every healthy business systems, both ERP and PLM are trying to grow and Production Domain is an obvious common target for both PLM and ERP. Since PLM came from managing the form and materials in product design, the ability to manage product and work-in-process data are much better compared to ERP. At the same time, ERP holds very strong on the ability to mange operational environment. In the very competitive business environment, both domains failed to collaborate successfully and, instead of taking route to manage openness and process transparency moved to the “marketing excellence” by starting to invent slogans like innovation and execution. But, unfortunately, devil is in details and after agreeing about “roles” and “focuses”, you will get back to bits and bytes of design data, EBOMs, MBOMs and processes that span across the organization.

ERP Business in PLM
With the clear competition state of mind, ERP vendors are trying to push technical limits of ERP foundation to manage product design and work-in-progress design information. As much as they come to the business having fewer design roots design roots, the chances to successfully stretch ERP data models and infrastructures are more successful. When you almost cannot see automotive OEM or supplier that decides to manage design product configuration in SAP PLM, you probably will be more lucky to see high tech and telecom companies managing product engineering and manufacturing BOM in ERP. Also, companies tried to reduce the cost of “process management” by concentrating it inside ERP process infrastructure.

Border Between PLM and ERP
I think, to define the right border between PLM and ERP is a very complicated task. I’m almost sure, the results will be very different for various companies even in the same domain. There are lots of factors such as existing systems, implementation, history, legacy stuff, new projects. You can find companies pushing towards implementing CAD/PDM bundles and move process oriented environment towards ERP. You may see companies that put PLM as a global product development environment worldwide, while ERP is local and specific for business in the specific countries. So, I’m sure there are some patterns we can discover. However, try to establish this boarder will be heavily overused by marketing and competitive efforts and in the end will be disruptive for industry. I think PLM and ERP need to establish some common infrastructure and maybe be even open initiatives that can simplify the exchange of the information and process flowing between systems in the organization.

What is my conclusion today? PLM and ERP are a very complicated topic. There are multiple levels of influence starting from completely technical, moving to IT-related  and ending up with very emotional aspects. I hope Jim and I helped you to navigate and find your path in your future PLM/ERP projects.

Getting back to Jim’s post, there is one topic left- innovation. I want to touch it in separate discussion. I will call it my “Golden Eggs Innovation Strategy”. Stay tuned :) …

Best, Oleg

PS.

It was good to see the same day Joe Barkai (twitter @joebarkai) from IDC Insight joined our discussion with Jim on twitter and IDC blog: ERP vs. PLM: Debating The Wrong Question?

…So now we are debating PLM vs. ERP.  Some of these discussions have a very strong, and, in my opinion, incorrect undertone of IT architecture debate: who owns what data repository, where are the boundaries, what are the integration points, and so forth.  One blog discussion attempts to separate ERP as the “execution engine” from PLM, which is “innovation focused.”…

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3 Comments | Daily PLM Think Tank, PLM+ERP, Top Discussions | Tagged: , , , , | Permalink
Posted by olegshilovitsky

PLM vs. ERP – Don’t Manage Innovation!

January 21, 2010

I was reading Tech Clarity insight “Evolving Role of ERP and PLM“. The topic of PLM and ERP is not new. However, I was always looking for detailed analyzes of PLM and ERP functions and roles in the organization, especially taking into account latest technological and social trends. You can find the report on this link. It provides 15 pages of analyzes, and, I think, this is the biggest publication from last time I had chance to see about PLM and ERP together.

Below my notes, emphasizing points of agreements and disagreements with Jim’s report:

Distinct roles of ERP and PLM
The roles of PLM and ERP are blurred in the organization. For the last years ERP companies successfully acquired and developed their PLM portfolio. So, their presentation of PLM as “Yet another app in ERP portfolio” was quite successful. PLM fights ERP heavily on their ability of manage product and engineering data. Unfortunately, instead of becomes an ultimate product and engineering data shop, PLM is running upstream by trying to establish themselves as “Innovation Management”… This is something that made me feel bad. Don’t try to manage innovation! You just cannot…

Design and product data management
The need for design and product data management one is clear for me.This is undervalued zone. What exist today as a mainstream PDM is only top of the big iceberg. I think PLM needs to get back to the roots and fix PDM topic. Otherwise future crash is the only question of time. PLM needs to define themselves as “product data unbreakable”. Not what happens today, in my view.

Cross functional processes.
There are no PLM or ERP processes. There are “organizational processes”. Therefore, the process’s problem cannot be resolved in PLM or ERP separately. The step toward BPMN can be good for PLM. It will set up openness to the right level and will establish a spot for process improvement in the organization.

PLM and ERP integrations
This is a hugely disappointing topic. The PLM/ERP integration reminds me ball in the air when both players are trying to keep him flying and not landing.  Demand for data integration is huge. I’d expect here some technological thinking and not process-organization. Until now, this is in complete ownership of services and smaller partners developing specific integration application.

Where does PLM stop and ERP begins?
Don’t even try to put this border. To establish this border is the same like to establish gatekeeper on the firewall between engineering and manufacturing. In my view, this is a huge mistake. We need to work toward removal of this wall by using appropriated technologies, methodology, collaboration and social application.

What is my conclusion after all? I can identify two PLM trends. (1) Cross organizational processes. By ability to connect and interplay different organizational process, PLM can be in unique role in the organization representing a product-oriented activities. (2) Future design excellence, 3D tools, consumer-oriented experience.

PLM and ERP need to stop fighting in the organization. As a first step, PLM needs to take the next level in the organization and embrace a cross-functional processes and organizational needs that cannot be served by any of existing systems.

Just my thoughts.
Best, Oleg

49 Comments | Business Process Management, Daily PLM Think Tank, PLM+ERP | Tagged: , , , | Permalink
Posted by olegshilovitsky

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