Cost Reduction in the Downturn: What PLM Support Do You Need?
by Roger Tempest
Everyone knows about the downturn, but its effects are far more severe in some industries than others. For companies at the severe end of the scale it can mean the complete abandonment of PLM planning and implementation as everything becomes focused on cost saving.
As predicted in the December 01, 2008 issue of 2PLM: "If PLM is seen as being peripheral to the business, then there could be a much greater downturn in the PLM marketplace during 2009 than in any ordinary recession. Action needs to be taken now." So what is the PLM industry doing to help?
Currently, the answer is: very little. There are some offers of free CAD training for those who have been laid off, but this hardly stimulates PLM within user companies as they battle forward. In general, as user companies in affected industries retrench and try to survive, the PLM providers' response is to cut their own spending and try to sit it out. This is poor support for customers who have fed them for so long.
The headline recession-hit industry is automotive, so that will be used as an example here, but if your industry is in a similar position then read on.
If the size of the PLM marketplace in 2007 was around $24bn (Cimdata, May 2008), then the annual PLM spend of the automotive industry within that amount must have been comfortably over $1bn per year. That represents a lot of life-blood for PLM vendors and service providers.
If the current automotive suffering were to reduce that to zero in 2009, the PLM supply side (most of which has wide industry diversity) could cut back its own costs, focus on other industries that are still buying, and wait for the automotive revenue to come on stream again when conditions normalise. But is that the way to treat a customer base that has been so committed and provided so much revenue?
The general support from vendors in response to the downturn is to recommend that companies try to understand the real business value of PLM, and link the PLM benefits to business objectives. For the automotive industry, which does not have a current purchasing process on which to attach consultant days, this support is mainly rhetorical.
Whilst this hands-off approach is the easy option for vendors, it carries significant risks. The universal spending freeze could give automotive companies huge negotiating power if they act in unison. After a year or so of not spending on PLM, companies will get used to it and might decide to rein in for even longer. The return of the automotive industry revenue stream that vendors are waiting for could be discretionary, rather than automatic.
The question is then: "How can the PLM vendors be proactive without spending money on empty gestures?" The purpose of this article is to help find the answer.
Taking the automotive industry first: if you are involved in PLM within the automotive industry, try to identify the single most important thing that your PLM vendors or providers could do, that would help your own PLM situation in the short term. Something that would be immediately useful for as long as your company is in "recession mode". If you send your comments via the link below, the PLMIG will coordinate the results in confidence and present a summary in the next issue of 2PLM.
The same invitation applies for every other industry that is freezing PLM because of the economy. If you imagine a "fairy godmother" who could grant you one PLM wish, what would that be? The more feedback we have from more industries, the more chance we have of setting up something useful.
If the results turn out to be fragmented, then obviously there is nothing that can be done - but if there are common views then it will give a clear indication to the supply side that action should happen.
We also welcome input and feedback on this from non-user organisations within the PLM space, via the same link.
Please send your comments via firstname.lastname@example.org.
Roger Tempest is co-founder of the PLMIG.
by David Potter
Some of you will already have read the article Tech Standards Loom As Last Big Hurdle To Internet Of Things mentioned in the previous issue of this newsletter by my colleague Lion Benjamins, as he argued not only that "the Internet of Things will affect your business" - meaning the PLM business - but also that it will affect PLM standards. But how can this be?
Certainly if PLM as a discipline were to remain focused on the beginning of life (BOL) of products and PLM standards were restricted only to those required to facilitate exchange of data between those application suites supporting that lifecycle phase, then the Internet of Things might have little effect. However, the future of PLM lies in the exploitation of information gathered not only at beginning of life, but also in the middle of life (MOL) and at the end of life (EOL) of a product, and the exchange and exploitation of that information across all three lifecycle phases.
The EU PROMISE Project investigated how technology and processes could be exploited to "close the information loops" and derive real value from information gathered in each of the three phases of a product's life. Thus data from any phase might be used to influence decision making in the other phases, for example factors prevailing at the time a product is made, or how it has been used can significantly affect its residual value at end of life; there are simply too many permutations to discuss here.
By the end of the PROMISE Project in May 2008, research into the data gathering and identification technologies required, such as barcode, all frequencies of RFID, several wireless sensor network standards, their practical application to 10 industrial-strength demonstrators, plus an understanding of the nature of the communications infrastructure necessary to "close the PLM information loops", led to the clear realisation that this technical infrastructure was indeed analogous to the much vaunted but still rather vaguely defined "Internet of Things".
Furthermore the partners of the PROMISE Project recognised that its resulting processes and technologies could be applied much more generically than simply to PLM, and could be extended to, among others, healthcare, supply chain management and traceability. "Closing the PLM information loops" had become "closing the information loops across all phases of all kinds of lifecycles".
Therefore PROMISE also found it necessary to distinguish between traditional PLM, which is widely interpreted to apply only to parts of the beginning of life phase, and the applicability to different kinds of lifecycles. Thus the concept of "Closed Loop Lifecycle Management" (CL2M) was born.
Several partners of the former PROMISE Project have since been preparing with The Open Group to form a managed consortium, building on many of the results of PROMISE to strongly influence the development of the architecture and standards crucial for the successful realisation of the Internet of Things and Closed Loop Lifecycle Management. The first public step of that launch will be in a one-day parallel meeting on April 29th, 2009 at The Open Group London Conference.
The Open Group turns out to be an ideal partner for this initiative since the realisation of the Internet of Things has implications way beyond technology, impacting such areas as how it will fit into IT systems architecture in general and impact on business models and processes. All of these are highly developed and visible strengths of The Open Group, its architecture framework (TOGAF) and its worldwide network of accredited architects.
The main objective of this consortium will be to position and establish the architecture and interface results from PROMISE as the basis for further work leading to an open international standard enabling a global infrastructure that will support multi-directional information exchange between all kinds of information sources, including sensors, decision support systems and existing legacy systems - in essence the backbone for the Internet of Things.
In conclusion, let me make one thing very clear, we know that PLM standards in the traditional PLM space are mature and continue to be refined, we are not proposing to "replace" them nor interfere with them. However we are appealing to those exponents of PLM, both companies and individuals, who can grasp the vision of CL2M, to join with us and collaborate in this initiative to close the information loops between lifecycle phases.
Together we can expedite the realisation of Closed Loop Lifecycle Management and the Internet of Things. You can register your interest in participating in the managed standards consortium using the following link: The Open Group: PROMISE Interest Group or meet us at their London Conference on April 29th.
David Potter is Chief Technical Officer, Promise Innovation International Oy., and former Chairman of the Project Steering Board of the EU PROMISE Project.
The Value of Business Process Management
by Scott Cleveland
I received a whitepaper from www.EvolvedTechnologist.com and with input from SAP, they wrote....
Sometimes it sounds as if proponents of BPM are suggesting that every activity of a corporation should be described and automated using formal business process models. Even the most enthusiastic proponents do not suggest that adoption of BPM go this far. Rather, the targets for BPM are the processes that are most important to creating value, those that will yield tremendous benefits if optimized, those that most need to rapidly change and evolve to keep pace with competitive markets.
They have listed what they believe is the business value of BPM and below is a partial list:
- Increased transparency - Management knows what everyone is doing and how they should be doing it
- Increased traceability - It is possible to find out what happened and what is going to happen with respect to operational processes
- Improved responsiveness and flexibility - Change can be effected more rapidly and precisely because the as-is state is documented and understood
- Continuous business optimization - As BPM implementation matures at a company, everything needed to understand performance falls into place
We concur with the text above. We believe that companies are a collection of processes. These processes fall into the 80/20 rule. Managing the 20% of your processes (the processes that are most important to creating value) will get you the most (80%) benefit. The difficult task is identifying those processes that make up that 20%.
Missing business values from the white paper...
- Increased control over process cycle times - Using BPM (execution) software, companies are able to establish how long a process should take. Making use of escalations and visibility into process status, they are able to make sure that a process is completed in a specified amount of time
- Decreased costs - Reduced costs will come from removing non-value added activities and adding efficiency to a process
- Increased revenue - Reducing costs and providing more goods/services with fewer people helps drive increased revenues
- Increased customer satisfaction - When we talk about creating value, isn't it the customer that determines the value? Processes that touch the customer should be given the highest priority
Certainly in this economy, we are all interested in reducing costs and increasing revenues. Improving interactions with your customers is a key ingredient to increasing revenues. We refer to all 3 of these as the "Triple Crown" of business and who wouldn't like to win the "Triple Crown" of business?
Scott Cleveland is VP Sales & Marketing, Ingenuus Software.
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Delcam announced it added DM Solutions to the FeatureCAM reseller network. Details
Delcam announced it appointed Rick Huddleston as FeatureCAM Representative for Oklahoma. Details
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Informative Graphics Corp. announced an integration partnership with Trinity Technologies. Details
INUS Technology, Inc. announced it has entered into a new OEM Agreement with Scansystems Srl. Details
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Cadence Design Systems, Inc. announced that the Cadence Incisive Palladium Dynamic Power Analysis product was recognized with an EDN Innovation Award. Details
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Eurostep announced that, on 27-28 April, 2009 it will be showcasing the Verification & Validation Knowledge base and the PDAI pilot developed for CFMS. Details
Exostar announced it has been named to the Washington SmartCEO Magazine/BDO Seidman LLP 2009 Future 50. Details
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GlobalSpec announced that it has exceeded five million registered users. Details
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Omnify Software announced that Managing Automation Media announced winners of the 2009 Progressive Manufacturing 100 awards. Details
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