How to Know When Product Lifecycle Management Is Not For You
October 25, 2013
Strategies for product development and management can be extraordinarily useful and profitable -- or they can be red herrings, rabbit trails you’re better off ignoring. For some companies, product lifecycle management (PLM) can be one of them.
PLM is an information strategy in which a company creates a coherent data structure by consolidating systems, according to an introduction from Siemens. It “lets global organizations work as a single team to design, produce, support and retire products… capturing best practices and lessons learned along the way.”
The purpose of PLM software is to help manage a product from ideation, design, and manufacture through service and disposal, bringing together such components as computer-aided design (CAD) and manufacturing, product data management, and digital manufacturing.
PLM is unique “because it drives top-line revenue from repeatable processes,” by providing the “depth and breadth needed to digitally author, validate, and manage the detailed product and process data,” according to Siemens.
PLM Kills Innovative Ideas
So goes the theory. Yet many PLM users have found that they waste “more than half of their innovative, business-viable ideas because of suboptimal product lifecycle management processes,” according to a survey reported in European Communications.
In 2003, when PLM was the new, hot management buzzword, CIO magazine wrote that “PLM applications hold the promise of seamlessly flowing all of the information produced throughout all phases of a product's life cycle to everyone in an organization, along with key suppliers and customers.”
An auto manufacturer was considered the paradigmatic organization for PLM at the time, which was appropriate because what is recognized as PLM today was created in 1985 by American Motors Corporation in developing the iconic Jeep Cherokee. The ability to pull product drawings and other documents from a central database helped resolve engineering conflicts faster.
As the software has become more ubiquitous and easily integrated with other business processes, more and more people have become involved -- engineers, purchasers, even executives desiring greater oversight.
The result was the significant flaw of having too many cooks.
PLM suffers from “too much complexity, ineffective financial control and a lack of leadership,” resulting in operators holding back from “competing effectively,” European Communications reported.
Survey respondents reported investing about 10 percent of their revenue in PLM, but using it to launch only 48 percent of their product ideas, partly because PLM added as many as 23 stakeholders in some cases to the decision-making process -- from marketing and product management to IT, finance and network architects.
Teresa Cottam, chief strategist at Telesperience, a communications and media analyst firm that worked on the survey, said such cumbersome processes render it “difficult to compete with more agile operators.” Rebecca Prudhomme, a vice president at Amdocs, a software company that supported the study, added that companies using PLM suffered a double loss by “missing potential cost savings they could have achieved by moving to centralized and automated processes, and also the potential revenue from new products they could have introduced.”
Product Lifecycles are Unpredictable
An article in the Houston Chronicle’s Small Business section noted that product lifecycles are notoriously uncertain and difficult to predict: “The product life cycle concept postulates that even the most successful products may lose their appeal eventually due to forces such as changing consumer demand or technological obsolescence.”
Many manufacturers believe that a product lifecycle concept is unreliable. “For example, a dip in sales during the growth stage may only be a temporary lull instead of a sign the product is reaching maturity,” the Chronicle reported. But if companies are too fast on the trigger, reducing promotion of a product too early, “it may limit the product's growth and prevent it from becoming a true success.”
But If You Must...
There are reasons companies reject PLM, and good reasons to at least think twice before buying one. Tesis, a PLM software provider, admits that many companies that buy PLM fail to clarify their objectives in advance and jump into a purchase with “only a vague concept of the benefits of PLM.” Such companies need to examine the ROI much more carefully before deciding to buy.
Tesis also recommends “modifying business processes accordingly and involving everyone affected from the very beginning, to ensure that they are ready to adapt to changing circumstances.”
Cottam added that a business determined to implement a PLM solution must make sure it has an “end-to-end PLM solution that can deal with the scale and complexity” of the business model. Otherwise “the PLM bottleneck could choke future revenue streams.”