TRAILBLAZING SHORTER PATHS TO PLM VALUE

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NAVIGATING THE TRAIL TO SOLVING REAL PROBLEMS When you examine the product development process, you discover that problems are everywhere. You can certainly find them in engineering. There might be issues in testing and certification. There could be complicated processes and procedures related to platform planning. And there are often significant product development problems that arise outside of engineering. Procurement might need specific activities to share design data securely with suppliers. Operations might need to support a particular effort to gain sign-off from customers in the middle of development. Compliance might need to verify that regulatory requirements have been satisfied. Any of these issues, and many others, could be a critical issue that needs to be addressed as soon as possible.

Product Lifecycle Management (PLM) systems have great promise as a way to address these issues. They offer powerful capabilities to author, manage and track product data. They provide functionality to automate and manage projects and processes. They deliver tools to share and collaborate with internal and external product development stakeholders. They present the means to analyze and report on a range of organizational metrics and product characteristics.

However, realizing the value of the value of these capabilities is exceedingly difficult with traditional on-premise PLM systems. The total cost of ownership is high, and it requires large upfront costs, specialized hardware, and ongoing IT staff and maintenance fees. They often require that fundamentals—including data management, design release, and change management—be deployed first, and these may or may not be related to the problem the organization is trying to solve. Tailoring such systems to the specific processes often requires

heavy planning and customization phases. Then, once up and running, such systems are frequently inflexible to change. The path to value for traditional on-premise PLM systems is long, circuitous, and expensive. Product development leaders and executives are often scared off because it is so hard to realize its value.

Fortunately, a new wave of modern, cloud-based PLM systems is emerging. Because they come as a subscription service, the total cost of ownership is much lower, making this solution available to a broader range of manufacturers. Built in the cloud, these new PLM systems can be accessed instantly and are flexible enough to adapt to the organization’s needs. Additionally, the fundamentals related to data management and design release aren’t required, allowing organizations to attack their biggest problems immediately. The path to value for modern cloud-based PLM systems is streamlined, unconstrained, and affordable.

The focus of this eBook is to dig further into these matters. Here, you will find more details on the technical differences between traditional on-premise and modern cloud-based PLM offerings. You will find research results on how different technologies are used to manage product development data. You will hear from manufacturing companies that are deploying these solutions firsthand. From there, you can determine which solution is best for your company.

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THE FLAWS OF TRADITIONAL ON-PREMISE PLM SYSTEMS What is a traditional on-premise PLM system?

Traditional PLM software is installed on a computer server within the company firewall and is accessed over internal networks. The system is acquired through the purchase of perpetual licenses from a software provider. Many utilize client-server architectures, which require the installation of an application on desktops, although many now provide access through web browsers.

While PLM offers great promise overall, these types of software systems have a number of faults.

THE TOTAL COST OF OWNERSHIP IS HIGH

A prime shortcoming of traditional on-premise PLM systems is cost, both in the short-term and the long-term.

The investment in these kinds of systems starts with the licensing model. Based on client-server architectures, providers of these systems charge a flat fee for the number of end users that can access the system concurrently, which represents the maximum amount of users. These are sold as perpetual licenses, which the organization can use forever. This often adds up to a significant amount of money that must be paid upfront in lump sum. For organizations, such a large cash outlay qualifies as a capital expenditure (CAPEX), which frequently requires a formal cost justification and executive approval.

The investment then continues in the form of services needed to plan, customize, configure and install traditional on-premise PLM solutions. Although some capabilities are available out-of-the-box, such systems often need to be modified to mirror the organization’s digital definitions of products, projects, and

processes. This can often expand into management consulting, as some organizations take such opportunities to revisit and refine these definitions for better performance. This expense is often rolled into the initial CAPEX for software licenses.

PLM systems, of course, run on server hardware. Traditional on-premise solutions require computer resources that connect to internal networks. In large deployments, dedicated data centers are necessary. This represents another line item alongside software licenses and services on the initial CAPEX.

Finally, there are the ongoing expenses related to traditional on-premise PLM solutions. For access to technical support services from the software provider, there are often annual maintenance fees. Such systems, running on internal server hardware and connected to internal networks, require dedicated IT staff for support. These support costs, whether outsourced to contractors or supported by Full Time Employees (FTE), add to total cost of these types of systems.

Between initial license, service, hardware, maintenance and IT staffing costs, traditional on-premise PLM systems are not financially feasible for most companies, especially small to mid-sized manufacturers. This one of the reasons the path to value for these solutions is difficult.

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CASE STUDY: TSM CONTROLS

David Keeley, Engineering Manager at TSM Controls, is very familiar with PLM solutions. He worked for 4 years at another manufacturer deploying a traditional on-premise PLM system. When he joined TSM and looked at deploying a similar solution, he knew there might be drawbacks.

“Most PLM deployments don’t get past PDM functionality,” says David. “When we started planning for PLM here at TSM, we looked at that data management step. It would have involved migrating our CAD (Computer Aided Design) and retraining all of our engineers to check those files in and out, which is a change in how they work day-to-day. There is a benefit there in terms of search and reuse, but you don’t realize it for 18 months. Based on my past experience, I was concerned about any PLM initiative getting stalled. There is just so much change getting to that point with little benefit.”

Ultimately, David and TSM decided to deploy a cloud-based PLM solution instead. “We found that we didn’t have to deploy a big catch-all system right from the start,” continued David. “You don’t have to start with CAD. You don’t have to clean data. Instead, we went after key process management and enterprise integration. We have a full integration with our support ticketing system, which tracks our field service and returned materials process. Those tickets kick off workflows in our PLM system and remain constantly synchronized. We also use it for approvals in our order confirmation process.“

To date, TSM still uses their existing PDM system, which means there was no disruption for the engineers. However, they have eliminated most of the use of emails, spreadsheets and databases that were causing significant errors.

TIME-TO-ACCESS AND SOLUTION INFLEXIBILITY

Another flaw of traditional on-premise PLM systems is the time required to deploy and access the system, as well as the inflexibility of the solution once it is active.

Although the cost of deployment services is a drawback for traditional on-premise PLM systems, the delay in the company’s ability to access the solution is also a fault. The data model and schema of these systems are difficult to change after they are deployed, meaning they must done right the first time. As a result, planning, customizing, configuring and installing the system requires significant time—weeks or months—to complete. This means the organization must wait until the system is available before it can start solving the issues that initially motivated it to pursue PLM.

On a related note, the main reason why it takes so long to deploy traditional on-premise PLM systems also makes it difficult to change. The root cause is the inflexible nature of the data model and schema, which represents the underlying definitions of everything from products to projects and processes. These objects must be carefully and meticulously structured upfront. Changes could wipe out existing data or result in process errors. This might not be an issue for most companies. However, the needs of product development are dynamic. To support an important, time sensitive project, a new compliance process might be needed. To win a pending contract, an existing concept design procedure might need to be tweaked.

Ultimately, the purpose of PLM solutions is to support product development. Unfortunately, the inflexibility of traditional on-premise PLM systems can’t deliver on those needs in a timely fashion. This is another reason the path to value is hard.

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FUNDAMENTALS ARE REQUIRED

In many cases, organizations pursue a PLM system to address a specific problem. Unfortunately, they often find that they must first deploy the fundamental capabilities of PLM, including data management, design release and change management, before they can tackle the original problem.

The reasoning behind the deployment of PLM fundamental capabilities is sound. Deploying data management functionality for Mechanical Computer Aided Design (MCAD), Electrical Computer Aided Design (ECAD) and compiled software provides a fairly complete definition of a product. Control over that definition is then governed by design release and change management capabilities. From there, companies can bring additional digital aspects of their product under control, and can automate related projects, processes, and procedures. This is a sound approach for anything dependent on the digital definition of the product. And therein lies the flaw in this approach.

For some companies, the biggest problem may not be related to the product. In other cases, an abstracted representation, including a single drawing or model file, might be enough to enable a process and solve the issue. Unfortunately, the deployment of traditional on-premise PLM systems forces companies to jump through hoops to get the fundamentals in place, often unnecessarily.

PROOFPOINT: ADOPTION OF PLM IS LOW

With the many flaws of traditional on-premise PLM solutions, one would expect low levels of adoption. Testing that hypothesis was one of the objectives of Lifecycle Insights’ PLM Study. Conducted in January 2015, it collected responses on the use of PLM related

technologies, including the management of design data and execution of projects and processes, from 760 organizations.

Figure 1, shown above, reveals which technologies—either exclusively or in combinations—companies use to manage design data. Nearly half of the study’s respondents still use desktops and shared drives to manage the digital definition of the product. Furthermore, only one quarter of all respondents are exclusively using software systems, including PLM solutions. That is a strikingly low percentage of businesses that have completed one of the fundamental aspects of traditional on-premise PLM systems.

49%

26%

24%

Only combinations ofdesktops / laptops andnetworked drives

Software systemscombined with othertechnologies

Software systemsexclusively

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Figure 2, shown above, details which technologies companies use to support the execution of projects and processes. Barely over a quarter of the respondents are still printing out forms and routing them inside or between offices. In this application of technology, software systems are used by nearly 4 out of 10 respondents, but very few are using solutions like PLM exclusively. Again, this is a strikingly low number of organizations that are utilizing software systems, including PLM solutions.

TAKEAWAYS ON THE FLAWS OF TRADITIONAL ON-PREMISE PLM SYSTEMS

The drawbacks of traditional on-premise PLM solutions are numerous, including a high total cost of ownership, long lead times for access, the inflexibility to changes, and the often unnecessary need to deploy fundamental capabilities. Findings from the PLM Study, which show low levels of adoption of software systems for the management of design and execution of projects and processes, imply the barriers to deployment are stronger than the potential benefit that these solutions can provide. Overall, the path to value for traditional on-premise PLM systems is expensive, both in terms of time and money.

26%

34%

39%

Print, exclusive or alongsidedigital documents, email anddesktop applications

Digital docs, desktop appsand email

Software systems andanything else

FIGURE 2: TECHNOLOGIES USED TO EXECUTE DEVELOPMENT PROCESSES

Includes Design Review, Design Release, Change Management and Project / Program Management,

The PLM Study, Conducted January 2015, 760 Respondents

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THE ADVANTAGES OF MODERN CLOUD-BASED PLM SYSTEMS What is a modern cloud-based PLM system?

Cloud-based PLM services provide access to PLM software that runs on server hardware outside the company’s firewall in the cloud and are sometimes specifically architected to be cloud native. These solutions are acquired through a subscription service, where the company pays at a certain frequency, often monthly, for ongoing access to the solution.

Modern cloud-based PLM solutions hold several advantages over their traditional, on-premise peers, most of which are enabled by their technological underpinnings. Overall, the path to value with these new PLM offerings is far shorter and easier.

THE FLEXIBILITY OF SUBSCRIPTION BASED ACCESS

With traditional on-premise PLM solutions, companies have to make a large upfront CAPEX investment and long-term commitment. One significant advantage of modern cloud-based PLM systems lies in the different ways companies acquire access.

With on-premise systems, the software is installed on customer servers, out of reach of the technology provider. As such, they must sell perpetual licenses that remotely control how many users can access the system at any one time. Those licenses are tracked by software that comes with the PLM system.

In contrast, technology providers have far more control over how many users at any single customer can access the solution, as they are the ones running the software in the cloud. In turn, they can increase or decrease the number of licenses a company can access at any given time.

This, in turn, allows technology providers to offer access to the PLM solution as a time-based technology service instead of selling perpetual licenses.

This offers advantages to the technology provider, but the customer reaps significant benefits as well. With a subscription service, companies need not make large upfront CAPEX investment. Rather, they need only commit to much smaller monthly payments as a subscription. Additionally, there is often no long-term commitment to the PLM solution. If the system isn’t fulfilling the company’s needs, then they can discontinue the service. Furthermore, if the company’s needs shrink or grow, they can decrease or increase the size of the subscription accordingly.

Outside of the subscription, modern cloud-based systems have few other costs. There is no hardware cost from a server perspective. That cost lies with the technology provider in the cloud. There is little cost from an IT staff perspective, as there is no need for hardware tuning. Ongoing maintenance costs are built into the subscription.

In short, modern cloud-based PLM systems let organizations avoid large upfront CAPEX investments, provide the flexibility to grow or shrink their subscription as needed, and let them avoid a long-term commitment. The path to value here is easier because of the much smaller initial investment.

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CASE STUDY: INPHI

Inphi is a high-speed analog semiconductor company, which provides products such as modulator drivers, transimpedance amplifiers, 100G, Gearbox, CDR and other connectivity products. Robb Johnson, Inphi’s Director of Technology had considered a number of PLM solutions, but ultimately decided to move forward with a cloud- based system. “We felt that on-premise PLM systems have some inherent disadvantages,” states Johnson. “Moving forward with a cloud-based solution made a lot of sense to us.

Inphi’s PLM initiative first focused on document libraries as well as approvals and control. They now manage over 100 document types in their system, with preset lists of approvers for each by role. That was the early starting point, but they quickly moved on to other applications of PLM.

Next, Inphi moved on to focus on approvals in the New Product Development and Introduction (NPDI) process. Per their ISO process definitions, there were very specific checklists of tasks and requirements that had to be met before a project could proceed from one stage to the next. But furthermore, these projects had aspects that were specific to company departments. So these tasks and requirements, taken together, represented the entire development process. All of this was captured and enforced using their cloud-based PLM system.

Since that time, Inphi has expanded the scope of their PLM deployment deeper into engineering, qualification certifications, integration with their ERP system, quality activities like CAPA and RMAs. So far, Inphi has deployed PLM far broader than the traditional on-premise system.

START SIMPLE, ADD COMPLEXITY PROGRESSIVELY

A traditional on-premise PLM system requires a significant amount of effort and time to deploy. Due to the inflexibility of the underlying data model and schema, organizations had to plan meticulously and complete this step before installing and configuring the software.

However, modern cloud-based PLM offers far more flexibility. New objects can be added easily to the object model. Existing objects can be extended quickly. All this can occur while the PLM system is running. Furthermore, cloud-based systems are already installed. Quite literally, users can start using a system as soon as subscriptions are paid. Over time, the organizations can tailor the solution, evolving it to their exact needs.

The effect of this kind of agility is immediate. Organizations no longer need to go through long, painstaking planning cycles to make sure they set up the system properly. Instead, they can start immediately, tackling the first and biggest problem at hand. Over time, they can take on more issues in product development, adapting the system.

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NO FUNDAMENTALS REQUIRED

Another defining characteristic of traditional on-premise PLM solutions is their need to deploy the fundamentals of design data management, design release, and change management first, before pursuing other, often bigger, issues in the organization.

Modern cloud-based PLM systems don’t have such constraints. While they do have these capabilities as well as templates for various processes, they do not have to be applied in those areas first. They can be used for the biggest product development issues within the company. The only thing required is the minimal definition of the product needed to support the processes that will be executed. For example, a regulatory compliance process requires a product’s bill of material and amounts of material per part.

This means you can apply this new breed of PLM system directly to the problem in the organization without first figuring out data management, design release, and change management. This is how these solutions offer a shortcut to value.

TAKEAWAYS ON THE ADVANTAGES OF MODERN CLOUD-BASED PLM SYSTEMS

In all, modern cloud-based PLM systems offer greater flexibility. They are subscription-based, resulting in smaller ongoing payments without long-term commitments. They can be accessed instantly, and they let companies evolve them to address more and more product development issues. Finally, they don’t require a specific set of fundamental capabilities to be deployed. In all, modern cloud-based PLM solutions provide a shorter path to value than do traditional on-premise solutions.

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RECAP AND CONCLUSION Every company faces a variety of challenges in product development, both inside and outside engineering. PLM solutions offer powerful capabilities to help organizations solve these challenges. However, until now, the path to value for these PLM systems has been long, convoluted, and extremely expensive.

TRADITIONAL ON-PREMISE PLM SYSTEMS

Traditional solutions are installed on onsite company servers and purchased through perpetual licenses. Many leverage client-server architectures. These systems have a number of flaws that make it difficult to realize the potential of PLM solutions, including:

The total cost of ownership of these systems is high, making them financially inaccessible for many. Costs include a large upfront CAPEX expenditure for perpetual licenses, implementation services for deployment, server hardware, and ongoing IT staff and maintenance costs.

The data model and schema of these solutions are often inflexible, driving organizations to plan meticulously to avoid any future changes. This results in delays in accessibility of the solution.

These systems often require the deployment of fundamental capabilities, including design data management, design release, and change management, before addressing other product development issues, which might be more pressing and urgent.

In all, the path to value for traditional on-premise PLM systems is expensive, both in terms of time and money.

MODERN CLOUD-BASED PLM SYSTEMS

Cloud-based PLM services provide access to PLM software in the cloud, and are acquired through a subscription service. This type of solution offers a number of advantages over traditional on-premise PLM systems, including:

The total cost of this service is lower, making it more accessible. It requires a smaller subscription investment. There are no additional hardware or maintenance costs. Implementation services and IT staffing are minimal.

Modern cloud-based PLM solutions are very flexible, and their data model and schema can be changed easily, even while it is being used. This allows for an evolutionary approach in which the organization can begin using the system immediately and adapt it over time.

No fundamentals are required for these solutions. Companies can target the most important product development issues at hand.

Overall, modern cloud-based PLM solutions provide a shorter path to value than traditional on-premise ones can.

© 2016 LC-Insights LLC

Chad Jackson is an analyst, researcher and blogger with Lifecycle Insights, providing insights on technologies that enable engineering, including CAD, CAE, PDM & PLM. chad.jackson@lifecycleinsights.com.