Update! 2019 Predictions in PLM
We set the tone in early 2019 that there would be a variety of challenges to contend with as the political landscape continued to venture into a place not seen many times in US history. At the same time, other nations across the globe would be affected by these actions, ultimately causing a global economic slowdown.
This is all occurring as industries face exponential rates of technological change. In turn, this is creating a big strategy shift in organizations, and 2019 uncovered some of the problems that can occur when organizations try to create next level products, with yesterday’s information technology investments. (more on this later).
So, as we do at this time every year, let us look at our 2019 predictions to see how we did in predicting the year in product lifecycle management. We will use specific examples and data uncovered throughout the year to determine if we were correct, partially correct, or off target. Each of these is a lesson to be learned and applied as you move forward into the next decade of product complexity and technological evolution
Prediction #1: Economic slowdown roots out the weak.
We expect an economic slowdown to root out some weaker manufacturers—resulting in bankruptcies, mergers and large restructuring announcements. These will be the attempts to push a reset button for those who have not anticipated market changes and have high costs associated with missing the market on customer demands for products, or the inability to innovate and manufacture complex products cost effectively.
How did we do? Partially correct.
What was correct? According to the International Monetary Fund, the global economy shrank to 3%, its slowest since the global financial crises we endured during the last decade. Advanced economies fared worse, moving from 2.7% in 2018 to 1.7% in 2019.
What did we miss? Well, there wasn’t much rooting out the weak. Yes, there were a number of high-profile layoff announcements in 2019, but they with select companies, not entire industries. And the “rooting” of the weak was not attributed to an economic slowdown but based on acquisitions or becoming nimbler to gain market share from competitors.
Stocks indexes, like the Dow, finished at an all-time high. This is in indication of the canary in the coal mine—meaning, history will repeat the whole “what comes up, must come down.” We are reaching Price/Earnings levels that compare to the last decade’s global financial crises, so watch out. There will be rooting out of the weak soon.
So, this still holds true from last year’s blog: We anticipate increased momentum for rip and replace strategies. CIOs who pursue this approach place their organizations on a competitive footing while addressing their long-term fight with Technical Debt, enabling them to respond to dynamic market shifts.
Prediction #2: Embedded software becomes strategic.
Manufacturers will realize it’s time to elevate a precious resource—embedded software. This specialized software is written to control machines and devices for a specific operating function—navigation, collision sensing, fly by wire, and missile guidance to name a few. This software is the heart of how their products work and how they feature unique differentiators to compete for market share.
How did we do? Correct.
We claim to be correct, but how the realization came to be, is due to examples that resulted in tragedy. Nowhere was this more prevalent that in the Aviation & Auto Industry. As industry pushes technological advancements into their products, it is often difficult to see if the processes you have in place for development, testing, simulation, and production are truly complete without some real-world operation.
Software seems to be the answer to addressing the management of the operation of complex products. Over the last decade we have realized that it can be difficult and dangerous to rely on the human element to react and manage the product complexity we are incorporating into products. Now, we are starting to see, that if you don’t involve the human element with the right training or put too much of the decision making into the software—catastrophe can occur.
The impact was severe this year. These failures in software became a forcing factor for government agencies to become more involved in the processes for approving safe incorporation of technologies in products that directly affect people's lives. It also resulted in massive losses in market share for manufacturers of complex products and the market shares for the customers they serve. It may take years to formalize the development processes, tests, and new simulations that will emerge as government and industry come together to create the necessary safeguards to improve the safety of software in complex products.
Please keep this in mind as software continues to eat the world. Embedded software and the process to manage its development, should be incorporated into the product lifecycle—not be treated as a separate enigma. Those who manage embedded software in concert with the entire development of a product will create safer offerings and gain competitive edge.
Prediction #3: Industry platforms assert more relevance
We expect industry platforms to gain momentum in 2019, in terms of both use and the number of platforms that become available. Why? As technology accelerates at a furious pace, many organizations will continue to have a skills gap when it comes to incorporating this technology individually into their business. Like incorporating complex products into their environment—organizations will rely on industry platforms to pull value from the products they purchased.
How did we do? Incorrect timing, but change is coming.
You can see last year’s blogs for some examples in 2018. In 2019, a notable industry platform was launched by Microsoft and BMW Group—the Open Manufacturing Platform.The intent of this platform, like others is to drive development and build a community to support and accelerate new solutions for IoT and Industry 4.0. Using a reference architecture, open source components based on industrial standards, and an open data model—any manufacturer or supplier can join the community.
It sounds good, the problem is how to scale and gain momentum with members committing the time and resources. Also, there is difficulty in articulating what problems the industry platforms are trying to solve. I image if some of these companies do know how—they aren’t going to share very much, as it becomes a competitive differentiator.
A note that being incorrect does not mean you should ignore platform. In a recent Forbes article, “Platforms Models Are Coming To All Industries,” they found that not many organizations are changing their business models. From 2007 to 2018, only 12% of companies changed their primary business model. OK, so the momentum into 2019 was wrong, but more interesting is the fact that those that did invest in assets and technology to create new business models, had higher revenue—to the tune of 40%—and had a 30% higher capitalization than their peers. The moral of the story—just because it didn’t happen doesn’t mean it’s not happening right now to you.
Those who want to explore industrial platforms should consider and look for platforms that have traceability of information, aka the Digital Thread, in order to access information across the Product Lifecycle. They should also use them to learn new technologies such as Internet of Things or Predictive Analytics. It’s a great way to learn what these technologies are and how they can fit into your existing business processes and increase operational efficiencies in the future.
Looking forward to what 2020 will bring…
As this decade has come to a close, it’s great to see how far we have come, from global financial crises, to one of the greatest economic expansions—it will be interesting to see if we can sustain some level of momentum, which in a large part will be reliant on technology innovations and the management of complex products.
As always, uncertainties remain, in the economy, in government regulation, and the geo-political landscape. Manufacturers need to remain vigilant as one of the one of the longest runs of economic growth begins to teeter, but will it stagnate, or will new growth emerge? Those accepting a new reality and are able to anticipate the next phase of the economy, will come out on top.
Now is the time to accelerate on investment in people, products, and technology. Those that continue to adapt and create complex products that meet customer demands, are high quality, cost effective, and create innovations that allow companies to do more with less, will be the market share leaders in their space. We wish you the very best in 2020 and as always will continue to monitor the PLM landscape to see the exciting innovations our customers come up with by using a Product Innovation Platform approach. Check back, same time next year and see how our predictions played out!
If you have not seen our recap for 2018 predictions, check it out here.