The PLM Kiss of Death: Hoarding & Consolidation

Whether you have one PLM system, have spent a decade trying to deploy one, or have fifty, PLM can kill you.

I’m going to focus on the hoarders. You know who you are—you wake up in the middle of the night with a hankering for just one more. Perhaps you have a secret PLM stash—a couple hidden away. You’ve developed a taste for them; you’re a connoisseur of fine legacy PLMs.

In 1995, I was engaged with a well-known, market-leading Fortune 100 company looking for their first PLM system. Eight years later, in 2003, that prestigious company, referenced in many best-selling business books, had a problem. They now owned 20 PLM systems from four vendors on many releases.

This happens for many reasons, largely mergers and acquisitions, joint ventures, reorganizations, year-end spending binges, and due to enterprise agreements where, over time, the software is viewed as being nearly free or from “the” approved vendor.

Any time you have a large number of pillar applications such as PLMs, SCMs, ERPs, and CRMs, and they start to cut across divisions due to reorganization, things get complicated. These cross-division threads are expensive to fix and chaotic to leave in place.

In 2003, now working for a PLM Interoperability company, my job was to put down one of our clients’ legacy PLM systems after extracting the product data, comparing, cleansing, enriching, and placing it in the “corporate” PLM, which I’ll refer to as the “big” PLM, one of the largest in the world. Working with a phenomenal team from that company, this went off without a hitch.

When we were done, I asked my client’s IT leader, “Okay we’re down to 19—what’s next?”

He responded, “Actually, over the past few months, we added three more, so we’re at 22.”

That evening, I reported back to our CEO: “The good news is they have an infestation problem—they’re breeding PLMs. We need to scale up and try to do two simultaneous consolidations just to try and keep pace.”

“The bad news?” he asked.

“We need to get as much money upfront as possible because we’re helping them go out of business.”

Over the next few years, this client went from a highly profitable business to losing billions. Much of the company was acquired during their downward spiral, with over 80% of the workforce laid off. This is not the recommended PLM consolidation approach.

How does a PLM consolidation make a company weaker?

First, nothing is free. If you force an inferior PLM technology across your company because you have an enterprise deal, you’re spreading a cancer that drags down your company’s ability to get more innovative products to market faster.

Next, keep your businesses optimized. If you have two PLM systems in the same division where you only need one, take care of it at the time of reorganization, merger, or acquisition. By sweeping it under the rug and deferring costs in the short term, you’re hurting your ability to compete.

By consolidating separate instances of PLMs, you lower your quantitative costs, such as infrastructure, software maintenance costs, IT support, etc., but what keeps you competitive is your qualitative differentiators. By forcing a more focused business to adopt the “big” PLM, they end up in a sub-optimized PLM that make them less competitive.

The chart below is taken from a white paper by Dr. Bipin Chadha’s: “Implementing a Federated Architecture to Support Supply Chains.” It illustrates that, as you move from many disjointed systems to one “big” centralized architecture, you can cross a point where the hidden costs of sub-optimized processes, inflexibility and hidden costs, compromise your ability to innovate faster. That intersection is the degree of commonality where you cease helping your company and begin hurting it with a consolidation.

 Lastly, this company let the many “small” PLM systems lapse, not investing in them, not performing upgrades, and falling years behind; consequently, the tools and lack of ability to customize for improvement were hampered because all of the IT spend was on the “big” PLM.

In this case, the company absolutely knew the disruptive threat that faced them in the marketplace because they’d previously partnered with this newcomer to their market. Unfortunately, rather than focus on providing the design teams in question with the flexibility and PLM upgrades they needed, they concentrated on cost cutting consolidation. If you are consolidating and it is not part of a digital transformation that leads to faster innovation and better operational performance, then you’re hurting your organization.

There were other factors in this company’s demise, such as ignoring consumers and missing opportunities to acquire suppliers of key technology, which ended up helping their competitor. But, an absolute key to their disruption was that they knew what their competitor had and they planned to produce equivalent technology, yet there was no sense of urgency to get their version of an innovation to market faster. Instead they wasted money trying to cut IT costs with their “big” PLM consolidation. As a result, they ended up in the wake of one the most iconic products of our time.

Whether you struggle to get one PLM to work across multiple divisions or have a dozen inside one division, it’s really a symptom of the same problem—the degree of commonality. When you realize you have a hoarding problem, and think the answer is consolidating multiple PLMs into a “big” instance, you are wrong. That is the kiss of death. The key is to provide an “open” platform that enables agility—a flexible way to allow each business unit or division to optimize how fast they can bring innovation to market, improve their operational performance, execute flawlessly, and easily upgrade as often as is required. The PLM platform has to empower your organization to continually reinvent itself so you can quickly thrive in the market place. Get there first and keep re-inventing. www.aras.com

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