This month’s Desktop Engineering has an editorial by Peter Schroer, Aras President and Founder, about the impact of the recession on product development and engineering at global corporations.
The implications range from the need for new products that will fuel the recovery and strengthen competitiveness to the requirements for greater collaboration and control across the enterprise. At the heart of both issues lies the problem with PLM software solution licensing.
Peter describes the situation well by saying:
In 2008 the world changed. The credit crisis and financial industry meltdown plunged the global economy into recession. Pervasive corporate uncertainty has forced companies to take dramatic measures across the board and engineering IT is faced with a stark new reality: Do more with less, starting immediately…You can read the full Desktop Engineering article at: Down Economy Shows PLM Licensing Must ChangeTechnology purchases are being delayed and existing contracts are being renegotiated. Unlike other areas however, engineering cannot simply put product development initiatives on hold. Nor can engineering IT fail to deliver on the automation projects that enable companies large and small to bring new products to market to generate revenue to make it through the downturn. These conditions present an unprecedented challenge for engineers around the world. Namely, how to contain technology costs without strangling new product development.
Engineering collaboration and process improvement remain absolutely essential as cross-functional product teams strive to work more efficiently in an environment that includes international supply chain partners. For the past decade companies have turned to enterprise PLM solutions to satisfy these requirements, but at a cost. The licensing schemes of these systems are complex and costly, requiring a company to purchase different modules and servers along with end-user licenses for each user.
As a PLM system rollout expands beyond design and engineering to include participants throughout the organization, the licensing expenses become prohibitive. The price tag to provide everyone in a company with access to essential product data ranges from several hundred thousand dollars for midsized organizations to multimillions for larger enterprises. Economic circumstances for the foreseeable future make the capital outlay for broad enterprise PLM system access unrealistic just when global product development collaboration is needed most.
To remain competitive, manufacturers need PLM licensing that enables users across the company and the supply chain to securely access product information and PLM functionality without incurring runaway expenses. Smart companies are using proven strategies like enterprise open source in new ways because of the business advantages inherent in the licensing format.
The enterprise open-source structure removes the upfront capital expense for licenses, enables companies to prove solutions before committing, and allows for unlimited users without incremental costs. The benefits are clear: elimination of expense risk, high-quality enterprise-class support and services, assured business value, and a predictable, fixed-cost structure.
The enterprise open-source format also means that companies have options. A business can either migrate to a corporate PLM environment entirely, or integrate with an existing system to extend PLM to more people.
The fact that the major enterprise PLM providers have felt justified in forcing companies to pay for every single person that needs access to product information is counter-productive to the corporate necessity in these difficult times. Companies need alternatives that work and are cost-effective in order to regain profitability.
This is where the Aras enterprise open source approach delivers results. By eliminating PLM license costs, corporate leaders are able to focus on the business challenges confronting them without worrying about runaway costs.
The time has come to rethink old assumptions. You have to make shrewd business decisions and focus on profitability. The obvious conclusion 5 years ago is clearly the wrong answer today. Everyone knows it. It’s just a matter of time before they internalize what needs to be done, and conclude that PLM Licensing Must Change.
What’s your take? Will companies like yours recognize the advantages of No User License Costs? Or will the stale preconceptions of the past lock your company into following outdated PLM systems strategies that jeopardize the future?