We’re introducing a new Q&A feature as a way to let members ask questions anonymously and get useful answers from other members. If you’ve got a question, just drop us an e-mail, and let us know if you’d like an answer from a company of a particular size or industry (or even from a specific person or company.) The question below was answered by Kalypso founding partner George Young, and senior manager Pamela Soin. We thank our longstanding partner and supporter Kalypso for their assistance, and we invite your comments at the bottom…
Question
We’ve got what I’d call a first-generation legacy PLM [Product Lifecycle Management] system that we’re not really using or getting value from. I’m relatively new in the Chief Innovation Officer role here ($20+ billion insurance co.) and have my own opinions about the tools we need, but I can’t really get my hands around the shortfalls or value of PLM (i.e., both the downside and upside are evading me, or my team can’t clearly articulate as it’s legacy and no one is using). Do you have any research, data, or insights into PLM, where the breakdowns typically are, and what the upside / value is re: innovation? Thanks.
Answer
It’s not unusual to wonder about the value PLM technology can provide for your organization, especially if the implementation was done poorly or the business case was not clearly articulated and tracked post go-live.
The good news is that a results-oriented business case for PLM has not only been created, but also is proven across industries.
Here are some of the most common ways business value is gained from PLM:
- Cycle Time Reduction – According to a CIMData study, companies can see up to 75% reduction in time, costs and errors from manual data entry
- Improved Product Quality – According to a AMR/Gartner study, design errors/rework can be lowered by 25%
- Decrease in Regulatory Costs & Improved Compliance – Companies have seen anywhere between a 25%-50% reduction in compliance issues
- Reduction in Development & Maintenance Costs – According to a Forrester PLM ROI study, companies have seen up to 80% savings due to the reuse and centralization of product data
- Direct Material Cost Savings – An $83 billion corporation saved over $300,000,000 in material cost
- Scrap Reduction – According to a CIMData study, companies have seen an 8% reduction in material scrap
Unfortunately, you have not realized value from your PLM technology implementation. Based on Kalypso‘s experience, this is usually a symptom of one or more of the following:
- No clear business case or tracking results against metrics post go-live. Companies that do PLM well use this data to motivate people to use the solution as it helps answer “What’s in it for me?” (more efficient ways of working) and “What’s in it for us?” (better results, better brand/company image from reduced errors)
- Lack of organizational alignment on and support for the solution. Were the users heard during requirements gathering? Is PLM and its intended results part of anyone’s performance objectives? Did leadership clearly communicate expectations to use the system and do they follow up?
- Not properly defining the scope of PLM. You may have enabled Product Data Management (PDM) for better efficiency and fewer errors, but what about strategic capabilities like Portfolio Management, Phase Gate, and Strategic Roadmapping? These processes ensure you are working on the best projects to deliver the best business results
- Too much emphasis on a software solution, and not enough on process improvement, master data management and bringing people along the journey. PLM is not just about a tool, but a transformation that includes process, technology, information, and most importantly people
The good news is that all is not lost. To reclaim the business value of PLM, a Chief Innovation Officer with your challenge should:
- Encourage the organization to step back and take a more holistic view of what’s expected from innovation, from both a process effectiveness and financial results stand point
- Map the capabilities set (people, process, information, tools) required to deliver innovation expectations. We think you’ll find PLM is the answer to a large portion of what’s needed
- Don’t call it PLM – it’s a dirty word for your organization now. Rebrand your program
- Figure out who needs to be accountable for success and build it into performance objectives and incentive structures
- Build a PLM-specific business case, and then benchmark where you are today and track results. Market the heck out of the good news
- Most importantly, develop processes and technology through rapid iteration with a wide, cross-functional user community. That way the design enables the way work really needs to get done
When done correctly, a PLM transformation delivers the best ideas to market in the most effective and efficient way possible, with fewer mistakes. As Chief Innovation Officer, PLM is a critical tool in your kit if you want to deliver expected results from innovation.
