Does One Size Fit All?

By Louise Elliott

Industry analysts agree that small and midsize businesses (SMB), also known as small and medium-sized enterprises (SME), face the same problems as those faced by large companies, but have fewer physical and financial resources to solve them. Not only do they have less money with which to implement PLM, but they also have fewer IT people to handle customization, and are probably less knowledgeable about the repeatability benefits PLM offers.

The issues such companies must deal with include deciding what PLM functions they need first and how their own growth may affect their future PLM needs. Whether SMBs are ready to adopt PLM or not, many vendors are ready to adopt SMBs. This includes large PLM developers,  midrange CAD companies, a few vendors who target the SMB market specifically, and Microsoft, which is peddling a range of tools. This bewildering array of choices comes from such well-known players as UGS,  PTC, and Dassault Systemes—vendors now actively pursuing the SMB market; CAD companies such as Autodesk, SolidWorks, and Solid Edge—all of which now offer some PLM tools; and stand-alone midrange PLM companies including Arena Solutions, Aras Corp., and Softech.

‹‹ This graph follows the evolution of product lifecycle management (PLM) applications,  illustrating their stages before reaching the “plateau of productivity” in the mainstream market. The legend at top right indicates the time estimated for functionalities to reach the plateau. Click image to enlarge. (Graph courtesy of Gartner.)

 

Many of the tools SMBs use now to manage their businesses come from Microsoft, and range from Excel and Sharepoint servers to such new ERP-like database tools as Axapta and Navision. Ven- dors, such as Aras, Autodesk, and Solid Edge, base many offerings on Microsoft solutions, and Microsoft works closely with the enterprise-level developers to create more user-friendly products.

What do SMBs need to know and do to get the best PLM value for their specific needs? And what do vendors need to know and do to make the SMB universe a viable PLM market? Here’s what well-known industry analysts think.

Some SMB Needs

“SMEs want to manage CAD, share information with partners and their supply chain, and they probably also want change management,  vaulting and PDM,” says Ken Amann, director of research at CIMdata. “As the number of regulations grows, especially in the automotive and electronics industries, they may also need help with regulatory compliance. That’s particularly true of SMBs supplying large OEMs that are under pressure to comply.”

Gartner, a provider of global IT research, has identified 17 different classes of PLM functionality. Research Director Marc Halpern believes that smaller businesses need eight, possibly nine, of those functionalities right now. “In the execution area, these are collaboration tools, CAD, CAE, and CAM. In management, they are PDM, bill of materials (BOM) management, and product configuration. Interfacing to ERP systems is the eighth—especially Axapta and Navision. And project management is the ninth class of software that’s starting to become important.”

Senior Analyst Monica Schnitger at Daratech, Inc., says that most companies with more personnel than can fit comfortably in one room “need tools to control design, manufacturing, and customer and supplier relationships.” However, she says, “smaller companies may find it a burden to accept new technology because of lack of an IT infrastructure. Many may now be able to allocate money to PLM, and find technology that’s easier to implement than in the past.”

If PLM is defined as the expansion of business applications integrated with engineering and manufacturing applications, the definition favored by Ken Versprille, PLM research director for CPD Associates, “PLM vendors generally let users pick and choose the applications they need,  regardless of the size of the user. Smaller companies really face scalability issues, and need to be able to start small and then grow the applications.”

Out-of-the-Box Solutions

Before PDM evolved into PLM, most vendors offered complex toolkits that required laborious and often very time-consuming customization. Large companies with sizeable IT staffs spent months creating systems. Small and midsize companies did not and do not have the people or time to do that. Such companies need real solutions to management problems they can implement more or less immediately.

“No one adopts technology unless they feel pain in a business area, and many SMBs use ad hoc solutions based on Microsoft Office tools. These businesses don’t see benefits for full PLM yet,” says Gartner’s Halpern.

Where they do feel pain, CIMdata’s Amann points out, many former custom solutions “have evolved to more packaged capabilities, with prepackaged processes and industry-specific functions.”

›› The pressure to cut prices of basic product data management functionality has added value and made it attractive to SMBs. That is seen, by some analysts, as setting the stage for wider adoption of PLM. Click image to enlarge. (Figures courtesy of Gartner.)

 

However, in a packaged approach, some capabilities may not be needed. Versprille says, “SMBs need to understand what technology they need,  and map their requirements against the product packages offered. If nothing else, choosing the wrong package will affect cost if they don’t need all the tools included.”

Schnitger says that because SMBs don’t have time to tailor software to their specific needs, “the lack of customization is a big differentiator for this market. They need collaboration tools, cost estimation tools, and design change management—mostly workflow help.”

Data Security and Hosted Solutions

Hosting offers a way for SMBs to obtain PLM without investing heavily in IT—and vendors like Arena Solutions, Agile, Aras, and PTC offer hosted solutions. The industry analysts interviewed for this story point out, however, that businesses of all sizes are very concerned about their data security, and fear it may be compromised by hosted systems.

Versprille says that industrial espionage fuels data security fears, and adds, “even within companies—particularly when they have divisions in rapidly growing places such as China—they may have internal firewalls between divisions.”

Halpern questions whether SMBs are happy about keeping their internal data outside. “The cost savings on IT are the greatest value of hosted solutions, and also their greatest problem,” he says. “This is particularly true of an ASP model such as that offered by Arena Solutions.”

“Some companies, particularly in heavily regulated industries, can never accept hosted PLM,” says Schnitger. “In the case of nuclear power plants, for example, the companies have to verify access,  and they just can’t do that outside their own company.”

For many SMBs, however, Amann expects more hosted solutions to appear and be accepted. “The cost of IT infrastructure is a big issue of SMEs,  and vendors are looking for ways to allow midrange companies to absorb the functional aspects of PLM without big investments in infrastructure.”

Is the Midrange a Viable Market?

The analysts believe the viability of the SMB market depends on vendor flexibility. The SMB market appears to be viable for products that target its needs, and for solutions embedded in popular CAD programs, but PLM for the SMB market may prove difficult for some enterprise-level vendors.

Versprille says, “Over time, certain capabilities find broader usage and sink lower in the overall system—sometimes as low as the operating system. If Windows, for example, solves some problems, those capabilities won’t continue to be developed by PLM vendors. It’s an evolution of functional capabilities. Application vendors need to focus on higher end capabilities, and that will put pressure on them. Some of them may find that their business disappears.”

Amann notes that the larger vendors will need this market, as the high-end market becomes saturated. “But they need to package for SMBs and price for them, without hurting their high-end sales.”

All the analysts agree that in breadth of product, UGS, with its new Velocity Series, is well positioned. Halpern also believes that PTC, as the only large vendor offering SMBs the same technology it offers large enterprises, seems to be growing in the SMB arena.

Schnitger thinks SMBs may choose PLM capabilities embedded in midrange CAD. “The problem for large vendors is that SMBs won’t wait for promises to be kept, and it doesn’t help larger vendors to talk about what they will offer in a couple of years.”

What do the vendors think? We’ll cover that topic in Part 2 of this feature.

Contributing Editor Louise Elliott is a freelance writer based in California. Offer Louise your feedback on this by clicking here. Please reference “One Size PLM, March 2006” in your message.

Company Information

Agile Software

Aras Corp.

Arena Solutions

Autodesk

CIMdata,  Inc.

CPD Associates LLC

Daratech, Inc.

Dassault Systemes

Gartner,  Inc.

MatrixOne

Microsoft

PTC

Softech,  Inc.

Solid Edge

SolidWorks

UGS Corp.