THE VALUE CASE BEHIND PLM

The value case behind PLM

Is the value case behind PLM clear and tangible for many organisations?

Summary of Findings

The value case behind PLM - Summary of Findings
The value case behind PLM – Summary of Findings

Which best describes the ROI for your investments in PLM?

As PLM is a significant investment in most organisations, it is important to have a clearly defined Return on Investment (ROI) which is tangible and measurable.

Figure 9: Which best describes the ROI for your investments in PLM?
Figure 9: Which best describes the ROI for your investments in PLM?

Key Findings

  • 27% of respondents believe PLM benefits are intangible.
  • 22% of respondents do not require a ROI to implement the PLM system.
  • 26% of companies report a clearly defined and positive ROI before implementing their PLM system.
  • 8% of respondents are not supported by the organisation even if the ROI is positive.

Conclusions

  • 66% of respondents are making PLM investments based on no ROI defined in their business case
  • The investment profile for PLM with either long-term implementation or high-up front costs still prevent positive ROI’s. It can be inferred that new vendor solutions such as “cloud” and “subscription” license models seem to be having limited impact1.
  • For the “must do” projects, it should be explored further which business factors drive this investment without a business case.
  • In the case of the 8%, when positive ROI lacks business support, is it the usability of PLM? Or is it unclear business ownership or resistance to change of current processes? that drives the low support levels. This is explored later in this report.

How are the benefits from PLM seen in your organisation?

For PLM to be seen as a valuable business solution, it must be perceived to add value in an organisation, not just take costs out, especially in IT.

Figure 10: How are the benefits from PLM seen in your organisation?
Figure 10: How are the benefits from PLM seen in your organisation?

Key Findings

  • 58% of respondents state that although benefits are observed, including reduction to non-IT costs, they are intangible or difficult to measure
  • 25% of respondents believe PLM can support increased revenue streams and new business models.
  • 9% of respondents believe benefits come from IT-related cost savings.

Conclusions

  • Cost reduction of non-IT expenditures is the most common benefit, as described by 66% of respondents. The majority of them believe the benefits are intangible and difficult to measure.
  • 25% using PLM to support new revenues and business models needs to be explored in future surveys.  To drive this further, it is believed that wide business use and information scope of PLM needs to be expanded beyond Engineering functions.
  • Efficiency is the primary driver behind the decision to implement PLM. Curiously though, the efficiency increase is presumed and not demonstrated.
  • Based on the responses, PLM is focused on driving costs out for the business, with only 9% reporting the focus in cost-downs in IT.

What are the most attractive features of a licensing model you would like to see?

PLM licensing is usually complex and can sometimes restrict an organization’s ability to fully use its PLM system in a cost-effective manner impacting the overall realised ROI of projects

Figure 11: What are the most attractive features of a licensing model you would like to see?
Figure 11: What are the most attractive features of a licensing model you would like to see? (values in %’age)

Key Findings

  • Lack of geographical limitation is critical for 60% of the  companies.
  • Clear licensing costs and the ability to use floating licenses is also seen critical for 60.5% of the respondents.
  • Additional 46% see as important the ability to swap licenses within the vendor portfolio.
  • License rental is seen as important or critical by a majority (60%) of respondents.

Conclusions

  • Geographical limitations of licenses are, understandably, major issues for global companies.
  • Clear licensing costs allow companies to better plan their expenses, removing unwanted “surprises”. It is interesting to understand how this issue evolved from the PLM vendors’ point of view.
  • Floating licenses allow for efficient use of a license, therefore being critical for most companies.

Is PLM “in the cloud” seen as a viable option in your business?

The promise of secure, reliable and resilient cloud solutions should allow business to minimise the significant initial investment in infrastructure needed to support on premise PLM solutions.

Figure 12: Is PLM “in the cloud” seen as a viable option in your business?
Figure 12: Is PLM “in the cloud” seen as a viable option in your business?

Key Findings

  • Most concerns are security-related, with 43% of respondents citing this as the main issue,
  • 20% of respondents see cost as the major blocking point, including the ongoing subscription cost.
  • 16% of respondents reject PLM in the cloud altogether, due to the need to control the entire environment in-house.

Conclusions

  • Companies seem to be open to migrating their data to the cloud, with only 16% being completely opposed to the idea.
  • The most prevalent concern is security.
  • 20% of respondents see PLM in the cloud as a more expensive option than in-house, specifying both migration and ongoing costs. Assuming that the move is being made between instances of the same PLM software, could this mean that PLM vendors should put more effort in making sure migrations are pain-free?
  • It is worth understanding what companies need to control their PLM system in-house.

Notes

1 With cloud solution, it can be assumed that large infrastructure costs and implementation times can be significant reduced.  With subscription models, the initial investment of software licenses can now be spread over the lifetime of the solution.