PLM: High Tech's Billion-Dollar Lever

Just a few years ago, you may remember that the market-leading companies -- the powerhouses -- in high-tech markets, such as smartphones and PCs, were household names. Now, the tables have turned for a number of them. Some of these leaders are now followers, while some followers are now leaders.

This change has pivoted on the ability of these smartphone and PC companies to deliver innovative and impactful products, leveraging smarter investments in the product development arena. Emerging as the key lever for competitive success, this core business process area, extending from idea generation through product market launch through to product retirement, is known as Product Lifecycle Management (PLM).

How does a global enterprise maximize the business impact of PLM? For a global enterprise to maximize the business impact of PLM processes, they need to examine two dimensions: effectiveness and efficiency.

PLM processes effectiveness -- the what
High-tech companies, including smartphone and PC manufacturers, are making substantial investments, often 5 percent to 25 percent or more of revenue, inside the PLM business process. But according to Accenture's analysis, nearly half of spending inside PLM ends up wasted on products that do not meet market needs or timing. This translates into huge improvement opportunities in PLM process effectiveness.

PLM process efficiency -- the how
Typically, these high-tech companies have thousands of highly skilled and well-paid designers, formulators, scientists, and engineers working each day inside global PLM processes across hundreds of current and future products. However, because of a frequent lack of central coordination, prioritization and integration of processes, systems and data, a substantial number of non-value-added or redundant tasks are necessary.

This translates to substantial improvement opportunities in PLM process efficiency. Together, these two dimensions impact corporate spending inside the PLM process and the potential market revenue impact from PLM, making PLM a billion-dollar lever of corporate performance.

Integrated approach
Enabling the PLM process with technology can have a big impact but generally needs to be implemented in tandem with an integrated plan focused on a distinct business process. Within the end-to-end PLM process, most global companies have deeply fragmented systems of 20 or more applications that cause efficiency and effectiveness drags. This problem provides an excellent opportunity for PLM process streamlining and PLM application rationalization.

The PLM technology market has a number of leading software vendors providing powerful and field-tested applications. The challenge is that none of them provide end-to-end business process coverage available, for example, across customer relationship management and enterprise resource planning.

As such, high-tech companies will always be operating with three or more PLM vendors needed to completely span the various PLM capability areas, including idea/requirements management, portfolio and project management, design and scientific tools, product data management, direct material sourcing, product quality, and analytics.

Such complexity gets amplified by various types of design and development activities needed to support a company's portfolio of offerings, including styling/industrial design; mechanical, electrical, and integrated circuit engineering; artwork/packaging design; apparel design; formulation, software development, and technology research.