Will PLM finally have its day in the enterprise?
Lawson Software announced March 17 that it has acquired the product lifecycle management division of Freeborders, a developer of retail and apparel lifecycle management software. While the acquisition strengthens Lawson's PLM capabilities in two key vertical markets for the company, it also raises the question, Will PLM finally have its day in the enterprise?
PLM software has long held the promise—for vendors and industry analysts, at least—of being able to streamline the new product development and introduction cycle. The argument has been that by bringing business users from sales and marketing, R&D, accounting, and even the supply chain into the product design process, companies would be able to streamline new product introduction and lifecycle management … and save big bucks.
But the promise of PLM has remained only a promise for a number of years. Then, in October 2006, Oracle, one of the world's largest business applications vendors, plunked down $495 million for PLM software developer Agile, sparking new hopes that PLM would finally see the light of day throughout the enterprise. And now Lawson, a major ERP (enterprise resource planning) vendor for midmarket companies, has bought Freeborders in a deal the terms of which were undisclosed.
To really work effectively throughout the enterprise, PLM software has to have access to business processes found in various applications, from financials and ERP out to SCM (supply chain management), SRM (supplier relationship management) and CRM (customer relationship management). The idea is that while PLM doesn't necessarily have to reshape business processes in, for example, ERP, it should rephrase processes with a product-oriented perspective. The strategy has finally started to pay off. An AMR Research report titled "Product Innovation and PLM 2008 Application and Market Trends Spending Series," published in January, said manufacturers and service companies recognize the importance of product innovation to their companies' success—and they're planning double-digit increases in PLM spending this year in the United States and Europe. "The majority of respondents to our survey realize the need to integrate PLM with the broader value chain," wrote AMR analyst Jeff Hojlo.
Hojlo, along with analysts Eric Klein and Michael Burkett, wrote that in past PLM spending research manufacturers were asked why they think product launches fail. The reason most often cited was that the product didn't meet customer needs. The 2008 report found that the biggest reason new products fail was thought to be higher-than-projected costs—"which highlights the need for better visibility and analysis over cost drivers like increased R&D and procured direct materials," according to AMR. The research showed that the groups outside of engineering that have the biggest influence on PLM spending in the United States were R&D, design and manufacturing, and in Europe, where supply chain and sales also have a considerable influence, it was logistics, R&D and finance.
The influence of outside departments is not lost on ERP vendors. In February, Hardeep Gulati, vice president of PLM and PIM (product information management) at Oracle, briefed eWEEK on Oracle's PLM strategy for the coming year.
"Initially a lot of our users were focusing on collaboration aspects and focusing on engineering aspects, but [increasingly] we see, if not the majority, they have deployed our solutions broadly [into areas like] portfolio management, compliance management, quality," Gulati said. "[Agile's] synergies with Oracle will take this even further. We are taking Agile PLM to the next level. We have capabilities to build integrations to the broader enterprise architecture to get to the same page to build composite applications. Synergies are driving this effect."
Gulati said there are four dimensions of PLM development at Oracle. Rather than focusing on building a bigger toolbox, Oracle's first priority is building deep-industry best practices. "Trends like how software is becoming [the] core of any device, How do you manage all aspects of that? ...Or with companies like Boeing, How do you deal with all the supply collaboration from supply to design to manufacturing?" he said. "We will factor in trends and continue to innovate."
Oracle will also expand the breadth of enterprise PLM on a number of fronts, focusing on enhancing the usability, upgradability and analytics capabilities of Agile's PLM software. At the same time, Oracle will look to integrate Agile deeper into enterprise processes through its Application Integration Architecture.
"Lots of processes need to go beyond Agile to ERP, SCM, etc. with information integration and process integrations to build composites [and] utilize analytics," Gulati said. "We are doing this based on AIA. Whatever integrations we are building should work with Oracle and others. This year we will focus on manufacturing and master data management, next year on CRM, planning and financials."
Lawson, for its part, plans to focus on providing PLM to the fashion industry, helping those companies to establish processes that will help them cut the lead time from product concept to production to actual delivery on the retail shelf, officials said.
Lawson Fashion PLM will initially be available as a stand-alone product. The company will then determine how Freeborders' software will fit with its core M3 Enterprise Management System for the fashion industry, according to a company press release. There was no word on whether Lawson plans to integrate Freeborders with its larger ERP suite functionality. Odds are, if the company's paying attention, it will.
"PLM is slowly maturing to become part of an important part of the value chain," said AMR's Hojlo in a March 17 interview with eWEEK. "People are realizing that without solid product innovation processes underlying [a] business overall, then PLM really isn't that effective."
However, once PLM is part of the larger enterprise, there is another challenge to overcome, according to Hojlo. "Just defining what PLM is for non-engineers [is a challenge]," he said. "Marketers, product management [and] the vice president of supply chain have always been involved in new product development and launch processes, but they've not been users of PLM. Just explaining to them that they should suddenly be using PLM and why they should be collaborating closer with engineering—the biggest challenge is organizationally and managing that through the psychological initiative."
Source: EWeek.com, 2008-03-17