Part 1 of this blog series talked about the major (blockbuster of a sort) announcements at PTC’s PlanetPTC Live 2011 annual user conference, which was held in mid-June 2011 in Las Vegas, Nevada, US. These announcements were as follows:
But there were a number of other announcements that were seemingly not that earth-shattering. Still, these announcements indicate the ongoing PLM/computer-aided design (CAD) market trends and will likely have significant implications on other product development software market players’ moves.
Not Taking Quality and Sustainability for Granted
The 2008 purchase of Relex Software (mentioned in Part 1) provided PTC with advanced reliability and quality management engineering software that provides key system performance metrics such as reliability, maintainability, and prediction. The metrics are shown in a flexible and intuitive framework that ties compliance testing and reporting back to the product design where necessary changes, e.g., corrective and preventive actions (CAPA), can be made.
By combining Relex and Windchill (and possibly Arbortext in the future) capabilities, PTC has become quite strong in the following closed-loop quality management areas: requirements verification and validation, risk and reliability analysis, maintainability/serviceability planning, warranty management, and performance analysis. But PTC is not necessarily the only quality management game in town, given SAP PLM and Oracle Agile PLM’s solid quality management capabilities. The two giants have been espousing an enterprise quality management play that unifies customer relationship management (CRM), supply chain management (SCM), manufacturing execution system (MES), and PLM into an integrated quality platform.
For its part, Dassault Systemes’ ENOVIA (formerly MatrixOne) has good quality and requirements design tools, although they might require some additional scripting. Along similar lines is Siemens Teamcenter PLM, which can be customized to support almost anything pertinent to quality processes. In addition, the Dimensional Planning & Validation (DPV) module within Siemens’ Technomatix manufacturing operations management suite has been gaining traction since its launch over two years ago.
Moreover, PTC’s Windchill Product Analytics (AKA InSight products, as mentioned in Part 1 of this series) module enables companies to manage and improve the environmental performance, regulatory requirements, and related costs of their products, parts, materials, and suppliers. Without analytics, the value of PLM is diminished, and the PLM system becomes just a static vault of data. I should duly note here that Oracle Agile PLM has had strong PLM analytics for several years now, including the recent OBIEE 12-based enhancements.
The Windchill Compliance, Windchill Cost, and Windchill LCA solutions enable manufacturers to measure and improve product performance relating to restricted substances, carbon consumption, and cost analysis of products and their components. These metrics help companies effectively improve environmental performance while reducing costs and mitigating risks.
SAP has been making lots of mileage in the realm of sustainability, while Siemens has long become “green”-oriented in light of its presence in utilities and coal mines, which have started many of green environmental issues. For its part, Dassault is not falling behind, as reported in TEC’s 2010 Dassault Systèmes article. Oracle has also been serious about its sustainability capabilities, not least by announcing the Environmental Accounting and Reporting offering for Oracle E-Business Suite (EBS) and Oracle JD Edwards and acquiring its former environmental compliance consulting and software partner Ndevr.
Reducing energy consumption (and waste in general) are creating hard value and are just good business practices. But since most of the green carbon footprint calculations are hard to quantify, this whole segment could come crashing down. The biggest risk is the speculation in carbon offset credits. Will the carbon credits exchange, especially in the current political climate in the US, end up like Enron or mortgage backed securities?
In any case, in order to outflank enterprise resource planning (ERP) systems, quality and sustainability will be additional turf wars. While ERP systems can report on these requirements, fixing quality issues, redesigning products, or evolving supply chains are really pre-ERP tasks and may be better served by PLM systems.
PLM as Companies’ Strategic Weapon
This leads us into PTC’s attempt to position PLM as a strategic weapon for companies (i.e., as the innovation and master data record) vs. ERP and manufacturing execution systems (MES) that are merely good for execution of transactions. PTC’s contention is that PLM, ERP, and MES are different business solutions that are built differently and with different durations and complexity of events. In other words, while PLM is product information-oriented across the entire enterprise, ERP is transaction-oriented across the enterprise, and MES is event-oriented at the shop floor only.
Rather than being a mere engineering bolt-on application for ERP, PTC emphasizes the following strategic PLM scope areas: innovation strategy, quality strategy, supplier strategy, service strategy, and manufacturing strategy. If companies are using Windchill PLM [evaluate this product] just as one could use Microsoft Word to create engineering bills of material (BOMs) or eBOMs (and not manufacturing BOMs or mBOMs, bills of operations, etc.), they are throwing dollars away.
As for ERP integration, PTC touts its Windchill PDMLink and Windchill MPMLink modules, whereby eBOM to mBOM change managements should be handled in PLM databases rather than in ERP databases. As integration to ERP is critical, PTC offers Windchill Enterprise System Integration (ESI) as an integral module of Windchill PDMLink. PTC suggests as the best practice for change management to have manufacturing process management (MPM) capabilities in the PLM system rather than in production systems such as ERP and MES.
I believe that PLM is the best place for product data change management and publishing to downstream systems. If companies are still sourcing or approving parts, ERP, MPM and/or MES databases are not the best place to do that. One could imagine a work with finalized BOMs in ERP systems, configured (variant) BOMs in sales systems, assemble-to-order (ATO) BOMs at the warehouse/distributor system, etc.
Maintenance of all of these BOMs through ERP systems is like adding yet another language translation. Adding another language in the middle or a transactional system will just add time and complexity. ERP systems should get all of the BOM data that they need, but users should not have to translate eBOMs within ERP and then use MPM to reformat this data for other purposes downstream in the supply chain.
ERP vs. PLM is still a religious-type argument à la “integration vs. best in class” where PTC even gets some moral support from its Siemens and Dassault archrivals. The key answer here lies in where the value is. Simple product data of high volume, ATO, and configure-to-order (CTO) products might be best served by ERP systems. Conversely, complex engineer-to-order (ETO) products with outsourcing and unique CAD needs lend themselves best to PLM systems’ product data management (PDM) capabilities.
In addition, if the company owns an Oracle or SAP ERP, the chief executive officer (CIO) will often push for integration with that vendor’s PLM offering. But where the company is not an Oracle or SAP shop, a best-of-breed PLM option should win.
SAP and Oracle beg to differ when it comes to definitions about what “ERP” is in this debate. They rather offer business suites that include the realms of ERP, SCM, PLM, CRM, MES, etc. This creates issues when comparing “ERP vs. PLM.” From their perspective, the real discussion is about the data-model. If one can offer a common data model for the end-to-end product innovation and development process including all downstream processes such as manufacturing, service and sales etc., this becomes a considerable advantage compared to a break in the data model.
In their view, it’s not a discussion about ERP vs. PLM, but should rather be a discussion about ERP and PLM. SAP and Oracle’s point of view is that one needs to consider also cost, human capital, and corporate functions in combination with PLM.
Now That Someone Mentioned MES
As pointed out in my previous blog post, in addition to Process PLM capabilities, PTC lacks native MES and automation capabilities (process simulation and validation in manufacturing). In contrast, Siemens can brag about its validation tool that helps designers simulate machining operations and tools & fixtures early in the product’s lifecycle (product ideation), so that they can see how easy it is to clamp it, how safe it is for the operator, etc. The ISO 9001 standard’s compliance instills the need for PLM-MES integration to ensure whether “as-built” equals “as-designed.”
But PTC does not seem too worried about its lack of MES offering as compared to Dassault, Oracle, SAP, and Siemens. The company believes that PLM/CAD is already a huge area to handle, and that hardly any customers have a single PLM/CAD provider, let alone PLM/CAD/MES. The reality is that most companies have not even standardized to one MES or ERP system.
The biggest companies in the world might be able to deploy the big PLM-MES vision and afford the cost of replacing all of their existing automation gadgets. Automotive and aerospace and defense (A&D) companies have long product cycles and have always invested heavily in automation and ERP systems. As for the majority of the world and small to medium enterprises (SMEs), few will be able to manage the complexity and afford the cost.
While a completely integrated environment (“one-stop-shop”) sounds nice, the time, cost, and risk of change escalate with the functional scope. Manufacturing environments such as job shops, metal fabricators, blow molding, etc. could never implement this big unified picture. In addition, many SMEs cannot afford the cost of this big picture vision. Most SME companies are not highly automated, whereas the companies that outsource manufacturing don’t need automation anyway (but they still own their product design).
Even if companies wanted to replace their automation systems, it will take at least a decade or two for that to happen. There is a large installed base of industry leading MES products (Rockwell Automation, Honeywell, Schneider Electric, Emerson Electric, etc.). Additionally, there is still a large base of pre-MES products such as programmable logic control (PLC) and SCADA hardware.
Thus partnering with these solution providers is probably a good idea for PTC at this stage. The vendor will have to hook up or buy some manufacturing simulation applications (as it has done with Polyplan for today’s Windchill MPMLink module) and could win with more open interface/integration strategy (given that most companies have multi-vendor CAD and MES systems).
At PlanetPTC Live 2011, there were a few of PTC’s MES partners, and I chose to see a breakout session on Solumina by iBASEt. The session showed how Solumina MES complements Windchill PLM in terms of “ISO 9001 Part 1 - Product Realization” compliance via the relevant Requirements, Design, Supplier, Production, and Maintenance/Overhaul Management records. The product also helps with the “ISO 9001 Part 2 - Continual Product Improvement (CPI)” compliance via related records, archives, business intelligence (BI), audits, CAPA, and program management capabilities.
In any case, Siemens’ solutions for both digital manufacturing (engineering the process) and manufacturing operations management (executing the process) exceed the competition at this stage. Siemens also provides high value of manufacturing planning for digital validation, so-called “designed for anything (DFX).”
This is a critical component for cost control and time to a full-scale production in complex manufacturing and electronics. As companies try to get greater control over global manufacturing, cost, and quality, MES integration with PLM becomes increasingly important. Another area for digital manufacturing and execution is in calculating carbon footprint of manufacturing, which will gain increased importance, so this entire area is important.
From a manufacturer’s CIO point of view, Siemens sees the following few domains that can have clear vendor responsibility in order to simplify the IT landscape of a manufacturing customer:
So in this way Siemens doesn’t see a one-size-fits-all as an end state, but to simplify one’s IT environment (at least for manufacturing supply chain participants), this is a reasonable long term goal. Look for my article on Siemens’ recently held PLM Analyst Summit for more details.
Social, Mobile, Cloud, and Miscellaneous Issues
As another observation from PlanetPTC 2011, Microsoft remains a huge PTC technology partner in the following ways:
As an update to PlanetPTC Live 2010, Windchill ProductPoint, a SharePoint-based PLM offering for SMEs (mentioned in Part 1) was discontinued soon before PlanetPTC Live 2011. The company explained that Windchill 10.0’s ease-of-use and Creo’s right-sized CAD applications are now good enough to be sold to smaller and large companies alike (without the need for “lite” gimmicks). I could buy this spin, although there have been some indications that PTC was hard-pressed to keep two code streams up to date, and that the SharePoint-based code stream and customer satisfaction were falling behind.
As PLM vendors try to outflank their ERP counterparts, mobility will become another frontier. Whoever has the best mobile capabilities and can integrate data from the other systems will ultimately win. As people travel increasingly often, the old CAD station paradigm will no longer work. If vendors start add quoting type applications, the mobility angle could have a large impact.
Given its dominance in (often harsh) industrial plants, where rugged mobile devices are standard by now, Siemens has lately moved into PLM and CAD mobility. For its part, Dassault has mobility offerings in its 3DVIA viewing product.
To that end, both Windchill and Arbortext will be mobile soon. At PlanetPTC Live 2011, there were some crowd-pleasing demoes on Apple iPad devices, where by shaking an iPad a final service assembly drawing would get decomposed into components that illustrate the assembly sequence (by shaking the iPad again, the components would go back into a finished product).
In his related blog post Oleg Shilovitsky noted that PTC made only a minor announcement about the availability of Windchill on the cloud platform – Amazon Web Services (AWS) and Microsoft Azure. PTC’s official stance is that it hasn’t actually even gone that far yet. Given that Windchill is architected as a “pure Internet-based” application (i.e. cloud-ready) it should be easy for PTC to port it to the cloud if/when it gets sufficient customer demand for it, but the vendor has yet to launch the product on AWS or any other cloud service.
Indeed, cloud computing is one initiative that PTC and Siemens are largely shying away from at this stage, especially in the CAD space. Their justification is that companies are still far too skittish about their confidential product innovation data, etc.
In contrast, at Dassault’s recent analyst conference that was this year bundled for the first time with the Application Innovation Summit (AIS) partner event (which I did not attend), the main themes were reportedly the open and organic V6R2012 and the cloud offering. As for the latter, V6, Dassault’s collaborative platform architecture for the complete portfolio of design, simulation, and build solutions, will be available through AWS in the cloud.
Dassault believes that all companies, but particularly smaller companies, need to move faster or die. While intellectual property (IP) protection is important, the current speed of innovation (whereby old items become quickly obsolete) reduces the risk. Of course, these companies do not want their IP to be made public ever, but their designs have a very short shelf life anyway.
I have always felt that the public cloud is not necessarily appropriate for everyone. If you are talking about a high volume of products that are easy to mimic, these companies should resist going to the public cloud. Private clouds and the ability to be virtual/have redundancy will likely become a standard feature in the PLM and CAD space.
For its part, the “open and organic V6” message will be directed to big system integrators (SI’s) and 3rd-party developers. The application marketplace (AppStore of a sort) will allow broader coverage without a huge development staff. Needless to say, it will be easier to integrate ERP data to PLM and CAD data.
With fairly high penetration rates in their core base and strong competitors, pulling more people into PLM or publishing more PLM content is an avenue to more incremental users for every PLM vendor. Thus, look for Siemens and PTC to follow suit.
In summary, PTC has been making the right moves: Windchill has moved from a toolset to a packaged collaborative application suite, while appetizing Creo applications could become affordable design solutions. While PTC “owns” the engineering CAD users within many enterprises, these are small percentages of the total user base. Thus, I like PTC’s Creo and Windchill SocialLink strategy.
If any vendor can capture the first login of an enterprise user, is has a better chance of not being replaced by another (PLM or ERP) solution and the ability to drive more revenue. Dear readers, what are your comments, thoughts, suggestions, or individual experiences with the aforementioned product development issues and PTC’s related solutions. What is your take on the PLM and CAD market trends that were outlined in this blog series?