Automating Product Management (PLM) — Failure?
Product management is a high wire act that requires two skills that seem opposed to each other. On the one had a product manager must be artistic and innovative — able to spot trends, articulate the value to the market and envision the marketing plan. On the other had the role is very focused on the minute — ensuring that engineering is day by day fulfilling the requirements.
From identifying problems to be solved by the new product (or solution), to competitive analysis, to product roadmaps and strategy there are definite touch points in product management that have to follow along a project management type timeline. Pragmatic Marketing has famously articulated the steps common to the process in their Framework.
The functions of the job are normally tracked with Microsoft Office applications including Project, Excel and even PowerPoint and Word. This means difficulty in keeping the various sources in sync and reinventing the templates for each new release and offer. The seeming answer to the problem was a new class of software called PLM (product lifecycle management). Just as ERP (Enterprise Resource Management) automated the back office functions including finances and CRM (customer relationship management) automate interfacing with customers, PLM seemed like a brilliant solution that was desperately in need.
In a nutshell, PLM helps manage the entire lifecycle of a product or service from idea, through market analysis and need analysis and into design and manufacture, then to service and disposal. PLM connects people responsible in each steps as well as tracking necessary data, processes and business systems. In other words PLM automates and provides a product information backbone for the product development and delivery process.
By helping to automate, streamline and track the process of product development costs are reduced, time to market shortened and over all over sight and tracking greatly improved. The cost to implement is paid back quickly (if PLM is implemented properly), so this seems like a holy grail for product management.
So why is IBM abandoning ship?
IBM jus sold its PLM offering to Dassault Systèmes (DS). Sure, IBM says this is a strategic move and that DS is a partner — but since IBM has been a market leader in PLM does IBM see the handwriting on the wall? Is PLM an idea that just did not make it?
CIMdata, a PLM Consulting firm, writes that the PLM market grew 6.7% in 2008. That was the good news. CIMdata repoted that in 2009 PLM experienced a 12% decline! Revenue went from $15.96 billion in 2008, to $14.03 billion in 2009. This decline was larger than originally forecasted.
I’m not heralding the death of PLM. I’m a big proponent. It helps to standardize the process across product managers and indeed the entire organization. It is very cost effective. Still, is the sale of the IBM offering the canary in the coal mine? (Miners used to bring canaries into the mine with them and if the bird died they knew the air quality was declining, and left before they died themselves).
CIMdata states that the 2009 information is preliminary and reflects currency exchange rates—primarily the euro versus the dollar rather than a real decline in sales. CIMdata’s preliminary estimates indicate that investments in all sectors experienced declines in 2009 over 2008.
Is that true or is it trying to cast a good light on a bad revenue stream? CIMdata report (in their press release):
“Comprehensive cPDm dropped to $2.7 billion, a 10.9% decrease. Investments with cPDm Systems Integrators/VARs/Resellers decreased 10.6% to $3.87 billion. Digital Manufacturing investments declined 12.7% to $445 million. Multi-Discipline MCAD dropped 12.4% to $2.57 billion, while investments in Design-Focused MCAD declined 20% to $1.83 billion. The Simulation and Analysis sector of the Mainstream PLM market experienced a more modest decline of 6.4% to reach $2.13 billion in 2009 while Non-Bundled NC had a 19.1% decline to $475 million. The distribution of these investments as components of the full Mainstream PLM market is illustrated in Figure 1.:
Figure 1—2009 Mainstream PLM Market Sector Distributions (Millions)
(Market information represents CIMdata’s estimates)
“Mr. Amann commented, “While 2009 reflected a downturn in new PLM investments, companies retained maintenance and continued to spend on services in support of PLM activities already underway. Continuation of PLM programs indicates that more companies recognize the value that PLM provides in helping them maintain their competitive position during difficult economic times. Hardest hit were small- to medium-sized businesses who tend to be more subject to credit and cash flow issues. Many small companies had to stop their PLM investments while larger enterprises had the resources to sustain programs that were already underway.”
“Ed Miller, CIMdata President stated, “Even in economic downturns, those companies that sustain investments in PLM can become more efficient both by reducing cost and better leveraging existing resources. Importantly, investing in PLM helps position companies to develop and deliver market-leading products as the global economy improves.””
I hope they are right. Perhaps this is a blip caused by the economic times, but it is something to be aware of if considering PLM.
Posted on August 15, 2010, in business intelligence, CMR, CRM, customer relationship management, PLM, Pragmatic Marketing, product lifecycle, product management. Bookmark the permalink. Leave a comment.