PLM Strategies--On-Demand Software: Modular, Flexible and Interoperable1 Mar, 2006 By: Kenneth Wong
Shopping tips from buyers and insiders.
MICHAEL TOPOLOVAC, CEO of Arena Solutions (www.arenasolutions.com), is a troublemaker in the eyes of some traditional software vendors. He is among those leading the charge in what's been called, somewhat melodramatically, "the end of software." He told the San Francisco Chronicle, "There are few entities you hate more than enterprise software vendors. They're mean, evil, nasty people. They'll sell you something that costs thousands of dollars and then walk away" ("Software Shifts Gear," December 25, 2005, www.sfgate.com). Fortunately, the reporter who filed the story noted it was a tongue-in-cheek comment, curtailing any animosity Topolovac might incur. Nevertheless, his sentiment is shared by some of his customers—who, weary of the costs and headaches usually associated with traditional client-server software, have turned to on-demand software vendors.
Ken Amann, director of research at CIMdata (www.cimdata.com), identifies the trend as "paying a recurring fee or a subscription fee to use a software, as opposed to buying a perpetual license and, sometimes, paying maintenance fee on top of that." He points out one of the strengths of this model is "being able to buy and use technology at varying levels over time" (for more, see "Pick What You Want, Pay As You Go," http://manufacturing.cadalyst.com/0905plm/ and "The SMB Serenade," http://manufacturing.cadalyst.com/1105plm/, Cadalyst, September and November 2005). This option works for those seeking technologies to streamline a geographically dispersed manufacturing process or rein in a helter-skelter supply chain, as the case may be.
Who Is Right for On Demand
One of Topolovac's customers is CRC (Component Reengineering Corp.), which produces ceramic and aluminum chucks used in semiconductor production. Woody Chapman, CRC operations manager, says, "With a small company like ours, you have to do a lot of different operations as an individual; you cannot be pigeonholed into doing one type of thing." Having passed through the manufacturing chain of command in various technical and managerial capacities, CRC's Chapman has become an adroit juggler. "Schedule, cost, quality—you always keep these three balls in the air; you can't let them drop," he says.
CRC falls into the SMB (small- to midsize businesses) category. Amann contrasts SMBs with their larger counterparts: "Larger companies tend to need a more complex system for sharing their data within their organization, working collaboratively with both their customers and suppliers. In many cases, they have already invested in the infrastructure required for PLM (product lifecycle management), in things like data management. A SMB, on the other hand, has a different maturity level. Its immediate pain point may be just to get its CAD data or change management under control for a small group. Trying to do global collaboration might not be its problem."
Chapman says his company deploys Arena Solutions primarily to manage its engineering documents internally. CRC's manufacturing operations are 100% outsourced, and the company is too small to justify a full-blown Web site, so he uses Arena Solutions Web-based environment to communicate with the ten suppliers involved. "The cost was very low," Chapman says. "We were online within two weeks. There's no hardware, not even for data backups." Arena Solutions subscription includes data security, regular backup and many operations typically undertaken by in-house IT (information technology) departments.
If your company is a SMB, Chapman says you should consider, first and foremost, cost and speed. "Cost is the total cost of ownership—not just how much the initial purchase costs, but also how much it costs to operate it annually," he says. "And speed is how fast you can come up to speed and how many people you might have to hire to get up to speed." As a cautionary tale, he recounted his past experience: he chose a household name in enterprise software, only to find out he needed to put approximately 50 people from the vendor on his payroll to customize the software.
How Well Do You Comply
Dave Hammond, director of clinical affairs at Ondine Biopharma (www.ondinebiopharma.com), is a compliant man by profession; it's part of his job to make sure his company complies with all the FDA regulations. Ondine Biopharma is developing PERIOWAVE, a laser-activated system to treat bacterial, fungal and viral infections. The product received approval from Health Canada in November 2005 and was submitted for FDA review this year. To manage all the reporting requirements, as specified in the Safe Medical Device Acts of 1990, Hammond and his staff use Agile Product Governance & Compliance, a PLM module from Agile Software (www.agile.com). But don't talk to Hammond about PLM. His production department might feel amenable to the ubiquitous acronym, but he prefers to call it "doc control."
When Hammond began the search for a doc control system, he knew more about what he didn't want than what he did: "I don't want it to demand a lot of time from me for things like customization. I don't have time to be learning it and tweaking it. I don't have an IT department to run and maintain it for me." Ondine Biopharma is a largely scattered company, with offices in Vancouver, British Columbia, and Redmond, Washington, but its operations are tightly run by a lean staff, 20 in all. Hammond can't afford to let the doc-control system take away his precious human resources.
"If you're starting new," Hammond advises, "start with a system you know is going to be scalable. A lot of companies will try to start on a paper-based system, then when they realize they can't keep up anymore, they'll turn to electronic systems. It's better to think ahead. You should also seriously consider your resources. Do you want to hire a full-time person to manage your document control system? Is it that important to you? How long will you be willing to pay subscription fees?"
In the case of Ondine Biopharma, Agile happens to offer another advantage: it's a widely recognized name in the medical device market. "When we deal with auditors from Canada," Hammond recalls, "if we say we use Agile for our reporting, it's almost an instant checkmark."
CIMdata's Amann says the increase in regulatory reporting ushered in a host of new players: "This was an early opportunity for enterprise content management vendors, like FileNet (www.filenet.com), OpenText (www.opentext.com), Documentum (www.documentum.com) and others. Over time, these vendors are expanding their solutions to support some of the operations in manufacturing. Depending on what you're trying to address, these vendors may provide some or all of what you need immediately. In general, you won't find that these vendors offer a complete PLM solution."
Who, then, provides a complete PLM solution? "There's no one single vendor out there that delivers everything needed for a complete PLM solution," Amann says. "Major PLM vendors—such as UGS, Dassault/IBM, PTC, Agile, MatrixOne and SAP—traditionally provided solutions targeted at large enterprises. But if you are a $50-million-a-year company, do you really need everything? So you can ask yourself, 'What do I need PLM for?' You should look for vendors, including the major ones, who are providing solutions targeted at your specific requirements, or a couple of vendors who have relationships among themselves that can provide all of what you need."
If you are an OEM or a tier-one supplier, you likely can find a vendor who is willing to build—at a significant cost—a set of solutions around the way you do business, but if you are an SMB, the best approach is to find vendors who allow you to build your PLM system bit by bit, at your own pace. For this reason, look for modularity, flexibility and interoperability.
How Much Do You Want to Bite Off
Tom Shoemaker, PTC's (www.ptc.com) director of product marketing, cautions: "If you don't know what you want going in, you're not going to get what you need." (Regrettably, I failed to abide by this shopping tenet last Christmas.) "Some buyers," he points out, "might try to do everything at once, might try to solve too many problems, without realizing what they're getting into." PTC's PLM products Windchill PDMLink and Windchill ProjectLink, like those from Arena Solutions and Agile mentioned above, are available as on-demand solutions. Shoemaker reminds us that a buyer also has flexibility in deployment options with PTC: "There are vendors that only offer a hosted model or only in-house deployment. PTC offers both."
Reflecting on the common mistakes PLM shoppers often make, CIMdata's Amann says, "They don't understand the requirements—both technical and business requirements—and how they are linked together. They don't do a good job of identifying what they really need. Then they don't establish metrics to measure how the implementation is going."
Add the failure to secure management support to the list of common blunders: "You have to have the right executives on your side," PTC's Shoemaker says. "Since it touches so many different people—not just engineering but sales, marketing and IT—you need to get that cross-functional team [to] buy into it. If you don't, you'll have problems."
"Not all PLM software solutions are created equal," Shoemaker continues. By the same token, not all on-demand solutions are the same. All three vendors featured this month offer their products through on-demand programs, but you should investigate to find out whose definition suits your enterprise's needs the most. You should also consider whether the traditional client-server approach is more compatible with your operations than the on-demand approach.
So is it really the end of shrink-wrapped software? Amann says a eulogy might be premature: "I certainly see continued adoption of that model, but I don't think it'll dominate the PLM industry—not at this point."
Kenneth Wong is a former editor of Cadence magazine. He explores innovative usage of technology as a freelance writer. E-mail him at email@example.com.
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