Pure-play PLM: Report from AGILITY 2004

I spent a day at the AGILITY 2004 conference in Orlando (October 10-13, 2004), where users of the Agile PLM (product lifecycle management) suite of products gathered to swap notes and learn the latest. Agile is a pure-play PLM vendor, which means that, like Matrix One, it?s wholly focused on developing its PLM solutions. Other PLM vendors moved into that space from CAD software development (PTC, UGS) or from enterprise-level business software development (SAP).

Agile 9 was announced at the 2003 event and released to production about six months ago. Newly released modules are driving interest in upgrading, in particular the Product Governance and Compliance product. This module manages compliance with standards and regulatory requirements, including ISO and FDA mandates and environmental directives such as WEEE (a European Union directive for product recycling) and RoHS (reduction of hazardous substances). Indeed, the need to fall in step with existing and pending regulations is a strong incentive to adopt a PLM system, second only to the need to link locations around the world.

Suppliers increasingly must track material usage and provide product histories to comply with initiatives such as Dell's Supplier Restricted Materials Program, which requires suppliers to provide a declaration for each new part that shows compliance with Dell's restricted materials specifications. One Agile customer noted that his company plans to spend 1-2% of annual revenue over the next year of so doing a green assessment.

Agile COO and president Jay Fulcher reported that PLM is drawing much interest these days as manufacturers come to view innovation as a means to drive business performance. Indeed, innovation in the form of new product introductions is the main engine of growth. Cost-cutting increases margins, but it doesn?t deliver growth.

The company is financially strong, he noted, with a customer base of 1,200 and a 90%+ maintenance renewal rate. Traditionally strong among high tech/electronics and medical device manufacturers, Agile is gaining ground with manufacturers of industrial products, pharmaceuticals, and consumer packaged goods.

Agile has also turned its attention to small and midsized manufacturers—those with annual revenue of less than $1 billion—a market segment expected to embrace PLM in coming years. AMR Research estimates that by 2008 such companies will invest $5.1 billion in PLM applications (excluding CAD).

Agile Advantage 2005, a product tailored to small and medium enterprises, is designed to minimize the need for system administration and the time needed to deploy the product. It comes with built-in product capabilities and business process templates for product record management, quality, program management, and product sourcing. It uses components that are also used in Agile 9, such as PDX product data exchange format to enable quick supplier integration.

Also designed to appeal to the smaller company is Agile On Demand, a subscription-based licensing options that lets customers adjust the license capacity based on their needs. Access to the Agile-hosted product requires only a desktop browser and Internet access. Agile Advantage is also available in a traditional on-site licensed version.

Kevin O'Marah of AMR Research discussed how new product development drives revenue, profit, and company value. In the new product development process, he noted an imbalance between accountability and influence—marketing is most influential, but engineering and R&D are most accountable. And manufacturing has no influence at all, but is where most of the money is spent.

In O'Marah's view, PLM encompasses five applications: product data management, sourcing, collaborative product development, customer needs management, and product portfolio management. "The value [of PLM] to those who get it right is big," he said, citing potential improvements of 60% in design processes and 30% in product definition.

Rich Christensen, senior vice-president of operations at Arthrocare, a medical device manufacturer, cited improved processes and control as benefits his company has gained from its Agile implementation. Product portfolio management is also a key area—the company has 110 patents and 100 more pending, and tries to introduce a new product each month. The software also proved helpful in integrating the operations of newly acquired companies.

Many other Agile customers spoke at the event. Here's a quick summary of some of their thoughts and suggestions on PLM implementation:

• Buy-in from the top is necessary to get employees to adapt to the PLM system. The CEO must become the change agent.
• Take the time to do your homework before you start the project.
• Make sure you understand your business processes. Then question all of them.
• Documenting your actual processes will require lots of work.
• Beware of how complex a seemingly simple system like part numbering is.
• Remain focused on the problem you set out to fix.
• Make sure your data is clean before you implement a PLM system.
• Beef up your network—file replication must be instant.
• Choose your consultants carefully. Watch for signs of hidden agendas.
• Identify and break down organizational barriers.
• Develop an innovation strategy.
• Link new product development to the supply chain. Use PLM to share product data with suppliers.
• Don't assume people know what they're supposed to do.
• Implement a pilot project to show people success.