CIOs know about ERP, CRM, SCM and other enterprisewide, energy-sapping, three-letter acronyms.
Well, it’s now time to come up to speed on another: PLM, short for product lifecycle management. Even in this downturn, manufacturing companies across myriad industries are investing in PLM application suites?to the tune of $2.3 billion this year, according to AMR Research. Why are these pioneers willing to take the risk, particularly when they’ve been burned before on comparable, large-scale software rollouts? Because they see PLM’s potential to vastly improve a company’s ability to innovate, get products to market and reduce errors.
PLM applications hold the promise of seamlessly flowing all of the information produced throughout all phases of a product’s life cycle to everyone in an organization, along with key suppliers and customers. An automotive company or aerospace manufacturer, for example, can shrink the time it takes to introduce new models in a number of ways. Product engineers can dramatically shorten the cycle of implementing and approving engineering changes across an extended design chain. Purchasing agents can work more effectively with suppliers to reuse parts. And executives can take a high-level view of all important product information, from details of the manufacturing line to parts failure rates culled from warranty data and information collected in the field.
Getting to this promised land, however, takes a lot of work on the part of the CIO?perhaps even more than with other enterprise application deployments. Unlike ERP packages, which are typically used to replace various outdated systems, PLM requires integrating many siloed databases and getting people from different business functions to work together better. PLM is not so much a system as a strategy?for integrating and sharing information about products between applications and among different constituencies such as engineering, purchasing, manufacturing, marketing, sales and aftermarket support.
Because PLM grew out of product design software, CIOs sometimes defer on it to engineering executives, who traditionally have managed their own technology rollouts. While this hands-off approach works for choosing point solutions like CAD tools, it doesn’t fly for a companywide, integrated platform. Different business functions generate product data and deal with it in disparate ways. Manufacturing and engineering, for instance, work with different versions of a bill of materials?a listing of parts and subassemblies making up a product?as does purchasing, which also relies on approved vendor lists and catalogs.
For PLM to bear fruit, CIOs need to address touchy issues such as establishing data standards and designing a corporate integration architecture so that formerly fragmented information can be served up to individuals in a format they can use. That way, people in various divisions are equipped to make key decisions?such as what products to introduce or what features to include in a product’s design phase?when they are most cost-effective, rather than midstream in the parts procurement stage or even during manufacturing.
Without the CIO’s early guidance on product lifecycle management, on the other hand, “there’s a much higher probability that each functional tower would decide on what’s best for them rather than searching for a global solution,” says Dennis Charest, vice president of e-business and IT at Hamilton Sundstrand, a $3.4 billion aerospace and industrial products subsidiary of United Technologies. The result of decentralized decision making would be a standards mess and a giant cleanup job for you-know-who.
CIOs can best avoid this trap by acting as both chief architects for the PLM strategy and leaders of change. The first task is to draw up the technology road map, devising the infrastructure to support cross-application integration and helping select the right vendor (see “Shopping Tips for the Vendor Bazaar,” Page 98). The next job is to lead the troops, with the help of key business execs, through the laborious process of changing the way they work. Finally, given the constraints of today’s economy, responsibility falls to CIOs to identify the areas where PLM can deliver the most immediate results. “This is yet another thing that’s going to cost big money,” says Kevin O’Marah, vice president of PLM at AMR Research. “It’s up to the CIO to watch out for where PLM can really be meaningful.”
Chief Architect and Change Agent
PLM is a tall order for CIOs, one that a few are just starting to address. Industries such as automotive, consumer-packaged goods and aerospace are taking the lead, but even there, most companies are in the early phases of deployment. The most common starting point is in engineering?creating collaborative design platforms and streamlining the engineering change order (ECO) process. The next steps usually deal with bringing efficiencies to supplier relationships. Still relatively unproven is integrating customer requirements information and post-sales data about products into the broader PLM picture.
“We’re in the real early stages,” says Michael Grieves, director of IT programs for the Center for Professional Development at the University of Michigan’s College of Engineering. “Most of this is still collaborative engineering. You don’t yet see pieces of information from beyond the factory door being tied back in.” To foster research and education on PLM best practices, Grieves has helped establish the university’s PLM Development Consortium, which initially will explore use of the technology in the automotive sector. Industry heavyweights such as Ford Motor, Johnson Controls and Lear are among the charter sponsors, paying as much as $25,000 annually to support the research.
Lear, a $14.4 billion automotive supplier, is taking this kind of stake in PLM because Vice President of IT and CIO John Crary views it as a way to more effectively manage Lear’s product development efforts for its customers?the leading car manufacturers, which contract with Lear for interior systems such as seating, instrument panels and electronics. Crary says he wants to give Lear customers a “laserlike focus” about their projects throughout the development cycle, which can run anywhere from a few weeks to 18 months. In the past, project information was conveyed in an ad hoc manner via spreadsheets and e-mail, and it was often inconsistent, Crary says. Now, using tools from EDS PLM Solutions, Lear has built the underpinnings of a system that will give carmakers a constant flow of information about their projects?everything from engineering schedules to part changes to quality statistics?beginning with current vehicle models.
Crary’s initial role with PLM was that of change agent, working with engineering to sell the business case to senior management. From there, Crary helped oversee a cross-functional PLM project team charged with mapping and defining common business pro-cesses. Hamilton Sundstrand’s Charest took similar steps. With the engineering and operations groups as cosponsors, he launched a campaign to sell the benefits of PLM to the company’s different constituencies. The campaign included videotapes that talked up how PLM would improve the jobs of product developers, manufacturing personnel and post-sales support staff. “It was a trilateral sales job, and my most important role was to act as change agent,” says Charest. Had he shied away from that task, PLM would never have taken root as an enterprise solution, he says. The first fruits of PLM at Hamilton Sundstrand are more interchangeable parts, flexibility in engineering job roles and a reduction in ECOs by as much as 15 percent.
CIO Stuart Scott orchestrated a wholesale campaign to sell GE Industrial Systems on PLM. What started as a little-known engineering foray into product development management (termed PDM, which is a narrower, engineering-focused version of PLM) became the star attraction of Scott’s biweekly communiquŽ highlighting IT successes. But Scott had more in mind than just giving accolades to the engineering department. He believed what was happening in that microcosm had ramifications for all business functions within the $5 billion manufacturer of industrial, electrical, and security systems and services?even for its parent General Electric.
Instead of leaving engineering to its own devices, Scott took the project under his wing. That involved sending e-mails and even making a webcast talking up the virtues of a broader vision of PDM?that is, PLM. Engineering became Scott’s poster child for what was possible. “What I did is help engineering be successful with PDM, and that gave us the power to drive the technology across the business,” he explains.
Prove the Value of PLM
Once there’s buy-in on PLM from the business units, it’s up to CIOs to help determine where the biggest opportunities lie. Susan Kampe, vice president and general manager of IT for the $15 billion Automotive Systems Group of Johnson Controls, focused her early PLM efforts on product design and launch, her goal being to keep up with the time-to-market pressures of the major carmakers.
When Kampe came on board in December 2001, a more narrowly focused PDM project was a year behind schedule. She and other executives made sweeping changes, bringing in a seasoned IT program manager (who was also a former CIO at another company) to oversee the bigger PLM strategy. To the all-engineer project team, Johnson Controls added representatives from different business functions, such as purchasing and sales units, and established a cross-functional steering committee, which included senior managers. The biggest challenge was getting stakeholders across functions to agree on common business pro-cesses, Kampe says. “These are gut-level changes. It’s not about IT telling business what to change, but about IT and business teaming together to work through how things should run.”
In this economic downturn, IT leaders should keep PLM activity focused on immediate results. Senior management wants nothing to do with multimillion-dollar, multiyear deployments. “Things are tough at the moment, and while you’re trying to invest in new capabilities, you’ve got to do so within the boundaries of profitability,” says Mike Webb, senior vice president of information technology and CIO at Flextronics, a $13 billion electronics manufacturing services provider.
Flextronics’ customers, mostly high-tech and electronics manufacturers, face extreme time-to-market pressures. As their design and manufacturing partner, Flextronics can’t afford the weeklong delay that used to come with approving every engineering change, which can number several hundred for a single product. “All the [product information] was nonintegrated and prone to a lot of error,” Webb explains. “We needed to cut back the processes for ECOs to less than a day, and that gave us a very focused point to start with.” Using a PLM application from Agile Software, Flextronics has accomplished just that. The next steps are to integrate some supplier management capabilities, such as requests for quotes and quality tracking tools, across the enterprise.
Webb, like other CIOs leading the way on PLM, is charged with creating and enforcing data standards so that information can flow freely among systems. He has appointed a team to make sure that the 80-plus Flextronics facilities adhere to PLM nomenclature detailed in a corporate data handbook.
But data standardization doesn’t have to be a constraint. At Ford, the goal is to choose an architecture that allows different data standards to coexist, says Richard Riff, a Ford technical fellow overseeing the company’s PLM project. A large, decentralized company like Ford would be mistaken to insist on a single PLM database, says Riff, who reports to CIO Marv Adams at Ford headquarters. Ford is in the early stages of architecting its PLM data?but regardless of how the task is accomplished, responsibility for data clearly falls on the CIO’s shoulders, says Riff. “A major task of the CIO is to reconcile silos of information into one set of cohesive requirements and product descriptions.”
Shape the PLM Market
As Riff sees it, CIOs should cultivate relationships with key PLM vendors to ensure their companies’ needs are being met in follow-on products?such as was the case in the early days of ERP software. Ford maintains partnerships with its PLM vendors, IBM, Dassault Systemes and EDS PLM Solutions, through which it gives input into the evolution of their products. By working closely with vendor MatrixOne, Johnson Controls merged its initial PLM implementation, which was essentially a custom-built toolkit, with the software company’s packaged application suite. This linkage made MatrixOne’s suite more useful for the automotive industry as a whole, Johnson Control’s Kampe says.
Procter & Gamble has also leveraged its connection with a vendor to get the PLM customizations it requires. Robert Dixon, vice president of IT for P&G’s Baby, Feminine and Family Care division, was one of the initial sponsors of the company’s early PLM efforts. He talked up EDS’s PLM group to other P&G divisional CIOs and top management. As a result of its work with P&G, EDS PLM Solutions recently came out with a version of its PLM suite tailored specifically to consumer-packaged goods makers. “We wouldn’t have the relationship with EDS today without [Dixon’s advocacy],” says Tom Massung, P&G’s associate director for IT business solutions PLM. “And we’d still be hunting and pecking, buying 2,000 to 3,000 licenses at a time and spending more money.” As a result of the partnership with EDS, P&G plans to increase its current installed base of more than 8,000 licenses of EDS’s TeamCenter PLM offering to a potential 20,000 users during the next five years, Massung says.
At GE Industrial Systems, the concerted campaign by CIO Scott to promote PLM has led to a multistage implementation based on MatrixOne’s product. After the PDM foundation was put in place, Scott, with guidance from a PLM steering committee, began work on a document management system for coordinating more than 18 million purchase orders, intellectual property licenses, contracts, correspondence and the like. Next up is integrating sourcing applications and project management capabilities. There are numerous other possibilities to explore, he says.
Scott’s enthusiasm for PLM derives not from the technology but from the implications for the business. He’s now the official promoter of PLM to GE’s divisional CIOs. Says Scott: “There’s opportunity there if CIOs can open their eyes and look at PLM as a change management issue, not an engineering drawing control issue.”