Introduction
Over the past year, it’s become clear that the pandemic—the greatest disruption in my lifetime—has not only driven us to work, learn, and consume remotely, but has reshaped our economy and our own behaviors much the way the Great Depression and World War II restructured the lives of previous generations. In 2021, Aras had a banner year with many companies choosing our platform to transform their businesses—many in the cloud and many in the form of enterprise SaaS. As we enter 2022, companies have had the opportunity to revisit past inefficiencies and proactively pursue new, more resilient alternatives.
Proactive Continuous Digital Transformations Accelerate
Prior to the pandemic, companies were focused on big-bang digital transformation projects with high costs and horrific failure rates. Companies found themselves in a panicked shift to remote work and other gap-plugging measures to keep their businesses running. From these initial stages of inefficiency and inconsistency came a greater understanding of the need for more sustainable ways of working. Companies now prioritize business resiliency—the ability to adapt to unexpected disruptions. In 2021, faced with remote work, climate change, global supply chain shortages, and the unrelenting demand for more complex, connected products and services from more digitally savvy consumers, we saw a shift from a reactive to a proactive approach to transformation.
In 2022, we will see an acceleration of proactive digital transformations. These transformation efforts will result in greater efficiencies and increased productivity at less cost with less time to value. The transformations will be more focused and continuous, resulting in greater connectivity, collaboration, visibility, flexibility, and the agility to both navigate future disruptions and take advantage of technology providing new and better product-as-a-service offerings. We all now share a common understanding that we don’t really know what the future holds, but we do understand the need to transform in a way that’ll enhance our business resiliency and agility.
The Talent War
A company’s most important asset is its people. The combination of “The Great Resignation,” where millions of mid-career employees are leaving their jobs at the same time baby boomers are retiring, has resulted in the highest voluntary “quit rate” on record, coinciding with record low unemployment. Many things go into building a winning team but attracting and retaining talent are fundamental. Without strong talent, you simply will not win. This, of course, is pushing companies to rethink many aspects of attracting and retaining talent and how to invest in technology to make their knowledge workers as efficient as possible.
As it relates to PLM, in 2022, the trend will be to provide new workers with non-tribal knowledge. Companies will be shifting to a more geographically dispersed workforce with more efficient, easier, and better ways to access data across their digital thread. 2022 is the year employees and companies that recognize how to amplify the productivity of these scarce knowledge workers with state-of-the-art technology will be ahead of the curve.
Adoption of Enterprise SaaS in PLM
It’s no secret that both cloud and SaaS cloud adoption in PLM have lagged other areas such as CRM and HRMS solutions. Due to the pandemic and the need to provide resilient solutions that scale globally, companies are now migrating to the cloud. Most of them prefer a SaaS solution that will simplify their IT infrastructure.
The challenge they face is two-fold. First, despite claims to the contrary, most SaaS PLM offerings lack the functionality of their on-site counterparts, or they haven’t yet been re-architected to leverage cloud services, instead offering virtual machines in the cloud. Second, companies want the advantages of a SaaS offering with robust out-of-the-box (OOTB) functionality with regular updates; but they also need the flexibility to adapt—to customize their solutions in a low-cost sustainable manner to meet their enterprise needs. This will enable their PLM platform to be a digital transformation platform.
The problem is SaaS offerings limit or prevent customizations for company-specific requirements and force OOTB customer upgrades onto the provider’s schedule. The fundamental problem is a company’s requirements are changing at an accelerating pace, so this is outdated thinking if you wish to sustainably and continuously transform.
Fortunately, Aras Enterprise SaaS offers the best of both worlds—a true platform architected for the cloud with a SaaS offering that includes unlimited sustainable customizations and upgrades on the customer’s schedule with the same exact capability as the standard offering. We anticipate that the huge shift to enterprise SaaS, which we began to see in 2021, will only accelerate in 2022. For more information, check out our Aras Enterprise SaaS brochure and learn more about the ways in which it supports the new vision of PLM digital transformations and the move to the cloud and, in particular, enterprise SaaS.
Sustainability
Every organization must seek to eliminate or reduce the environmental costs of doing business. Decarbonizing the supply chain is a sensible place to start, but forward-thinking businesses are looking beyond the supply chain to improve sustainability across all business operations. And of course, sustainability is linked to resilience—that is, being able to adapt and survive for the long-term. Any business that ignores sustainability is unlikely to do well in this age of conscious consumption.
Supply Chain and PLM will Focus on Resiliency
Over the past year, many of us have witnessed and felt what it’s like to face empty shelves, rising energy bills, and shortages in everyday services. The supply chain crisis started with the lockdown’s impact on the manufacturing industry and continued with labor shortages such as truck drivers, which stalled traffic flow through the world’s busiest ports. A wide array of materials, parts, and goods fell into short supply, ranging from common household items to semiconductor chips. Just as in the talent war, the world has shifted from a mindset of abundance-thinking, where lowest cost rules, to one focused on scarcity.
Presently, the biggest supply chain trend is resiliency. Material backlogs and labor shortages will continue to force companies to pivot. In a recent report by Capgemini Research Institute, 62% of respondents said supply chain resilience would be a key priority in the wake of the pandemic. With respect to PLM, in 2022 we will see PLM play a bigger role because supply chain resiliency requires greater visibility across the enterprise. More than 90% of supply chain executives said visibility into their supply chain is important to their success, yet less than a third have achieved true visibility. In order to be more resilient and more agile, you need greater insight across your product lifecycle. If you’re going to develop a more diverse sourcing of products and transportation modes, you’ll need to have your supply chain and sourcing connected to your digital thread. In 2022, this will become an area many companies will focus on transforming.
Digital Threads
As companies seek to transform their product landscape to develop smart connected products and offer more platform-as-a-service offerings (PaaS) and manage their as-running assets (digital twins), they must shift toward using all of their product data in the most efficient manner possible. Accenture refers to this as Thread First Thinking.
As companies look to transform, their digital thread is at the heart of the efficiencies and resiliency they hope to gain. This is one area that can’t be ignored. Here are some of the benefits cited by Accenture:
Cost Optimization*
- 20%–40% reduction in costs for data duplication and overlapping toolsets
- Up to 5x the speed of data capture and curation through thread automation
- 2–3x data reuse through cross-functional access to data
- 15–40% improvement in time to market via enhanced design team coordination
- 10–50% reduction in product renovation activities through data-driven design
Post-Sales Revenue Growth*
- 30–45% increase in accuracy in predicting service or spare parts needs
- 10–25% reduction in customer churn through more focused customer offerings
- Up to 5x increase in services revenue through new service offers targeted towards specific consumers
- 10–20% increase in market share through superior service offerings
* dependent on industry
In 2022, we will see more companies reinventing their PLM systems with a “Thread First” strategy.
Digital Twin
The digital twin market was expected to grow at a CAGR of 61.94% from 2020 – 2025, reaching $29.5 billion market in 2025. Overall, the digital twin market has had a couple of setbacks. First, the pandemic put the brakes on many digital twin transformations. Also, in many cases, the overreliance on performance twins and IoT without regard for keeping the as-running digital twin up-to-date and the lack of a connection to the digital thread have resulted in some false starts.
Now is when the digital twin market will take off driven by the increasing demand for asset optimization, the rise of smart, connected products, and a better understanding that the “configured” digital twin and its digital thread enabling traceability across the product lifecycle is fundamental.
Evolving Business Models
Most businesses are transitioning where customer engagement is more important than ever and the product-as-a-service model continues to take off. Personalization has become key to gaining customer loyalty with always-on connectivity becoming an expected feature. Companies are now building out ecosystems for many connected products making platforms, the digital thread and enterprise SaaS critical to their success. The realization that existing, disconnected traditional technologies and static processes won’t adapt and scale quick enough to meet companies’ transformation needs at this time.
Conclusion
In 2022, companies will transition from thinking about ”what if” scenarios, to taking more proactive steps toward more focused and continuous transformations resulting in greater business resiliency and the agility to take advantage of unforeseen disruptions.
Keep safe. All of us at Aras wish you a prosperous 2022.