For those who analyze the PLM sector, the yearly exercise of predicting when large companies will adopt PLM on the cloud en masse has become repetitive. For years, we have seen CRM and ERP systems adopt cloud strategies enabling companies to sustain a complicated and ever-changing security posture better while providing an alternative to the rising costs of recruiting technical resources and investing in new infrastructure. Every year seemed like “the year” that large PLM systems would join the CRMs and ERPs to begin their long-anticipated march together into the cloud. While cloud PLM systems targeted to smaller companies have been successful for quite some time, medium to larger companies requiring robust PLM capabilities have been hesitant to move off their on-premises solutions.
Prediction 1 – Cloud PLM deployments will become the first option for large companies
I predict the inertia from the growing number of cloud-first strategies and the increasing challenges of managing a company’s cybersecurity in today’s global environment will create a tipping point, and 2023 will be a breakout year for enterprise PLM deployments on the cloud.
With several years of relentless global disruptions from the pandemic to massive supply chain issues, from military conflicts to rising energy costs, companies have been forced to react quickly by adopting new business and technical strategies to ensure organizational stability. Significant shifts to company operations have been necessary to account for the labor force working from home, growing partner networks requiring system access from remote locations, and, of course, ever-increasing security threats. The impacts of these new demands have aligned precisely with the strengths of the cloud. Many organizations have adopted a cloud-first strategy for their system deployments, including PLM. We have certainly seen hints of this over the past two years, as reported by industry analysts:
According to CIMdata in their 2022 Executive PLM Market Report, “Cloud-based PLM adoption has been slow, but interest is picking up. In most of CIMdata’s industrial consulting engagements today, the question is 'why not cloud?' with a lot of push coming from corporate IT and even the C-suite.”
According to Tech-Clarity in their eBook, “The State of Cloud PLM 2022,” “three-quarters of companies favor, prefer, or mandate the cloud for their new software selections.”
Prediction 2 – When the cloud is not enough – enter SaaS
I predict as companies find that managing complex PLM deployments on the cloud require more than just cloud technology, but also the skills to manage it effectively, the importance of PLM SaaS offerings will accelerate quickly in 2023.
As companies move their deployments to the cloud for improved security, unlimited capacity or to reduce and simplify their system administration (Fig. 1), many find there is a major component overlooked – the expertise to optimally deploy, run, and manage their PLM implementation on the cloud. Enterprise PLM systems can be very complicated to administer.
Fig. 1, From CIMdata’s eBook “Leveraging the Cloud for Global Market Success”
Moving a system to the cloud using Infrastructure as a Service (IaaS) provides IT departments with many of the pieces to eliminate the dependency on an internal data center and the resources required to manage the infrastructure. But to realize the full value of the cloud, they also require PLM solution-specific technical resources that only a robust Software as a Service (SaaS) subscription can provide. Again, enterprise PLM systems can be very complicated to administer.
Huge volumes of highly confidential data are delivered to resources in remote locations everywhere and anywhere across the globe. Since enterprise PLM systems are often the core of a company’s digital thread, connecting data from multiple systems potentially located in different locations, the ability to ensure users have acceptable response times while the data between systems is always available requires a high level of solution-specific technical expertise. These resources are expensive and in-demand leaving companies struggling to recruit and maintain a workforce that can manage the high demands of today’s PLM environment. The right SaaS offering will include the expertise to not only deliver to their aggressive service level agreements (SLAs) but it will also be able to make the necessary pivots as requirements change, ensuring a seamless experience for its customers.
Prediction 3 – PLM Cloud Platforms become a battleground
In 2023, I predict that PLM providers’ strategic cloud platforms (not just each application’s business functionality) will become customers’ focal points when selecting their future PLM solutions as they migrate to the cloud. PLM platforms with loosely connected applications or that lack the capability to support customizations for organizations’ specific requirements will struggle to maintain their customer base as companies migrate to the cloud.
For years companies have heavily marketed their PLM solution as part of a platform. What it means to be a platform can suggest very different things to different organizations and is often the source of confusion for customers when comparing solutions. Jim McKinney’s blog “Do You Suffer from PLM Legacy Syndrome?” does an excellent job discussing the value of an integrated platform of connected solutions that support the digital thread. He also describes the potential negative impact of a platform that is nothing more than “a bunch of disconnected solutions neatly wrapped in a fuzzy blanket of marketing jargon.”
By 2022, most Enterprise PLM providers have introduced a cloud platform strategy. These strategies have often been assembled by acquiring multiple independent, existing cloud products, and using them as the basis of a platform to provide capabilities or functionality. While the success of these strategies will be critical in the fight for market share, most enterprise PLM providers have struggled to tie their platform solution together effectively for the cloud. This often leaves multiple data models or complex integrations in place for the platform to operate. This is evidenced by several providers quietly changing their platform strategies over the past few years.
To compete for the largest and most visible customers, enterprise PLM solutions will need to show their PLM platforms can support growth and flexibility into new and complex areas, while also meeting the specific requirements of large customers. Cloud solutions generally come with a perception that organization specific customizations are limited or even restricted. Since most large PLM cloud platforms have positioned their solution as out-of-the-box first with minimal ability to customize, I believe this is where the battle will begin. Historically, out-of-the-box solutions have never been a successful strategy in the enterprise PLM space, and I do not believe this will change in the future.
Summary
The adoption of cloud solutions for enterprise PLM systems has been slow. It seems understandable that companies were unwilling to move their most valuable intellectual property (IP) out of their own data centers and trust third party providers to deliver acceptable user response times for a system moving huge amounts of data around the world. Now, after many years of success managing deployments of all types of large applications around the world, the enterprise PLM cloud market is ready to grow quickly. The only question left is which of the enterprise PLM solutions is best prepared to handle the challenge?
For more information on Aras Enterprise SaaS, read CIMdata’s analyst commentary “Aras Enterprise SaaS: A Gen2 Leader.”