‘Indian Firms Need Disciplined Product Design Activity’

A product lifecycle management solution helps engineering and manufacturing companies churn out newer and better products in a short time-span. EDS, the world’s largest outsourcing services company, is one of the leading vendors of PLM solutions in the global market. The company’s PLM division has garnered a leading share in the Indian market with over 1,000 clients in the last 10 years. EDS’ PLM Solutions division president for Asia-Pacific,
Hans-Kurt Luebberstedt, spoke about the company’s plans for the future in an interview with Dataquest. Excerpts: 

Hans-Kurt Luebberstedt

lHave acceptance levels for products like PDM/PLM changed over the years in the Indian market?

Generally speaking, the industry in India has only recently begun to actively embrace PLM and product data management (PDM) tools. Till a few years back, factors like high costs and complexity of the solutions coupled with a shortage of trained manpower held back widespread adoption by businesses. Managements also had apprehensions about the viability and requirement of such solutions. But now, as they realize the improvements and the business value that these tools can facilitate, adoption is picking up.

As business becomes more competitive, product development is becoming a key focus area, particularly in large companies. Many Indian companies are now actively carrying out extensive R&D and coming out with their own products. To illustrate, Telco and Mahindra & Mahindra have already launched their indigenous products in the market.

Thus, if Indian businesses want to sustain themselves in the global marketplace, they need to have disciplined product design activity in place. There is need to produce and deliver goods faster to the market. Even designing becomes a key area. This is where the need for a sophisticated PLM solution–which helps in reducing the development cycle time and in improving the quality of the end product–comes in.

lWhat promise does the Indian market hold for EDS?

Being a high growth area in Asia Pacific, we believe the Indian market has a lot of potential for growth. In India, EDS has seen strong business growth in recent years and
we’re now poised for faster growth. For instance, we’ve already seen 

50% growth in the first half of this year. Again, this points to the acceptance of PDM/PLM solutions in the Indian market.

lWhat initiatives are you taking for building a workforce skilled in implementing PDM/PLM solutions?

We are taking a number of steps. For instance, in early 2003, we introduced a certification process for our software. A globally valid certificate, it allows certified professionals to work in any company that employs our solutions. Also, over 250 educational institutions and colleges use our software, either as part of their curriculum or for giving general training on CAD/CAM and PDM solutions. We also work closely with various institutes, such as the IITs and the RECs, to ensure that they have access to the material required for imparting PDM and PLM skills as part of their courses.

lIn times of economic recession, how do you convince customers to invest in highly expensive PDM/PLM solutions?

Our experience has been quite the contrary. In fact, instead of hesitation in investing in this technology, we have seen an opposite situation. For traditional IT infrastructure, managers have had a tough time showing returns on investment (RoI). The RoI from such investments is measured in terms of better performance and lowering of costs. However, investment in PLM solutions cannot be justified by cost benefits alone. Companies should see better returns through enabling technology, which should help them design better products in less time. If you implement a PLM solution in an efficient way, the end result would be a better and innovative product that is generated faster than before, which gives you a better leverage in the market place. The motives behind such investments are different and hence these are picking up both globally as well as in India.

lYou have been in India for 10 years and already have a leading market share. What is the way going forward?

The benefits of our long presence will be reaped all the more now. Investing in a solution like PLM calls for deep partnership and mutual trust. Now Indian customers know that we are here and we mean business, so the trust is easier to build. In order to move forward and remain competitive, Indian businesses need to get aggressive on product design and concentrate on the development phase. While most large companies have invested in PLM solutions, they require newer or innovative solutions to cater to their changing needs.

Also, there are about 18,000 to 20,000 small and medium companies across India that are yet to experience these high-end tools. While they may have invested in simple 2D drafting tools, we have in the last four years and still are trying to convert them to 3D tools. Despite having the largest market share we have only 600-odd customers in this segment, which is miniscule compared to the size of the market.

lWhat initiatives are you taking to tap the aforementioned 20,000 small companies?

Small companies are usually kept out of reach of a typical PLM solution not only because of higher price points, but also by investments required in expensive hardware that is needed to run these solutions. Therefore, we have come out with specific products to address this market that run on cheap hardware to help them migrate from 2D technology to 3D, while retaining the same ease of use. Our solution for this segment now costs approximately Rs 2 lakh per seat, compared to Rs 4 lakh to Rs 5 lakh for a typical solution for larger companies.

lEDS is still widely known as an IT services outsourcing company. Where does the PLM division fit in the company’s overall scheme of things?

The PLM division is less than two years old, but is already a significant line of business. In a way, this division complements the parent company’s outsourcing business as, by and large, the new customers of this division enter into a services outsourcing relationship with the parent company. We estimate that we have been able to get business from approximately 39,000 customers for our other divisions, resulting in $1.2 billion worth of revenues for these divisions. Overall, the PLM division contributes around 5% to the company’s revenues.

lYou have a development center in Pune. Any plans to ramp up operations there?

We have a team of 90 persons at our Pune development center, apart from 100 third-party contractual employees working on our projects. We have a good team with excellent management skills. We’ve also decided to double the number of employees at our development center in Pune. Overall, we are looking at an aggressive R&D and software development strategy in India.

RISHI SETH in New Delhi