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Tasting New Concoctions

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DQI Bureau
New Update

Indian software companies have been providing services that addresses the

entire manufacturing continuum that includes conceptual design, handling of

legacy data, industrial and mechanical engineering design, analysis, prototyping

and manufacturing process and assembly line optimization. They have focused on

providing engineering services in the field of CAD (Computer Aided Design), CAE

(Computer Aided Engineering), PDM (Product Data Management) and PLM (Product

Lifecycle Management).

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The areas where solutions are provided include:

  • Conversion and translation of legacy data
  • Industrial design

  • Mechanical engineering design

  • Engineering change modeling and detailing

  • CAE analysis

  • Prototyping, design of test rig and design validation

  • Process and systems design

Two significant changes are taking place in the CAD/CAE

solutions market. One, the core CAD market has begun to mature, volume growth

has slowed, while pricing pressure has intensified. Volume growth is being

supported by ongoing upgrades, platform upgrades from generic 2-D offerings to

vertical-specific 3-D offerings, and entirely new functionalities sold into the

installed base.

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Two, new product initiatives are likely to drive revenue

growth-PLM and mid-range 3-D design offerings. PLM offers a significant growth

opportunity, enabling the leveraging of the original design data downstream

throughout the product lifecycle. Specifically, PLM solutions unify and enable

the collaboration and process control throughout the product lifecycle, from

concept to design, manufacturing, and after-market support.

Mid-range 3-D and model-based solutions are designed to drive

an upgrade cycle from generic 2-D solutions. The most significant opportunity in

the CAD business is the opportunity to upgrade existing 2-D (drawing production)

design tools to 3-D (solid modeling) and model-based design tools.

PLM: What does it mean?



PLM refers to enterprise software applications that integrate a number of
functions required to develop, model, track, manage, and control the products

companies offer and to manufacture, sell, maintain, and, finally, retire these

products at the end of their useful lives. IDC forecasts explosive growth for

this market, from $1.05 billion in 2001 to $5.67 billion in 2005, a compound

annual growth rate (CAGR) of almost 45%.

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This software must straddle a wide range of functions and

users, starting with product designers and engineers and leading through

manufacturing and logistics to sales, customer support, and maintenance. The

success of PLM applications rests on their capability to provide users with easy

and intuitive access to data through role-based portals, consoles, or

dashboards.

PLM

Applications
l Actively

involved in enabling at least some of the PLM functions described in the

following bulleted list
l Sold

into product-supply-chain industries (i.e. manufacturing and

retail/wholesale distribution)
l Integrated

out of the box to allow for data exchange and collaboration among

employees with a range of different responsibilities and with outside

partners

The promise of PLM solutions, to both product vendors and

customers, is that they combine mature applications into a seamless environment

and gain a way to closely link different technologies and data sources into a

coherent information network that is secure; scalable; and easy to navigate,

customize, and localize for international users. While this sounds great, it’s

not that simple. End-user needs for specific PLM features and functions differ

among companies for whom success depends on operational efficiencies or on

product design, engineering capabilities, and rapid innovation. These

mission-critical goals should determine which PLM vendors offer the best fit:

those with expertise in ERP, in CRM, or in CPD (Collaborative Product

Development).

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In IDC’s opinion, PLM is a holistic approach to product

development and product management from cradle to grave (i.e. from product

conception through product retirement). As such, it straddles a wide range of

functions and users, starting with product designers and engineers, leading

through manufacturing and logistics to sales and customer support, maintenance,

and ultimately decommissioning. Application software vendors are drawn to this

market space simply because all applications required for a complete PLM

solution are available and well understood and many of them have reached the

cusp of their value curve. Therefore, the best way to increase revenue from

these mostly mature applications is to increase the user base by integrating

them in an extended solution offering. What makes PLM so exciting is that we now

have the technology to create a seamless environment in which to exchange and

track product information in real time across a number of sites, and to store

disparate data from a great variety of sources in data warehouses for long-term

trend analysis, at a level of granularity that simply was not feasible before.

The opportunities



As defined by IDC, PLM applications are still in the early stages of

development. This does not mean that its component features and functions are,

in themselves, new. The challenge to users and providers is to closely link

these different technologies and data sources into a coherent information

network that is secure, scalable, and easy to navigate, customize, and localize

for international users.

At this relatively early date in PLM adoption, users are most

likely large corporations or divisions that have taken the hurdles of ERP and

probably CRM integration and whose business depends on rapid development and

introduction of high-value products in discrete and process manufacturing.

Primary vertical markets at this time are high technology, industrial machinery,

automotive, aerospace, and shipbuilding.

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These markets share certain characteristics that justify the

overhead of PLM such as:

  • High-value products, that-particularly in the case of

    high tech and automotive, suffer from rapid value depreciation.

  • Engineered-to-order or made-to-order products that have a

    long life cycle with complex maintenance and overhaul requirements

  • Developed, manufactured, distributed, and maintained

    through a complex network of globally dispersed development, manufacturing,

    transportation, sales, and service organizations that can be internal and

    external to the enterprise.

Users in discrete manufacturing are currently leading in the

adoption of PLM. However, process manufacturing also can benefit from PLM

software solutions. These offerings include basically the same functions as for

discrete manufacturing but also include recipe management, support for chemical

analysis or nutritional analysis, and composition calculations.

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In addition, adoption of the PLM concept requires corporate

management that is willing to take on a leadership role in developing and

implementing new extended interaction and information sharing within company

families, departments, and divisions, as well as external partners in the supply

chain, and with end users. PLM may succeed in the areas ERP has failed, namely,

to bring and end to design and engineering as a functional silo or power center

and to integrate it more closely with manufacturing, purchasing and sales.

PLM: Who are the top players?



There is little doubt among enterprise applications software providers, that

PLM is becoming a hot market, succeeding ERP and CRM as the next opportunity for

revenue growth. The questions are, which types of vendors will have good

opportunities to succeed in the near term with relatively complete offerings,

what will be needed to support their growth, and will there be opportunities for

start-ups to add complementary capabilities?

CPD offers two core components of the PLM solutions, product

development, and engineering software (MCAD/CAE/CAM) and PIM software, which

traditionally has been sold to engineering departments and divisions. As the

market for MCAD/CAE/CAM has matured and growth rates have dropped close to zero,

PIM, with its sub-segments of product data management and component and supplier

management, has become the ticket to new sales and faster revenue growth. The

limiting factor in these applications has been that they were targeted at

company-internal use and even more specifically at engineering department use.

We are just now witnessing the opening of these silos to include

company-external development groups, component suppliers, and outsourced

manufacturers and service providers.

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By contrast, ERP/CRM products have a business process focus.

The core functions that they bring to PLM are materials management and CRM,

including sales and customer support. Their strengths are a process-oriented

architecture and data integration.

A third group of PLM solutions providers is expected to arise

out of partnerships between engineering, ERP, or CRM software providers with

complementary standalone application software vendors. Standalone application

providers are the document management and collaboration software providers,

among others. These partner-based PLM solutions could be made available as

hosted services, either by the vendors themselves or by ASPs. PLM solutions may

also become a valuable offering by private exchanges that can support their

subscribers by offering the exchange as a collaboration hub for PLM.

There is not doubt that as PLM gains in momentum, there will

be opportunities for small point solution providers that offer functionality

that is not market-critical to the larger solutions providers but that

nevertheless provides desirable capabilities. These applications will possibly

include product development management functionality, analytical capabilities,

manufacturing data collection, and analysis, diagnostic systems embedded in

manufacturing-critical machinery, and quality control for the pharmaceutical

industry, among others. From today’s vantage point, it appears likely that ERP/CRM

and CPD software applications providers will have their fair share of

opportunities: ERP/CRM vendors will sell their PLM applications into customer

sites where product development and engineering data do not represent the

company’s crown jewels.

This state of affairs could open the door to an obvious

solution. Rather than extending sales cycles and raising sales expenses for all

software providers by competing at all cost for the complete PLM solution at

each customer site, ERP/CRM and CPD software application providers could partner

in sales opportunities in which there is a high value on product design and

engineering capabilities and product information is success-critical. In

opportunities in which the primary value of PLM lies in operational efficiency,

ERP/CRM vendors will most likely dominate the sales situation and satisfy

customer needs by offering CPD capabilities through APIs. In short, the PLM

market would benefit from intelligent partnership agreements between ERP/CRM

players and CPD players.

Team DQ



For more information or enquiries, write to research@nasscom.org

PLM Functions

A PLM application software should offer any of the following

core functions

l Engineering

software or some access to it. This includes mechanical computer-aided design (MCAD),

computer-aided engineering (CAE), and computer-aided manufacturing (CAM) or at

least one of the three, or electronic design automation (EDA) software.

l Product

information management (PIM). This has two subsegments, namely product data

management (PDM) and component and supplier management (CSM)

l Materials

management software. This includes order management and purchasing as well as

inventory management for raw materials, work in process and finished goods.

l Customer

relationship management software. This software includes customer and sales

support and sales configuration.

Beyond these features that form the core of PLM software, a

comprehensive PLM application should also include the following:

l Collaboration

software: This would be especially for team collaboration.

l Maintenance

management software: This would be for repair and overhaul to track product

quality and perform failure analyses.

l Business

performance measurement software: This would be to analyze cost efficiencies and

search for process improvements.

In addition, depending on their roles, users should have access to a variety

of detailed product information used in the following:

n Project management

n Accounting and human

resources

n Manufacturing resource

planning

n Logistics such as

transportation planning and management and warehousing as well as return

logistics.

n Retail and wholesale

distribution

n Content and document

management is an application that plays an important role as an underlying

enabler that more or less touches the entire chain of PLM activities outlined in

figure 1. Content and document management software serves to organize and

maintain information and includes workflow tools for tracking documents and

changes, keeping records, auditing, and logging; indexing tools and document

access tools such as search engines; and browsing tools, among others.

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