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).
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.
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%.
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).
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.
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.
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.
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.