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Why PLM is moving to the cloud

Tue, 07/15/2014 - 11:02am
Steve Chalgren, Vice President of Product Management and Strategy, Arena Solutions

This is a golden age of innovative electronics. Lowered barriers to entry for innovators in the form of lowered costs, funding, and more ubiquitous manufacturing options are making it much easier for anyone with a good idea to become an entrepreneur. So what does all this have to do with cloud-based product lifecycle management (PLM)? The operative models for startups and large companies seeking to compete today are small teams that fail quickly and /innovate quickly, use external design and engineering experts to fill gaps, and leverage outsourcing for prototype, early run, and full production manufacturing to get to market. These external teams need to have access to the latest revision of the product design. And remember, today’s product designs are changing very frequently. Things fall apart fast when the support network of engineering and manufacturing teams fall behind on the design innovation path.

Imagine receiving assembly 40123-10 (old) from your manufacturer and updated engineering designs to support the power for assembly 40123-13 (newer but still old) from your outsourced engineering team, when what you needed was for everyone to be working on assembly 40123-15 (latest)! You just wasted a ton of money, delayed release to market by weeks, committed to working the next four weekends, and gave yourself a big headache. Cloud PLM’s entire focus is to keep these teams in sync. Not true, though, for PLM’s original on-premise incarnation.

Just like Enterprise Resource Planning (ERP), Product Lifecycle Management (PLM) has been around since the 1990s. In the 1990s these enterprise solutions were built for on-premise use. There was no cloud. Outsourcing was just beginning, and most of the production was still built in vertical manufacturing facilities. Outsourcing a product required mailing (or couriering) copies of the BOM and drawings, called a manufacturing build package, to the contract manufacturer, followed by several phone calls and onsite meetings to transfer the tribal knowledge. These on premise enterprise tools sit in expensive datacenters behind the corporate IT firewall. Many external users, fast turn prototype houses, volume contract manufacturers, design and engineering contractors have no access at all to the PLM system. Typically, just a few key people at a few key suppliers have a log-in. Today, every on-premise PLM company is racing to deliver cloud PLM/ So how does cloud PLM support this golden age on innovation?

Cloud PLM enables the capture of the product design and the creation of a complete manufacturing build package designed for outsourcing in the midst of rapid innovation and design changes. Multiple teams working on multiple products can all use the same system to track their designs. They can leverage each other’s work for maximum part or platform reuse. They can collaborate. They can leverage mashup integrations to check compliance, part availability, part lifecycle, and verify design specifications in a single view –then auto document any part they find on the web with a click of the button. They can easily upload their design from their eCAD or mCAD tools. They can grant secure access to anyone on their innovation team quickly regardless of where they are in the world and regardless of who employs them so they can all work together on the new product. They can all stay in sync!

Cloud PLM supports the golden age with lower upfront costs and lower long term costs. Cloud enterprise software leveraging multi-tenant architecture has built in economy of scale because multiple companies share in the cost of the hardware and operational support. Just like 3D printers enable the mechanical design teams to quickly build prototype parts and low production volume without building expensive tools upfront, Cloud PLM enables the team to subscribe, or rent, the software rather than purchase. This is a big cash flow savings. Traditional on-premise PLM software typically costs about $5,000 to $7,000 per user plus upfront annual maintenance (often over 20% of the license cost) and the purchase of the supporting hardware, database, backup, firewall, labor, and hassle.

With a cloud-based solution, the fee is an annual per-user subscription, so the cost of adding a user is a fraction of the on-premise providers, which makes it viable for small innovation product design teams to leverage a much large number of users in their manufacturing supply chain. Obviously, there are a lot more manufacturing people than design people involved in bringing a product to market!

Cloud PLM enables a simple to use, but comprehensive model for tracking the product changes and communicating them to all team members, including the manufacturing supply chain. It is the glue that holds the entire crazy, disruptive eco-system together so that new, awesome products get to market quickly, so this golden age of innovation can flourish and grow.

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