Oracle Renders Its PLM Outline Part One: Event Summary

Event Summary

While its tug-of-war bid for PeopleSoft continues to capture the market's attention (see Frantic Merger-Mania Spiced Up With Vendettas Leaves Customers Anxious), somewhat less vocally albeit in a still thoughtful way, Oracle Corporation (NASDAQ: ORCL), the largest database provider and one of the largest global providers of enterprise applications, continues to pursue its internally developed product strategy.

Recently, Oracle claims to have experienced a rebirth of interest in its supply chain management (SCM) capabilities as the enterprise market sentiment have lately turned against mainly struggling so called best-of-breed or pure-play SCM providers. To that end, Oracle has broadened its supply chain software footprint. First, although belatedly embracing internal development of a comprehensive suite of Supply Chain Planning (SCP) applications as part of its e-business suite, Oracle has made up any lost ground with its internal development of a comprehensive suite of Supply Chain Planning (SCP) applications as part of its Enterprise Resource Planning (ERP) system. Oracle has also been steadily building supply chain capabilities with its Oracle Advanced Planning product suite. Also, with the release of Oracle E-Enterprise Suite 11i.8 in late 2002, it added warehouse management system (WMS) and transportation management system (TMS) capabilities to round out the execution side of its budding integrated SCM system.

Further, Oracle has added new vertical functions, such as Oracle's Complex MRO application for the Aerospace and Defense (A&D) industry, which can be deployed either stand-alone or within its traditional suite, and which features strong configuration management and planning capabilities. Also worth mentioning is the high-tech industry-specific version of Oracle E-Enterprise Suite 11i.9, which includes the RosettaNet transaction set support, the ability to handle consignment inventory, and especially notable product lifecycle management (PLM) functions.

Zooming in on PLM, in the summer of 2003, Oracle announced the availability of Oracle Advanced Product Catalog, expanding the collaboration tools available within its PLM applications, which are fully integrated and are part of the Oracle E-Business Suite, a comprehensive set of business applications. Oracle PLM applications were also developed in conjunction with leading technology and manufacturing partners, including CH2M HILL, Honda Motorcycle, Pella Corporation, and Technip-Coflexip. Leveraging these partners' extensive experience developing complex products, facilities, and equipment, Oracle touts its PLM applications provide the most advanced set of tools based on a single global repository designed to manage products, components and projects through the entire lifecycle. Additionally, Oracle claims customers using its PLM applications should benefit from a work environment that allows collaboration with development partners; integrated, real-time sourcing capabilities; and analytics that monitor and help maintain engagement profitably. Oracle's PLM applications have been available for traditional deployment or delivered as an outsourced service.

This is Part One of a two-part note.

Part Two will discuss Challenges and make User Recommendations.

Advanced Product Catalog

Oracle Advanced Product Catalog is the core of Oracle's PLM applications, centralizing all product and component information into a single global catalog so that companies can improve reuse of components and intellectual capital, reduce costs and accelerate new product development. By centralizing product information, the module provides comprehensive and secure product visibility throughout the enterprise, to all other PLM applications, to all authorized external parties, and it also serves as the common source of product information for all Oracle E-Business Suite applications that manage or access product information. Additionally, Oracle Advanced Product Catalog features role-based security, advanced parametric search capabilities and closed loop change management for reducing Engineering Change Order (ECO) cycle times and costs.

In addition to Oracle Advanced Product Catalog, Oracle's PLM applications include:

  • Oracle CADView-3D, which leverages Oracle's patented streaming technology to provide secure visualization and mark-up capabilities for 2-D and 3-D models, streamlining collaboration and information sharing beyond the traditional walls of engineering departments with key customers and suppliers. Oracle CADView 3D will allow any authorized party with a Web browser to participate in collaborative design reviews of 3D Computer Aided Design (CAD) models over the Web.

  • Oracle Project Management, which provides project planning, tracking, budgeting and forecasting capabilities across the entire product lifecycle;

  • Oracle Project Collaboration, which allows project team members to efficiently report and track project status, publish status to all project stakeholders, including suppliers and design partners, and efficiently manage changes;

  • Oracle Collaboration Suite, which provides a suite of enterprise-level document management, messaging and collaboration applications that should enable organizations to increase user productivity;

  • Oracle Sourcing, which simplifies negotiation of supplier contracts with effective online collaboration to develop requirements, identify potential sources of supply and manage complex negotiations; and

  • Oracle Configurator, which manages configuration rules for complex products and services, helping validate a company's choice of options and guiding them through the selling process.

Following the product release, in October, during the 2003 Product Development and Management Association (PDMA) International Conference, Oracle announced the formation of the Oracle Product Lifecycle Management (PLM) Customer Advisory Board (CAB). Furthering the commitment to its customers and their business success, the new PLM CAB will provide an open-communications forum that should align Oracle's PLM development roadmap with customers' business priorities. Oracle PLM CAB members come from numerous regions around the world and span multiple industries, such as industrial and process manufacturing, high-tech, engineering and construction. Founding members include CH2M HILL, Diebold, Pella Corporation, Power Engineers, Power One, among several others. The Oracle PLM CAB should enable members to share product design, development and manufacturing challenges with Oracle and discuss enhancements to Oracle PLM applications that maximize their return on investment (ROI). The PLM CAB will also provide a PLM best practices forum to share innovation strategies and discuss PLM deployment successes among peers.

Market Impact

Oracle, despite often indulging in exuding a techno-macho attitude in the market, is nonetheless a pragmatic vendor that, maybe grudgingly, still listens to the voice of the customer and to the market sentiments. The best example to purport this would be the release of Oracle E-Business Suite 11i.9, which, through over 1,000 enhancements, for the first time seriously tackles regulatory compliance across several industries, such as support for electronic signatures and secure audit trails (for compliance with the Food and Drug Administration's [FDA] 21 CFR Part 11 regulation), Health Insurance Patient Portability Act (HIPAA), a guideline for managing patient information, and Sarbanes-Oxley Act (SOA), the new legislation for accounting procedures, while the Oracle Financials suite also now leverages eXtensible Business Reporting Language (XBRL), and XML-based standard for financial reporting.

Also, rather than traditionally delivering a horizontally broad and functional product and relying on its technically savvy sales force to "push" the sales of applications on top of the Oracle database, application server, development environment & middleware stack, Oracle will increasingly rely on industry experts within its reorganizing applications sales and pre-sales teams. To that end, the version 11i.9 offers a slew of new features aimed at a number of selected industries of focus, such as A&D, automotive, telecommunications, consumer packaged goods (CPG), government, high-tech, healthcare and life sciences.

Furthermore, most PLM vendors focus on specific vertical industries, and their solutions have been developed to solve the specific needs of those industries (e.g., CPG companies' emphasis on maintaining and extending the value and variety of merchandize brands, pharmaceuticals and life sciences concern with ensuring regulatory compliance, high-tech and fashion verticals focused on shorter time-to-market, and automotive suppliers caring mostly about effectively managing the complex supply chain). For more information on industry specific requirements, see PLM Is An Industry Affair - Or Is It?. To that end, Oracle seems to have addressed certain industry-specific problem areas within its PLM products like clinical trials for life sciences or intricate design configuration for engineered products with many options (variants) like windows or high-tech/electronics, which has not been its differentiating approach in the past. Also, Oracle has invested in developing PLM solutions that cover both discrete manufacturing centered around bills of material and process manufacturing centered around recipes and formulas. Oracle's past investment in building solutions for both process and discrete needs is further leveraged in their PLM offerings.

Owing to its deep engineering department roots, PLM still often gets confused with computer aided design (CAD) and/or product data management (PDM) systems. While CAD involves the use of high-resolution graphics in a wide range of product design activities, allowing quick evaluation and modification of the designer's intent, PDM systems are merely vaults for storing and updating data, which replace paper-based processes and information storage with a single, centralized data repository that enables authorized users throughout a company to access and update current product information, while ensuring they follow specific procedures.

Some might have even noticed the similarities between PDM and groupware or knowledge management (KM) technology appropriate to a range of other business environments, given that besides ensuring data integrity using relational database technology, both include workflow and Web-based applications that facilitate collaboration efforts. To that end, owing to its venerable technological expertise, Oracle has been fortunate to have many important constituents of PLM beforehand. The PDM is as much about managing disparate data types (e.g., bills of materials [BOMs], documents, specifications, change requests, change orders, etc.) as it is about supervised engineering change control, and Oracle's indisputable expertise in database technology has been an upper hand here. Due to the company's ability to run all of the enterprise application modules with one unified data model and one database, albeit Oracle-centric, this should vouch for one instance of 'the truth' for everything without inconvenient batch updates, integration and data synchronization issues, which has been a major tenet of PLM.

However, PLM, which is an overarching concept of guiding the product throughout its entire lifecycle, also entails much more, allowing collaboration amongst many constituents and successful planning and execution of new product development and introduction (NPDI) programs. Namely, a much broader mission of PLM would be to provide a panoramic "consistent idea" in terms of data and business processes associated with the product from cradle-to-grave to any involved party, such as design engineers, manufacturing engineers, production planners, field service personnel, purchasing, marketing, C-level executives, suppliers, and other trading partners. This still evolving category of software should help any manufacturing company deliver a product and continually enhance it by helping it manage and automate materials sourcing, design & visualization, engineering change orders (ECOs), and product documentation, such as test results, product packaging, and post-sales data. It should also help companies manage through a mushrooming number of local, state, federal and international regulations.

The product development life cycle — conceptualize, plan, design, procure, produce, deliver, service, and retire — naturally includes multiple people, operating in multiple departments, and typically from multiple companies, each with locations in multiple countries around the world. Thus, customers, partner channel and suppliers must be involved in a collaborative effort too, since the systems without enabling processes in place to coordinate product data for outsourcing, design, manufacturing, and maintenance across the global supply chain are destined for failure. Leveraging the Internet as a collaboration vehicle, PLM solutions aim at enabling manufacturers, suppliers, and partner channel to collaborate at each and every stage of the life cycle. More comprehensive PLM solutions blending integration to CAD, PDM, visualization technology, collaboration capabilities, analytics, program management, portfolio management and integration with existing enterprise applications have emerged only very recently to enable organizations to fully manage this lifecycle.

Oracle Strengths

A flexible workflow management facility, which is instrumental to allow users to build collaborative processes that reflect their unique product development issues, is another critical PLM underlying technology element that Oracle has long mastered and offered as a stand-alone option to Oracle applications users. Business intelligence (BI)/analytics too goes without saying, given Oracle has long sold stand-alone Online Analytical Processing (OLAP) tools for years. Oracle has also been making strides in document/content management, which will also come in handy for managing unstructured data within PLM systems

The vendor has also garnered its PLM capabilities through several acquisitions, such as of a guided selling configurator from Concentra in 1998 and streaming CAD viewing technology in late 2001 from Assentive, whose technology allows remote teams to jointly review and markup a live model in real time and in the field, without a full model download or a fast T1 connection. These acquisitions should give Oracle practical PLM point solutions in the important Customer Needs Management, which covers activities like Requirements Management, Product Catalog Publication, Product Variants, Configuration Management, etc., and Collaborative Product Development areas of PLM. Last but not least, native capability in direct materials sourcing and project management should give Oracle an attractive functionality to users looking at PLM from a supply chain rather than from a mere design perspective. Thus, Oracle's positioning of its PLM solution as a part of its overall SCM solution is more than logical.

Building out from Oracle E-Business Suite's broader functionality, Oracle PLM now addresses all most elements essential to product management for manufacturers, including NPDI processes across functional groups inside and outside the enterprise, engineering changes and lifecycle product data access, and sourcing, while certain industry functionality has been co-developed with several prominent companies. The project collaboration capability, for instance, is based on a patented streaming technology that allows even gigabyte-sized CAD models to be viewed live over a slow' dial-up line, which for some users in heavy engineering and construction segments might represent a time and money-saving solution. The Oracle Project Management module also has built-in application programming interfaces (APIs) to Microsoft Project, Primavera and Artemis, supporting a two-way interchange with desktop scheduling systems

As mentioned earlier, the central module is the Advanced Product Catalog, which is based on the existing item master used throughout the Oracle E-Business Suite. It could be regarded as a lightweight PDM system, allowing for much more complex product structure management than the basic BOMs leveraged by a materials requirements planning (MRP) system, but it certainly is not suitable for more complex engineering workgroup-level, authoring environment that needs to perform rapid design iterations to, e.g., discern the implications on customer preferences, manufacturing, supply chain and after-sale support. The emphasis is more on a business process and transactional view of the product structure in the supply chain, while the module also has good technical features such as support for amalgamated PDM, a strict role-based security model, and various filtered search mechanisms.

The advent and growth of a plethora of pure-play PLM vendors targeting the exacting needs of discrete manufacturing industries proves that the PLM market in this sector has been hot. This brings us to the fact that the ERP vendors are making their way into the PLM market by bundling or partnering strategically to embed PLM functions within their suites. Oracle, like SAP, IFS, Glovia and Baan (now a part of SSA Global), has apparently been striving to natively embed more PLM capability into its product portfolio, contrary to the likes of PeopleSoft/J.D. Edwards and QAD still filling their gaps through partnerships, with Agile Software and Arena Solutions respectively. Even if these ERP vendors' expertise is not yet completely meeting innovative design-centric manufacturers' needs, they are making some dent, given SAP garnered about $300 million in revenue from its PLM software sales in 2002, while Oracle boasts about earning nearly $30 million in 2002.

Although possibly overwhelmed with so many alternatives in a still evolving market, enterprises should benefit from having a few more PLM choices. As usual, the ERP vendors will bet on leveraging existing customers who will have deeply invested in them, and have even reorganized operations around their ERP systems. The promise of PLM products from ERP vendors is the link to financial and manufacturing back-office systems (albeit mostly the vendors' own, particularly in Oracle's case) and include cost reporting, resource planning, supplier relationship management (SRM)/procurement capabilities, data analytics, decision support, monitoring progress against the project plan and links to customer data in customer relationship management (CRM) front-office systems.

Oracle customers in particular may benefit over the long term because the integration of the PLM capabilities with Oracle's E-Business Suite can simplify business processes and reduce the TCO (total cost of ownership) for enterprise applications suite. There are nearly 12,000 customers using Oracle applications in over 90 countries (on multiple, nearly 30 languages and localized versions), and the company remains a leading provider within large corporations in the communications, financial services, manufacturing, pharmaceuticals, healthcare, transportation, and in high-tech sectors. Indeed, Oracle remains a true IT powerhouse with fingers in many pies other than database, such as application servers, and development tools, which ranks it as an enterprise infrastructure provider, together with SAP, IBM at a higher and, and Microsoft at the lower end of the market.

This concludes Part One of a two-part note.

Part Two will cover Challenges and make User Recommendations.

About the Authors

Predrag Jakovljevic is a research director with (TEC), with a focus on the enterprise applications market. He has over 15 years of manufacturing industry experience, including several years as a power user of IT/ERP, as well as being a consultant/implementer and market analyst. He holds a bachelor's degree in mechanical engineering from the University of Belgrade, Yugoslavia, and he has also been certified in production and inventory management (CPIM) and in integrated resources management (CIRM) by APICS.

Jim Brown has over 15 years of experience in management consulting and application software focused on the manufacturing industries. Jim is a recognized expert in software solutions for manufacturing and has broad experience in applying enterprise applications such as Product Lifecycle Management, Supply Chain Management, CRM and ERP to improve business performance. Jim created his consulting firm, Tech-Clarity Associates, to make the value of technology clear to business. Jim can be reached at

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