Event Summary
At
the beginning of October, amid several announcements of strategic extensions
for its few enterprise resource planning (ERP) product lines, possibly the most
eye-catching was Microsoft Corporation's (NASDAQ: MSFT) initiative
to avail most of its Microsoft Business Solutions (MBS) ERP
offerings with long needed pieces of product lifecycle management (PLM) functionality.
That will happen through extension of the existing relationship with Autodesk,
Inc. (NASDAQ: ADSK), a leading design software and digital content
company, to build a PLM solution for the thousands of MBS and Autodesk customers
in the mainstream small and mid-market segment manufacturing industry. MBS and
Autodesk's Manufacturing Solutions Division
will collaborate to deliver a solution that lets customers integrate designs
from Autodesk's pervasive CAD software with Microsoft's ERP solutions through
the Autodesk Vault design data/engineering data management
(EDM) software, giving these companies a way to easily connect the engineering
teams that design products with the operations teams that manufacture them.
Consequently,
the companies' mutual customers should be able to more easily track product
data by linking the engineering bill of materials (EBOMs) and engineering change
orders (ECOs) that will be created with Autodesk's software to Microsoft's Great
Plains, Navision, or Axapta ERP systems,
that process, to date, has been time-consuming and most often done by hand,
which results in data inconsistencies, poorly controlled engineering change
processes, long delays in releasing or changing products, and manual data re-entry.
This integration should also help customers with better visibility of their
design data earlier in the product development cycle to better control costs.
It should also allow businesses to move products through the development pipeline
more quickly by using reliable data to empower purchasing and manufacturing
personnel earlier in the design cycle and manage product data better and more
accurately from product concept through delivery.
Autodesk's
solutions, which have been reasonably easy to install and use, without complex,
costly installations, include AutoCAD and AutoCAD Mechanical
software, the Autodesk Inventor Professional and Autodesk
Inventor Series 3D mechanical design packages that are integrated with
the new Autodesk Vault functionality, and the Autodesk
Streamline collaboration service. The new Autodesk Vault functionality,
which is available to customers on a subscription-basis only and integrated
with the 3D design software, Autodesk Inventor Series, uses a Microsoft
SQL Server database and will be the integration point. This is Autodesk's
first offering in a line of EDM solutions that will be connected to MBS ERP
solutions, while future EDM solutions from Autodesk will be announced as they
become available. To share its plans for this integration, Autodesk exhibited
with Microsoft at the annual conference of the American Production and Inventory
Control Society, APICS 2003, in Las Vegas, October 6-8, and at the Microsoft
Worldwide Partner Conference 2003 in New Orleans, October 9-11.
Market Impact
It
appears that both vendors have put some prior thought into this alliance expansion.
For one, the partnership should mutually fill functional voids within their
current product offerings and should enlarge both vendors' opportunities, while
the products' technologies are sufficiently compatible so that product interfacing
will not be terribly complex. MBS' aspirations to capture the manufacturing
mid-market have been known for some time, with much noise and visibility coming
from the MBS' Manufacturing Division of late, particularly
through its strategy of targeting individual divisions of large corporations
and presenting the case of lower total cost of ownership (TCO) compared to a
standardized corporate-wide implementation of a tier one product.
However,
the feat has not been exactly a cakewalk, for various reasons. One would be
the fact that the MBS ERP product lines (i.e., Great Plains, Solomon,
Navision, and Axapta), with a possible exception of Axapta, have not been landmark
manufacturing-oriented products, at least not within markets that have more
than basic engineering requirements. On the other hand, enriching these with
an acquisition of a pure-play PLM solution would only burden an MBS product
development staff that is already up to their gills working frantically towards
Project Green, which will feature all MBS products on a single,
global code foundation built on the Microsoft Business Framework
and .NET Framework, some time in 2006. For the reasons above
and given the Microsoft platform compatibility, the alliance with Autodesk seems
a logical move.
Autodesk
claims that over 60 percent of Autodesk Inventor software users experience substantial
EDM problems, while even a higher percentage have never connected their engineering
data to their ERP system. Autodesk's AutoCAD is a dominant computer-aided design
(CAD) package that has been deployed in North American mid-size manufacturing
companies, with nearly 40 percent market share, followed by PTC's ProEngineer,
Dassault Systemes' CATIA, and SolidWorks
products (bolstered by the IBM channel and its recent foray
into the mid-market with its Express umbrella brand, see IBM
Express-es Its Candid Desire For SMEs), and EDS PLM Solutions' UGS and SDRC
products. While in other markets it is not necessarily the dominant package,
AutoCAD still often makes the top three ranking. All told, Autodesk claims over
three million users worldwide on its products.
On the other hand, one is not to dispute Microsoft's dominance on desktops, with a great deal of market share in the OS and database platforms in the segment. Thus, Autodesk should be able to add long-needed EDM capabilities to MBS ERP products (Autodesk Vault software abstracts engineering data and metadata and avails it to the users outside engineering departments, such as manufacturing constituencies), which should be embraced by the MBS' reseller channel as a means for their solutions' improved competitiveness in the field.
Mid-market
manufacturers, which have been overwhelmed by the huge scope and complexity
of the still evolving PLM concept, are focusing on taking incremental steps
to adopt PLM (see The
PLM Program - An Incremental Approach to the Strategic Value of PLM). Companies
that use MBS ERP offerings that want to take an initial step into PLM might
want to start initially from providing design access to manufacturing and enable
design collaboration during the new product development and introduction (NPDI)
process, where Autodesk will provide needed EDM capabilities and integration.
The messages of enabling cost management, engineering change management (ECM)
and dissemination of EBOMs to manufacturing, as the first manageable PLM initiatives,
should strike a chord with the risk-averse target market (see Can
ERP Speak PLM?).
Challenges
However, the alliance of the respective CAD and desktop and office networking applications leaders does not necessarily create a long-term combined ERP/PLM leader. While MBS is a revered ERP competitor, it is still not the functionally strongest or broadest ERP provider.
On the other hand, Autodesk is still far from becoming a full-fledged PLM provider, given its prominence in CAD but emerging presence in product data management (PDM). CAD involves the use of high-resolution graphics in a wide range of product design activities, which allows quick evaluation and modification of the designer's intent. PDM systems are 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.
However, PLM is an overarching strategy of guiding the product throughout its entire life cycle, and it also entails much more than CAD and PDM, allowing collaboration amongst many constituents and successful planning and execution of NPDI programs. Namely, a much broader mission of PLM would be to provide a panoramic "one version of the truth" in terms of data and business processes associated with the product from start to finish (i.e., from cradle-to-grave) to any involved party, such as design engineers, manufacturing engineers, production planners, purchasing, marketing, C-level executives, suppliers, and other trading partners. The product development life cycle—innovate, 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.
However, the Autodesk/MBS alliance seems to tackle only a first few steps of the life cycle depicted above . In the long term, however, traditional CAD and PDM are not enough in a competitive and collaborative e-business environment, where manufacturers are required to deliver new products faster, cheaper, with increased quality and with immaculate after-sale service. 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, are destined for failure.
More
comprehensive PLM solutions blending CAD, PDM, visualization technology, collaboration
capabilities, program management, portfolio management and integration with
existing enterprise applications have emerged recently to enable organizations
to fully manage this life cycle. For a detailed comparison of the ERP and PLM
markets and their respective scope, see The
Different Evolutionary Stages of ERP and PLM.
Although much of the effort spent in PLM typically comes at the earlier stages (i.e., product design and rollout), PLM expands traditional engineering applications with business processes that stretch further into the enterprise and even further into the value chain. The multi-departmental, multi-company nature of PLM is changing the way that engineering-related systems are bought and sold, and has caught the attention of the CIO and corporate IT who apply enterprise application evaluation criteria and processes to PLM selections.
Therefore, while the Microsoft and Autodesk announcement seems to currently address only the above-depicted earlier, design stages of the entire PLM scope, the combined MBS/Autodesk product is also only at an early idea stage. Thus, both vendors are able to say at this stage that the firm details of delivery of the solution will only be announced at a later date, with the other development phases to be rolled out at some further and also not specified dates in the future.
While
the alliance is a move in the right direction, many ERP vendors have at least
done the same so far. For example, SAP had a similar announcement
with Autodesk almost four years ago, with a clarity difference that the parties
have agreed to jointly develop a new interface that integrates Autodesk's AutoCAD
product with mySAP PLM component. The purpose was to provide
information and collaboration between diverse internal groups, like engineering,
procurement, sales, and marketing and communicate design data throughout a company's
supply chain. The new interface, which is licensed, sold, and supported through
SAP, includes functions for document management, product structure management,
materials management, and integration into SAP Business Workflow.
Conversely, it still remains unclear where similar specific integration points will be and what business processes will be facilitated or automated through the alliance between Microsoft and Autodesk. Thus, MBS has to be more aggressive and perspicacious in delivering a sound PLM vision and value proposition, if it is to be considered a serious, leading contender for the mid-manufacturing space. As gleaned from the above discussion, PLM entails much more than a data exchange between engineering and manufacturing departments (not that bridging that gap is not an important feat).
The
fact is that many prospective MBS customers will have already opted for some
other PLM point solutions that Autodesk does not offer (e.g., portfolio management,
PDM, project management), while on the other hand, many Autodesk users already
have instances of other ERP products. Furthermore, EDS PLM Solutions,
which also leverages Microsoft technology (Microsoft Windows SharePoint
Services) in addition to other platforms, has recently released its
Teamcenter Community, a visual product collaborative environment
that enables many participants to access, visualize, collaborate and conference
around detailed product information, as the latest addition to its Teamcenter
offering.
Thus, both MBS and Autodesk will have to pay attention to the needs of employees, customers, and business partners of their prospective user enterprises, whereby successful integration tools will need to provide access to such applications as inventory control, ERP, CRM, data stores, packaged applications, legacy systems and a myriad of other applications including the likes of Teamcenter. Even if the alliance were offering an integrated PLM/ERP product suite now (for which one would have to wait for quite a long time to come) the chances that the prospective customers would forsake their existing pieces of technology would be slim. The readiness to "play nicely" with other components rather than to impose the "all or nothing" mandate is hereby implied. Nevertheless, MBS and Autodesk should focus first on enabling some key processes within firm availability dates rather than on unveiling just a broad integration intent without much substance.
Further,
most PLM vendors focus on specific vertical industries, and their solutions
have been developed to solve the specific needs of those industries (e.g., consumer
goods companies focus on maintaining and extending the value and variety of
merchandise 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). As a general rule, the closer the PLM solution gets to the design
and production of the product itself, and the more complicated the product,
the more industry will play a role. For more information on industry-specific
requirements, see PLM
Is An Industry Affair - Or Is It?. At this stage, it is more than apparent
that this alliance will not focus initially on providing industry-specific PLM
solutions, but rather on off-the-shelf generic ECM/EDM capabilities within the
MBS offerings. MBS will have to excite its resellers about providing industry-specific
configurable templates, but that again can only happen once the alliance is
on much firmer ground and with more certain milestones.
User Recommendations
Small and medium size manufacturing businesses using MBS back office applications that have needs to connect their engineering and manufacturing departments, and which have new product development concerns, should react positively to this announcement. They should evaluate the above potential EDM functional enhancements as a way to add value to their existing applications although bearing in mind that other ERP or PLM vendors might currently offer more mature and functional products at this stage. These prospective customers should consider adding the announced functionality to their requirements list, as to secure value in terms of both potential cost savings and increased efficiency. Approach MBS to clarify for you its current skills to support your short- and long-term PLM initiatives, as well as a clarified product roadmap. Also, watch for market developments carefully, as the competitive landscape will heat up, and manufacturers will see more choices, particularly those looking for a full suite of functions to manage product life cycles.
Thus, due to the likely product immaturity businesses should consider other products until the second-half of 2004. Also, bear in mind that the first release of MBS PLM (or so called) will not provides tight vertical focus, and it should not be short-listed by larger or more complex enterprises, with more comprehensive PLM strategies (e.g., after-sale services and spare parts revenue stream, sourcing, event/workflow management), multiple-platform and strong scalability requirements. Discrete manufacturers seeking to facilitate manufacturing coordination across a supply chain, and which have all-encompassing design collaboration, and project management for cost containment should keep other PLM providers as the primary choice on their short lists for the time being.
For
a more complete discussion of how to select a PLM vendor, go to Selecting
A PLM Vendor
About
the Authors
Predrag
Jakovljevic is a research director with Technology Evaluation Centers,
Inc. (TEC), with a focus on the enterprise applications market. He has over
fifteen 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 fifteen 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, ERP and CRM to improve business performance. Jim
is a frequent author and speaker on applying software technology to achieve
tangible business benefits. Jim can be reached at jim.brown@tech-clarity.com