Cloud PLM – A Big Return with a Smaller Investment
by In the Press | March 02, 2015 | CAD Software Blog | PTC
PLM has proven the “R” in “ROI”
PLM is a proven way to deliver top- and bottom-line value. PLM helps if you just want to improve productivity and reduce complexity or if you have big goals to transform the way your company innovates. Either way, there isn’t much debate that investing in PLM drives a significant return (R).
The “I” in the PLM ROI was Out of Reach (for some)
So why are their still manufacturers that don’t have PLM? For some, the investment (I) was simply too much despite the potential value of the “R.” I hear that a lot in small to mid-size companies.
Why has PLM been out of reach? Two main reasons come up:
- They cost more than the company thinks they can afford
- The company doesn’t have enough IT resources to implement PLM
The thing is, most believe that implementing traditional PLM has to cost a lot and take a lot of time. We’ve researched it, though, and that just isn’t the case. PLM can be implemented efficiently and cost-effectively despite what many have heard.
Cloud Breaks Down PLM barriers
Regardless of what people believe about historical PLM cost and effort, cloud makes it meaningless anyway. Cloud software changes the game in a couple of fundamental ways:
- Software as a Service (SaaS)/subscription pricing means lower overall costs with no big, upfront commitment
- Hosted solutions don’t need as many internal IT resources (if any). There are no servers to install, firewalls or VPNs to set up, or software to be provisioned.
These two big differences remove the two biggest barriers to PLM adoption, cost and IT resources.
Cloud Changes ROI Mathematics
The ROI for cloud solutions is fundamentally different. On-premise, licensed approaches take a lot of justification and validation before pulling the trigger. Why? Because you have to commit to spend a lot of money without any guarantee that you’ll get a return. Effectively, your “I” is fixed and your “R” is variable. That means you have to make a big bet on the value and you can end up upside-down on your investment.
With cloud, your cost is aligned with value. As more people use the system the costs rise proportionally. That takes away the big financial hole that you had to dig at the beginning of a project and had to hope it would pay off. It also puts the vendor in the same camp as you. If you aren’t successful, neither are they. That’s a “win-win.”
Cloud Reduces the Investment and Speeds up the Return
Another way cloud changes the equation is lower cost. Cloud implementations don’t cost as much because of shared resources. Costs that would be absorbed by your company alone are shared across multiple companies.
The investment period is also much shorter. The time it takes to start getting value is faster because a lot of the “provisioning” time (and time waiting for IT resources) is eliminated.
Cloud Changes the Risk-Reward Balance
Finally, cloud reduces implementation risk. Most companies can’t afford the inefficiency and errors that PLM solves, but they can’t afford to fail trying to fix them, either. And no sponsor wants to risk their hard-earned corporate reputation if they don’t have to!
Reducing the upfront financial commitment drives personal and company risk way down. If the project fails, the costs go away. Now the “I” is variable based on the “R” – that’s just good business.
A Final Word
Cloud changes the game for PLM. Cloud PLM:
- Is more accessible because it costs less
- Removes IT resource shortages as a barrier
- Sets up shared goals and value with the vendor
- Lowers risk due to smaller financial commitment
- Allows for more experimentation without having to justify a big project
Jim Brown is the founder and President of independent research firm Tech-Clarity. Jim is a recognized expert in software solutions for manufacturers, with over 20 years of experience in application software, management consulting, and research.
This blog post is paid for by PTC. The concepts, ideas and positions of this post have been developed independently by Jim Brown.
Ed- In January, PTC—developer of PTC Windchill, a PLM system used by more than 1 million people worldwide—introduced a PLM solution for the cloud. This software brings all the benefits of a big-company data and lifecycle management to smaller companies by delivering software as a service (SaaS) – find out more about PTC PLM Cloud by watching the short video below: