AMR Research

Wednesday, November 09, 2005
Michael Burkett

Business process improvement is leading the adoption of PLM, as manufacturers question how to be successful with their technology investments. The trend is joining together traditional process improvement initiatives with large-scale enterprise technology projects. Manufacturers are pushing these improvements through internal teams, as well as seeking greater service support from technology partners.

Application vendors see increased demand for services

As manufacturers seek greater assistance in getting the most value from their PLM investments, application vendors are having to respond. The result is an increase in the services components of vendor revenue, as well as aggressive partnering with service providers. PTC partly credited a 39% increase in 4Q05 in consulting and training revenue for its strong year-end performance. For several years, Dassault Systemes and IBM PLM have successfully joined service and software, and UGS, Agile, MatrixOne, SAP, and Oracle are all placing more emphasis on services to ensure deployment results.

These efforts are further supported by increasing PLM practices within third-party consulting firms, including Accenture, BearingPoint, Capgemini, Deloitte, EDS, and HP. Specialty firms that have focused exclusively on product development are PRTM and Stage-Gate. Finally, offshore firms, including Infosys and Wipro, are adding support to this mix as well.

Internal Six Sigma programs define technology supported improvements

Six Sigma is best recognized for improving process and quality at General Electric and Motorola. At the recent Product Development Management Association (PDMA) conference in San Diego, Honeywell presented the success it has achieved in Design-for-Six-Sigma to reduce the risk and downstream costs of New Product Introduction (NPI) in its Aerospace division. By applying the structured methodology to the product design process, Honeywell has improved modular design and platform reuse to reduce high-risk development programs, and achieved 26% part cost savings and a 60% reduction in product development cycle time. Technology institutionalizes the process through component supplier management, workflow automation, and easy access to product data.

Organizational structure must support process improvement across silos

One key to success is to focus not on the technology application category, but on the business process, which often crosses organizational- or department-level boundaries. To be successful, however, manufacturers must have the organizational structure in place to make improvements across these business silos. A best practice learned from Six Sigma is that projects are monitored at an executive level and prioritized based upon the business problem defined, where data analysis leads to the recommended improvement. Product launch is an example of a process that crosses organizational boundaries, requiring a process owner to define the best improvement opportunities and appropriate technology to support these improvements (see the AMR Research Report “The CIO’s Guide to the PERFECT Product Launch: Translating Innovation to Business Benefit”). Leading with the business result and not the technology will ultimately lead to user adoption and the desired results.

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