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Where Does PLM Fit in Digital Transformation?

PLM, product lifecycle management, digital transformation, supply chain management, Razorleaf
Product lifecycle management (PLM) is a critical component of the digital transformation that is taking companies into the world of advance automation and connected systems.

Where does PLM fit in digital transformation? You might think that’s a strange question in view of all the talk about digital transformation. You may think that surely everybody knows the answer. I’m not so sure.

For manufacturers, PLM has become a crutial part of the digital transformation. (Image source: Razorleaf)

Let’s start with some facts. I asked Google to search for "digital transformation.” At the top of the first page of search results was “Page 1 of about 16,000,000 results.” Yes, 16 million! Next, I asked Google to search for "digital Transformation" and “product lifecycle management.” It found about 201,000 results. So, only about 1.2% of the results for "digital transformation" also include “product lifecycle management.” In other words, about 99% of what’s written about digital transformation doesn’t mention PLM. One reason that people may not know where PLM fits in digital transformation is because PLM gets swamped by everything else.

Another reason that people may not be sure where PLM fits in digital transformation is that there doesn't seem to be an agreed definition of digital transformation. I started to look for the definition among the many pages proposed by Google. By the time I’d looked at ten of them, I think I’d seen 15 different definitions.

With so much information, and so many definitions, it’s not surprising that many people wonder where PLM fits in digital transformation.

Four Levels of Digital Transformation

Part of the problem with the information about digital transformation is that it seems to be at four levels. The first two aren’t particularly interesting for PLM. Level 1 is about rebranding and relabelling, taking something that exists and calling it digital transformation. Level 2 is the addition of new features and functions to an existing IT product and calling it digital transformation. 

At the other extreme, level 4 digital transformation is the creation of a new business area or company that wouldn’t have been possible without the use of IT components such as the internet, the World Wide Web, database technology, GPS, or telecommunications. This is the digital transformation that led to the creation of companies such as Amazon, Google, Uber, Facebook, and LinkedIn.

In between the first two levels and the fourth level is level 3 digital transformation. At this level, digital transformation is applied to an existing company. It’s about changing the company. But it’s not just a change due to the application of new digital technologies and services. It’s much more than that.

This transformation is described in different ways. It’s “changing the paradigm, changing the previously approved way of doing something.”  It’s “not only a technological change but also as an organisational, cultural and managerial one.” It’s “about reworking strategies, products, and processes by leveraging digital technologies.” It’s “the deep transformation of business models and competencies; organisational models, businesses processes and practices.”

It’s this third level of digital transformation that’s related to PLM.

The Scope of Product Lifecycle Management

To see how PLM is related to digital transformation, it’s good to start with its definition and scope. PLM emerged around 2001. It was defined in Product Lifecycle Management: Paradigm for 21st Century Product Realisation (2004) in the following way: 

Product lifecycle management is the business activity of managing, in the most effective way, a company's products all the way across their lifecycles, from the very first idea for a product all the way through until it is retired and disposed of. PLM is the management system for a company’s products. It organizes a company’s product-related resources, including business processes, product data, people, parts, and software applications.

The scope of PLM can be described by reference to the PLM grid, a 5 * 10 matrix. On the horizontal axis of the grid, the x-axis, are the five phases of the product lifecycle: ideation; definition, realization, support, and recycling. On the vertical axis of the grid are the components to be addressed when managing a product across the lifecycle: products, business processes, product data, the PDM system, PLM applications, equipment, methods, people, organization, and objectives. Each of these components is managed in each of the five phases of the lifecycle.

Just as digital transformation is about augmenting, transforming, and changing the paradigm, so is PLM. Before the PLM paradigm emerged in 2001, the previous paradigm for the management of a company’s products was the departmental paradigm. With the departmental paradigm, the marketing department decided which products to offer customers. The engineering department developed them. The manufacturing department made them. The after-sales department supported them.

The PLM Paradigm

The PLM paradigm for the management of a company’s products differs significantly from the departmental paradigm. The PLM paradigm is business-oriented, joined-up, lifecycle, holistic, formally-defined, digital, and product-focused. Whereas the departmental paradigm was technically-oriented. It wasn’t joined up. It wasn’t lifecycle. It was atomistic and piecemeal. It wasn’t formally defined. It was paper-based. It wasn’t product-focused.

PLM can be seen as digital transformation applied to the product-related activities of a manufacturing company.

Coverage at the 1.2% Level

I wondered why, if PLM is so important, it only appears in 1.2% of the information about digital transformation. So I looked again at some of the results from Google. I found they mainly mentioned banking, insurance, education, health, and government, but not manufacturing. That led me to wonder about the importance of the manufacturing sector in today’s world. According to the Bureau of Economic Analysis, in 2017, manufacturing accounted for 11.6% of US Gross Domestic Product (GDP). Many other industry sectors contribute to GDP. And much of the information about digital transformation addresses these industry sectors.

Further reducing the percentage of information that might address PLM, much of what happens in a manufacturing company isn’t always placed within the functional scope of PLM. Supply chain management (SCM) and customer relationship management (CRM), for example, can and should be tracked and managed in PLM. Beyond those two, management processes such as corporate, quality, merger and acquisition, financial planning, and governance, along with support processes such as human resources, legal, finance, IS, and procurement, are natural candidates for the non-PLM digital transformation.

In our experience, PLM accounts for about 25% of the resources and activities in a manufacturing company. So perhaps it’s not surprising that only about 1.2% of the results for "digital transformation" also include “product lifecycle management.”

PLM can be thought of as digital transformation applied to the product-related activities of a manufacturing company. Now you know that, the next step is to run a PLM program to introduce PLM in your company. And you can tell the chief information officer and the chief digital officer that it’s part of digital transformation.

Juliann Grant, VP of the PLM company, Razorleaf, has more than 24 years of experience with high technology and industrial companies. She is a recognized speaker and author on B2B marketing strategies and tactics.

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