How Top Performers Implement, Operate, and Maintain PLM Integration. Best Practices for Integrating Product Lifecycle Management

How Top Performers Implement, Operate, and Maintain PLM Integration Best Practices for Integrating Product Lifecycle Management Tech-Clarity, Inc. 2016

Table of Contents Executive Overview... 3 The Business Value of Integrating PLM... 4 When do Companies Begin Integrating?... 5 Introducing the PLM Integration Lifecycle... 6 Implementation Challenges... 7 Operation Challenges... 8 Maintenance Challenges... 9 Business Impacts... 10 Quantifying the Impact... 11 Identifying the Top Performers... 13 Top Performers Experience Fewer Negative Impacts... 15 Top Performers Integrate More... 16 Top Performers Integrate with More Advanced Tools... 17 Top Performers Integrate with More Advanced Enterprise Apps 19 Top Performers Integrate More PLM Data... 20 Top Performers Use More Advanced Integration Techniques... 21 Focusing on the Future: The Impact of IoT on PLM Integration.. 23 Conclusion... 24 Recommendations... 24 About the Author... 25 About the Research... 25 Copyright Notice... 26 2 Tech-Clarity, Inc. 2016

Executive Overview Product Lifecycle Management (PLM) helps manufacturers in many ways ranging from operational efficiencies to top-line financial improvement. It improves business performance in multiple dimensions including increased revenue, reduced product cost, and decreased product development cost. But PLM is just one of many systems in the engineering and enterprise software ecosystems, and provides greater value when it shares data and connects workflows with other software. As reported in Product Lifecycle Management Beyond Managing CAD, Top Performers are much more likely to integrate PLM with a host of other systems. We surveyed over 150 companies to understand their PLM integration strategy, processes, and technical enablers in order to understand how proper integration can extend PLM value. The findings indicate that the vast majority of manufacturers view PLM as Strategic or Important. It also finds that many believe that PLM integration will become even more strategic (and challenging) as IoT initiatives progress. Top Performers are more able to implement, operate, and maintain PLM integration in an agile, cost-effective way. In order to understand how companies get the most business value from PLM integration, we identified manufacturers that were gaining the largest operational benefit from their PLM implementation, the Top Performers. These leaders achieve significantly better than average PLM business benefits. We analyzed what these companies do differently related to PLM integration in order to offer advice to poorer performing companies. The analysis determines that Top Performers in gaining the benefits from PLM: Are more likely to view PLM integration as strategic Integrate PLM to more design tools and more enterprise applications Integrate PLM to more advanced tools and applications Are more able to implement, operate, and maintain PLM integration in an agile, cost-effective way Experience fewer operational issues including: o Needing to look for data in multiple systems o Duplicate data entry o Data inconsistency across systems We also discovered that these Top Performers take different approaches to integrating PLM, leveraging a variety of techniques but opting toward more advanced, maintainable techniques like a hub and spoke approach. Read on to find out more about PLM integration and what sets the Top Performers apart across the PLM Integration Lifecycle spanning integration implementation, operation, and maintenance. 3 Tech-Clarity, Inc. 2016

The Business Value of Integrating PLM Integrating PLM with other systems extends the value of PLM. Our PLM Beyond Managing CAD research shows that Top Performers, defined for that research as those that excel beyond their peers in revenue growth, margin expansion, innovation, and cost reduction, are more likely to integrate PLM with both enterprise systems and with engineering tools. This allows PLM to be the hub for design-related processes and data. PLM integration made us very productive and enabled smooth data flow between organizations. Aerospace Company Respondents to this survey confirm the value of linking PLM with both engineering tools such as CAD and other enterprise systems including ERP. For example, one automotive supplier shares that Integrations in and out of our PLM platform have helped us gain efficiency and make information more consistent on the enterprise level, while an aerospace company explains that PLM integration made us very productive and enabled smooth data flow between organizations. Figure 1: Benefits Reported from PLM Integration (world cloud) Respondents to the survey mentioned numerous benefits from PLM integration, including increased visibility, but overwhelmingly indicate the PLM integration creates efficiency (Figure 1). This is an important benefit, because as Reducing Non-Value Added Work in Engineering finds Engineers spend a third of their time on non-value added work. Even worse, 20% of their time is spent working with outdated information, which often leads to wasted effort and rework. The benefits extend well beyond the Engineering department. 4 Tech-Clarity, Inc. 2016

Effective PLM integration offers more than just efficiency, though. It helps companies get more of the value they turn to PLM to achieve. Perhaps most simply put, one respondent from an industrial equipment automation company sums up that PLM integration is just another tool for us to use in making business decisions. When do Companies Begin Integrating? Many companies wait until later phases to integrate their PLM systems, despite the strategic value available (Figure 2). Less than one-quarter of respondents integrate PLM to other enterprise systems during their initial implementation. On the other hand, almost one-half of responding companies integrate PLM with design tools at that time. This is likely because enterprise systems integration requires more business process mapping and change management than integrating design tools, which is often done simply to manage design data. It may also be because Engineering has to involve fewer other departments. The longer companies have PLM in place, the more they recognize the business value. 44% 26% 21% 18% 18% 13% 6% 10% 16% 4% 2% 13% 6% 5% Enterprise Systems Design Tools Figure 2: Integration Phase by System Type 5 Tech-Clarity, Inc. 2016

Why the delay? For some it might be simply a matter of limiting scope. Others might fear the complexity and cost involved. But for some it might just take a bit longer to realize how important PLM integration really is. In fact, the longer companies have PLM in place, the more they recognize integration s business value. The survey shows that onehalf of companies with PLM for five to ten years and two-thirds with it for more than 10 years view integration as Strategic, as compared to 40% across all implementations. Two-thirds of companies with PLM for more than 10 years view integration as Strategic. Upon further analysis, the data points to an interesting shift over the last five to ten years. Companies with PLM for longer are less likely to have integrated to enterprise solutions in Phase 1 (implementation). Specifically only about 11% with PLM for 5 or more years did so, and only 7% for those over 10 years! That s a significant difference than the average of 18%. During earlier PLM initiatives, companies were more focused on integrating design tools with almost two-thirds of those with PLM the longest integrating with them in Phase 1. This might indicate a shift from design or data management focused initiatives to PLM playing a more integral part in the enterprise ecosystem. Of course it is also at least partially due to the fact that integration has gotten easier (at least from a technical perspective). The PLM Integration Lifecycle When considering integrating any solution it s import to think beyond the initial implementation. It s critical to look past the initial phase of establishing the integration to understand what s required to operate and maintain it over time. Integration efforts, particularly those that aren t well architected in the beginning, can cost far more in the latter phases than in the initial phase. This is especially the case for design tools that are typically extended or upgraded much more frequently than are enterprise applications. In essence, it s important to look at the lifecycle of PLM integration. For this research we defined the three phases of the PLM Integration Lifecycle, and analyzed performance and best practices across each: 6 Tech-Clarity, Inc. 2016

Implementation designing and creating the integration Operation running the integration on an ongoing basis Maintenance maintaining and upgrading the integration over time Figure 3: PLM Implementation Lifecycle (previous page) Implementation Challenges Companies are often apprehensive about PLM integration, which might be a factor in why so many wait until after their initial implementation to link with other systems. They have concerns including organizational issues, process problems, and technical hurdles. The most common concern reported is resource and skill-oriented (Figure 4). 60% of companies say they face a shortage of resources with the right knowledge to help them integrate PLM. About one-half say they are concerned by complexity, particularly of design tools and their frequently complicated file structures. Knowledgeable resource shortage 60% Engineering tools / Diles too complex Takes too long Hard to justify / prove ROI Too expensive 48% 44% 40% 33% Too much risk 23% Figure 4: PLM Integration Implementation Challenges Companies frequently view implementation efforts as taking too long and costing too much. Companies also report project-oriented concerns including lengthy implementation timelines and costly efforts. Deeper analysis of the data shows that those with PLM for longer (five or more years) more commonly report that they re challenged by implementation costs. This could be because they re integrating older PLM systems with 7 Tech-Clarity, Inc. 2016

less open architectures. Alternatively, it may just be based on their greater level of experience. They may have suffered from false starts or failed in the past and realized the complexity and better recognize the potential cost. Regardless, companies frequently view implementation efforts as taking too long and costing too much. Operation Challenges Implementing PLM integration is only the first step. Ideally PLM integration is seamless and runs invisibly behind the scenes with no issues. But the reality is that the operational phase comes with issues that impact both users and technical resources (Figure 5). Looking for data in multiple systems Handling integration exceptions / issues 52% 51% Disconnected business processes Manually gathering data for other people InefDicient / duplicate data entry 42% 42% 38% Figure 5: Operational Challenges Even when they have integrated, companies have challenges getting the data they need, both for themselves and for others. Particularly if integration is done poorly, or integration is not complete, users continue to suffer from inefficiency. Over one-half of companies surveyed report that users have to look for data in multiple systems. Over one-half of companies surveyed report that users have to look for data in multiple systems. This is a significant issue because searching for data is one of the biggest contributors to non-valued-added time. Our prior research, Reducing Non-Value Added Work in Engineering, concludes that The largest contributor to non-value added time is related to trying to find information. This includes engineers searching for data to complete their 8 Tech-Clarity, Inc. 2016

own work as well as collecting it for other people for activities such as status updates and meetings. PLM integration also involves technical challenges like identifying and correcting integration issues. About one-half of companies report this is an issue. Our experience shows that one of the key attributes of well-architected integrations is the ability to operate in less than perfect situations. 42% of companies report disconnected business processes. A look at the process perspective also brings some concerning news, as 42% of companies report disconnected business processes. When one of the biggest benefits of PLM can be connecting people and processes across departments and the supply chain, this leads us to believe that poor integration leads to missed opportunities to improve. Maintenance Challenges Sometimes the largest effort and investment related to integration is maintaining it over time. All software programs must be maintained, but integration tends to have a longer tail of effort and expense because it can be affected by numerous factors. Changes to any of the systems involved can have an impact as data models and programming interfaces are modified. Changing business processes can also cause challenges and require maintenance effort ranging from modifying integration frequency to adding new data or systems. Because integration bridges the gaps between processes and systems, it can be impacted from many directions. Sometimes the largest effort and investment related to integration is maintaining it over time. Those with PLM for a longer period of time report different perspectives on the maintenance phase, just as they did in the implementation phase. For example, those with PLM for a longer time are more likely to report maintenance cost as a challenge. Again, this could be due to older systems, because of older integration techniques including point-to-point integration, or simply because these companies have a better recognition of cost over time based on their greater level of experience. 9 Tech-Clarity, Inc. 2016

Keeping up with releases of different systems Hard to adjust to business process changes 47% 54% Disrupts operations Too expensive 30% 36% Risk too high 20% Business Impacts Figure 6: Maintenance Challenges The challenges faced across the PLM Integration Lifecycle lead to significant impacts. The survey asked companies to select the most significant negative impact resulting from integration challenges. The most common issue in the PLM Integration Lifecycle is inefficiency (Figure 7). This is an unfortunate irony given that improved efficiency is the most common benefit that most companies seek from PLM implementations in the first place! The most common issue in the PLM Integration Lifecycle is inefficiency. But inefficiency isn t the only issue. One out of five companies indicate that the biggest impact they face is the inability to upgrade design tools that could help improve innovation and performance. In fact, a number of companies (7%) report their top consequence is integration challenges impeding them from upgrading their PLM system itself! To shed further light on this, companies were asked how much of their PLM upgrade effort was spent on updating integrations. Surveyed companies reported that, on average, about one-half of PLM upgrade effort is validating and updating integrations! While this number seems high relative to our experience, it reflects a common challenge. About one-half of PLM upgrade effort is validating and updating integrations! 10 Tech-Clarity, Inc. 2016

23% 20% 15% 12% InefDiciency Delays or prevents engineering tool upgrades Inability to make timely, informed decisions Puts our business at risk Figure 7: Most Significant Impact Resulting from Integration Challenges It s important to get integration right in order to get the benefits of PLM and PLM integration. It s also important to keep PLM and engineering tools up to date, requiring adaptable and efficient integration techniques. We ll share how leading companies are accomplishing that shortly. Quantifying the Impact We looked at some common issues in more detail to understand what drives inefficiency. We looked at the how frequently companies experience duplicate data entry, look for data in multiple systems, and find inconsistent data across systems. The results were discouraging. Most companies are duplicating data entry on a daily basis (Figure 8). Most companies are duplicating data entry on a daily basis. Only 4% say they never suffer from duplicate data entry! The majority of companies do this multiple times a day. One-quarter of them face this inefficiency on an hourly basis throughout the day. Only 4% say they never suffer from duplicate data entry! 11 Tech-Clarity, Inc. 2016

Occasionally 15% Never 4% At least once a month 5% At least once a week 17% All of the time 17% At least once an hour 11% At least once a day 31% Figure 8: Inefficient / Duplicate Data Entry Another common issue that we attempted to quantify was the need for users to go to multiple systems to get the data they need to do their jobs. Almost three-quarters of companies surveyed must access multiple systems to get data on a daily basis, and about one-quarter report that they need to do it "all of the time." In this case, no companies surveyed said they never face the burden of needing to go to multiple systems. Almost three-quarters of companies surveyed must access multiple systems to get data on a daily basis. Once a month or occasionally 13% At least once a week 14% At least once a day 38% All of the time 24% At least once an hour 11% Figure 9: Multiple Systems to Get Data 12 Tech-Clarity, Inc. 2016

At least once a month 8% Occasionally 25% All of the time 16% At least once a day 18% At least once a week 27% At least once an hour 6% Figure 10: Data Inconsistencies The final issue investigated in more detail was how frequently companies find conflicting data across systems. About two-thirds of companies find data inconsistencies between systems at least on a weekly basis. As with the prior issue, no companies said they never face this challenging issue. About two-thirds of companies find data inconsistencies between systems at least on a weekly basis. Clearly there is a lot of room for improvement in the results companies achieve from their PLM integration investments. These efficiencies are exactly what proper integration should eliminate! Identifying the Top Performers One of our most important survey goals was to determine what integration best practice processes and technology lead to better business performance. To accomplish this, we asked survey participants to rank their business performance as compared to their competitors in a series of metrics that indicate how well their PLM systems are providing operational benefits related to: Process efficiency / streamlining Ability / efficiency of finding information Timeliness of information Accuracy of information 13 Tech-Clarity, Inc. 2016

Consistency of information across systems Ability to make informed business decisions Tightly linked processes and data (end-to-end) These represent common goals, benefits, and performance indicators of a successful PLM environment. Then, we combined these metrics into an aggregate PLM Performance Score and divided respondents into two different performance bands. We designated companies with the top 26% of the combined scores as the Top Performers, those that are operating PLM at a higher level than others. The rest were officially classified as Others. We designated companies with the top 26% of the combined scores as the Top Performers, those that are operating PLM at a higher level than others. The analysis then focused on understanding what these Top Performers do differently to gain their higher PLM benefits. We can use that information to make suggestions to poorer performing companies. The first thing we found is that Top Performers more commonly view PLM integration as strategic (Figure 11). Top Performers are 85% more likely to view PLM integration as Strategic than Others, who were more likely to rate it as Important or even Nice to Have. 7% 32% 61% 21% 46% 33% Nice to Have Important Strategic Top Performers Others Figure 11: PLM Integration Priority by Performance Class But their views on integration are not the only things that differentiate the Top Performers. The data also shows that Top Performers enjoy a PLM integration performance advantage. Top Performers were also much more likely to report that their PLM integration is Very Good compared to their competitors in metrics related to implementing, operating, and maintaining their PLM systems (Figure 12). This shows 14 Tech-Clarity, Inc. 2016

that there is a high correlation between better PLM integration and the ability to achieve PLM value. There is a high correlation between better PLM integration and the ability to achieve PLM value. Metric Very Good Performance Versus Competition Top Performers Others Advantage Project Cost 41% 14% 3x Upgrade 44% 21% 2x Timeliness Upgrade Cost 46% 10% Over 4x Upgrade IT Need 44% 17% Over 2x Upgrade Risk 41% 13% 3x Integration 35% 21% 1.5x Stability Integration 54% 19% 3x Timeliness Error Handling / Recovery 38% 17% Over 2x Figure 12: PLM Integration Performance by Performance Class Top Performers enjoy lower cost, lower risk, and have more effective integration projects, displaying better ability to implement, operate, and maintain integration. This leads us to believe that Top Performers are doing something differently that others could learn from to improve their own performance (let's see). Top Performers enjoy lower cost, lower risk, and have more effective integration projects Top Performers Experience Fewer Negative Impacts Let s revisit the negative impacts that drive inefficiency. Given their better PLM integration performance, one would expect Top Performers to experience these issue less frequently. Looking at how many companies experience these negative issues All of the Time is telling, and shows differentiated experiences. Top Performers report these issues less frequently, as expected (Figure 13). To be clear, even Top Performers face these issues, just less often. This means that Top Performers not only implement, operate, and maintain PLM more effectively they encounter fewer of the impacts of inefficiency that plague manufacturers as a result. 15 Tech-Clarity, Inc. 2016

28% 18% 15% 15% 19% 7% Top Performers Others Figure 13: PLM Integration Challenges by Performance Class Top Performers not only implement, operate, and maintain PLM more effectively they encounter fewer of the impacts of inefficiency that plague manufacturers as a result. Top Performers Integrate More What have the Top Performers done differently? The first finding is that Top Performers have integrated more. For example, 96% of the Top Performers have integrated PLM with enterprise applications. On the other hand, 37% of Others still have integration with enterprise systems planned for the future, with another 6% having no plans to integrate with them. While the Others may still plan to integrate, the Top Performers have followed through to do it and are enjoying the benefits. Top Performers have integrated, on average, to 45% more enterprise applications and 65% more design tools than Others (Figure 14). Top Performers have integrated, on average, to 45% more enterprise applications and 65% more design tools than Others. 16 Tech-Clarity, Inc. 2016

2.9 2.0 3.8 2.3 Top Performers Others Enterprise Applications Design Tools Figure 14: Average Number of Integrated Systems by Type and Performance Class Top Performers Integrate with More Advanced Tools Without the benefit of a survey, most people could probably guess that manufacturers most commonly integrate PLM with ERP and CAD, in the categories of enterprise applications and design tools, respectively. But, changing the focus from what s most common to what s most different tells a more interesting dimension of the story (Figure 15). While the most common integrations are probably a part of the Top Performers success, they are not the things that set them apart from the rest. While the most common integrations are probably a part of the Top Performers success, they are not the things that set them apart from the rest. Let s look at design tools first. As expected, the most commonly integrated systems overall are CAD tools, with about three-quarters of all companies integrating to 3D CAD and about one-half integrating to 2D CAD. Despite those being the most common, they are found across performance classes. On the other hand, Top Performers are over five times as likely to integrate with software development tools. This gives them much better capability to support developing today s complex, mechatronic, smart products. They re also 2.3 times more likely to integrate with EDA (electronics design automation). This leads us to conclude that Top Performers are more likely to integrate design efforts and product data across design disciplines. Top Performers are over five times as likely to integrate with software development tools and 2.3 times more likely to integrate with EDA. 17 Tech-Clarity, Inc. 2016

Visio 3% 22% Software Development Tool Factory Simulation / Discrete Event Simulation CAM (Computer Aided Machining) EDA (Electronic Design Automation) 7% 12% 20% 14% 41% 37% 33% 52% CAE (Computer Aided Engineering) 3D CAD Internally developed system 2D CAD 56% 28% 30% 25% 41% 52% 72% 89% Top Performers Other Figure 15: Design Tool Integration by Performance Class Top Performers also integrate more with tools that support manufacturing and manufacturing engineering. Top Performers also integrate more with tools that support manufacturing and manufacturing engineering. For example they are three times as likely to integrate with factory planning and over twice as likely to integrate with CAM. They re also about twice as likely to integrate with simulation, with over one-half integrating CAE to PLM. This may be to extract design data, to store and share results, or both. One of the most unexpected findings, perhaps, is the higher prominence of Visio in Top Performers. Companies can use Visio in numerous ways, including process definition and even systems engineering. The clear indication is that Top Performers have gone further, integrating with more advanced design tools that span further into the enterprise. 18 Tech-Clarity, Inc. 2016

Top Performers have gone further, integrating with more advanced design tools that span further into the enterprise. Top Performers Integrate with More Advanced Enterprise Apps As mentioned earlier, ERP is the most commonly integrated enterprise application. About three-quarters of Top Performers have integrated with an ERP system (Figure 16). About two-thirds of Others have done this is well, meaning that it s relatively common. This doesn t mean that integrating ERP and PLM isn t valuable it just means that it s commonly done so and not what sets Top Performers apart. ALM 10% 37% MPM 9% 30% CRM 12% 30% Other PLM 16% 33% MES 20% 37% ERP Standalone WorkDlow System Separate PDM Internally developed system 15% 13% 15% 26% 37% 38% 62% 74% Top Performers Other Figure 16: Enterprise Systems Integration by Performance Class Some similar themes appear in the enterprise tools integrated by Top Performers as with the design tools. They are more likely to integrate with software development and manufacturing engineering and execution systems. The first is support for smarter, mechatronic products. Specifically, Top Performers are five times more likely to integrate with Application Lifecycle Management (ALM) tools than Others. 19 Tech-Clarity, Inc. 2016

Top Performers are more likely to have integrated with software development and manufacturing engineering and execution systems. The other consistent theme is support for manufacturing. Top Performers are 2.4 times as likely to integrate with Manufacturing Process Management (MPM) / Digital Manufacturing (DM) systems that support manufacturing processes and information. They are also 1.8 times as likely to integrate with Manufacturing Execution Systems (MES) / Manufacturing Operations Management (MOM). And as with tools, they are extending further into the enterprise with 2.5 times more Top Performers integrating with CRM than Others. Top Performers are twice as likely to have integrated with another PLM system. One category of findings that might surprise some is the integration of PLM with other PLM and/or PDM systems, although many industry insiders would probably expect this. While it s not always done for strategic reasons, many companies have more than one PLM solution implemented. This is most commonly found in larger companies. To that end, Top Performers are twice as likely to have integrated with another PLM system. This could be for a number of reasons including harmonizing the results of mergers and acquisitions, integration with customers or suppliers PLM, or perhaps wrapping a supply-chain-oriented PLM around an engineering-centric PLM system to collaborate and share with others. Top Performers Integrate More PLM Data To better understand PLM integration with enterprise applications and design tools, we analyzed the data companies have integrated. The results are consistent with the systems they have integrated. The biggest differentiator is 3D images and visualization files (Figure 17). Images are typically used to communicate design information more broadly across the enterprise and the supply chain. Following the theme of sharing data more broadly, Top Performers more frequently integrate manufacturing data, including routings and CNC data. Beyond data, the information integrated points to broader process integration in Top Performing companies. Beyond data, the information integrated points to broader process integration in Top Performing companies. For example, Top Performers are more likely to integrate advanced PLM processes as shown by the integration of test plans to support verification and validation. They key takeaway is that Top Performers have integrated to more advanced data that is used to communicate more broadly. 20 Tech-Clarity, Inc. 2016

Top Performers have integrated to more advanced data that is used to communicate more broadly. 3D image / visualization Diles Manufacturing data (CNC code, etc.) 22% 36% 37% 63% Test plans 13% 22% Manufacturing processes / routings SpeciDications Items / Parts BOMs Drawings Documents 38% 42% 56% 56% 78% 62% 74% 70% 70% 67% 63% 61% Top Performers Other Figure 17: Data Integrated by Performance Class Top Performers Use More Advanced Integration Techniques In addition to researching what companies integrated PLM with, we analyzed the way companies integrate their PLM systems in order to determine if Top Performers take different integration approaches. The data shows that Top Performers are not only different in what they integrate with PLM, but also how they integrate the other solutions. There is no one size fits all way to integrate PLM. 21 Tech-Clarity, Inc. 2016

The most obvious finding is that companies use a variety of integration tools and techniques. Top Performers and Others both use a combination of approaches (Figure 18). This reflects the current reality that there is no one size fits all way to integrate PLM. Event triggers 36% 62% Data transformation 26% 42% Bidirectional data Dlow 38% 58% Top Performers Hub and spoke approach 34% 46% Others Adapters / connectors Point to point integration 42% 34% 42% 47% Figure 18: Integration Approached by Performance Class But there are important differences between integration approaches. Some are easier to implement, operate, and maintain over time. Some may take a bit more time up front, but provide better agility and maintainability later. Of course, the techniques aren t mutually exclusive as evidenced by the large percentage of companies that use each option. It s often best to base integration on the technology the vendors offer instead of trying to force fit a mandated approach, companies find it may be more expensive if you don t use what the vendor supports. It s often best to base integration on the technology the vendors offer instead of trying to force fit a mandated approach. Top Performers use a variety of approaches, but are more likely to include advanced forms of integration in their toolkit than Others. For example, Top Performers are a little less likely to rely on point-to-point integrations. As one automotive supplier shares, Our 22 Tech-Clarity, Inc. 2016

preferred integration standard is a proper enterprise integration hub, when not applicable due to target system, we use point to point. The key is to have a variety of integration techniques available and choose the optimal one for the given situation, optimizing for cost but also agility and other factors across the PLM Integration Lifecycle. Our preferred integration standard is a proper enterprise integration hub, when not applicable due to target system, we use point to point. Automotive Supplier Focusing on the Future: The Impact of IoT on PLM Integration Beyond the current state, we tried to determine what will change with PLM integration in the near future. One significant trend that we believe will significantly impact PLM is the shift toward the Internet of Things (IoT) and Industrial IoT (IIoT). We re already seeing the impact of smarter products. IoT extends this significantly. Having products that can communicate information back to the OEM helps identify product usage and MRO opportunities, explains a building products company responding to the survey. Having true product usage data allows companies to focus and identify areas for improvement or newer products. This makes integration more strategic and at the same time makes the integration much more difficult with the inclusion of software, firmware, and other requirements to make the communication handshake. Ten Build-Buy Factors For IoT Platforms explains that companies need to consider integration with devices, engineering tools, and enterprise applications. But IoT will not only make PLM integration become more difficult, it will make it more important. PLM is playing a major role in supporting IoT initiatives, providing the product context (including designs, configurations, and more) for the digital thread and the digital twin. This will put more demands on PLM integration. IoT will not only make PLM integration become more difficult, it will make it more important. Again, survey respondents express the increased importance alongside the increased complexity. Integration will be Much more strategic,... more data is going to need to go somewhere, and it should go into PLM to aid in business decisions, according to an industrial equipment manufacturer. Performance demands will increase. IoT adoption will drive more complexity but also increase the business value of PLM, making PLM integration best practices and performance even more of an important investment. 23 Tech-Clarity, Inc. 2016

Conclusion PLM helps companies improve product innovation, product development, and engineering efficiency and helps enhance communication across the enterprise and the supply chain. Improving PLM integration helps companies achieve the benefits PLM has to offer, making it a highly strategic investment. The level of importance, along with the level of complexity, will only increase as companies move to smarter, more connected products and the IoT. PLM integration helps companies achieve the benefits PLM has to offer, making it a highly strategic investment. Top Performers, those that get the most benefits out of their PLM systems, are more likely to view PLM integration as strategic. They integrate more design tools and enterprise applications with PLM, and integrate PLM to more advanced tools and applications. They also integrate more data, including more information that spans the enterprise and the supply chain. The leads us to the conclusion that better PLM integration is simply good business. Top Performing companies are more able to implement, operate, and maintain PLM integration in an agile, cost-effective way. Top Performers take different approaches to integrating PLM, employing a variety of tools but more likely including adaptable techniques like a hub and spoke approach that provides benefits across the PLM Integration Lifecycle. The result is that these Top Performing companies are more able to implement, operate, and maintain PLM integration in an agile, cost-effective way and experience less need to look for data in multiple systems, perform less duplicate data entry, and find less data inconsistency across systems. Recommendations Based on our experience and the research for this report, Tech-Clarity offers the following recommendations: Manufacturers should integrate PLM with a broader number of enterprise applications and design tools Companies should integrate with more advanced systems, including those that extend beyond Engineering into the enterprise and the supply chain Companies should use a variety of integration techniques depending on the specific solutions and connectivity methods available, leveraging more advanced 24 Tech-Clarity, Inc. 2016

approaches such as hub and spoke when practical to provide more agility across the PLM Integration Lifecycle Manufacturers should consider outside expertise to fill the PLM integration knowledge gap Companies should focus integration plans and efforts beyond the initial implementation to optimize across the entire PLM Integration Lifecycle About the Author Jim Brown is the President of Tech-Clarity, an independent research and consulting firm that specializes in analyzing the business value of software technology and services. Jim has over 20 years of experience in software for the manufacturing industries. He has a broad background including roles in industry, management consulting, the software industry, and research. His experience spans enterprise applications including PLM, ERP, quality management, service lifecycle management, manufacturing, supply chain management, and more. Jim is passionate about improving product innovation, product development, and engineering performance through the use of software technology. Jim is an experienced researcher, author, and public speaker and enjoys the opportunity to speak at conferences or anywhere he can engage with people with a passion to improve business performance through software technology. Jim can be reached at jim.brown@tech-clarity.com. You can read additional research, watch Tech-Clarity TV, or join the Clarity on PLM blog at www.tech-clarity.com. You can also follow Jim on Twitter at @jim_techclarity, or find Tech-Clarity on Facebook as TechClarity.inc. About the Research Tech-Clarity gathered and analyzed over 150 responses to a web-based survey on best practices for PLM integration. Survey responses were gathered through direct e-mail, social media, and online postings by Tech-Clarity, Razorleaf, and ConnectPress. The respondents were comprised of almost one-half (49%) who were manager or director level, about one-third (32%) who were individual contributors, with the remaining 19% included representation from VP or executive levels. The respondents represented a mix of company sizes, including 23% from smaller companies (less than $100 million), 22% between $100 million and $1 billion, 24% between $1 billion and $5 billion, and 19% greater than $5billion. 12% did not disclose their company size. All company sizes were reported in US dollar equivalent. 25 Tech-Clarity, Inc. 2016

The responding companies were a good representation of the manufacturing industries, including those gaining 10% or more of their revenue from Industrial Equipment (35%), Aerospace and Defense (19%), Automotive and Transportation (18%), Consumer Products (12%), Life Sciences / Medical Device (12%), Electronics / High Tech (9%), and others including CPG, Building Products, Federal Government, Energy / Utilities, and others. Note that these numbers total greater than 100% because some companies indicate they re active in more than one industry. The respondents reported doing business globally, with companies gaining 10% or more of their revenue from North America (89%), Western Europe (40%), the Asia-Pacific regions (40%), Eastern Europe (20%), Latin America (25%), and Africa (8%). Note that these numbers total greater than 100% because some companies indicate they re active in more than one geography. Respondents included manufacturers as well as service providers and software companies, but responses from those determined not to be directly involved in designing or manufacturing products (including software vendors and consultants) were not included in the analysis. The majority of companies were considered to have direct involvement in designing and manufacturing and the report reflects their experience. Copyright Notice Unauthorized use and/or duplication of this material without express and written permission from Tech-Clarity, Inc. is strictly prohibited. This report is licensed for distribution by our sponsor, Razorleaf. 26 Tech-Clarity, Inc. 2016