Price Tags and Pressures
For midsized companies, the range of PLM options is widening. At the low-cost end, there are on-demand providers, which offer remote hosting and charge as little as a few hundred dollars per user annually. At the high end, more traditional enterprise software providers offer options that can cost between $50,000 and $100,000.
Since the early 2000s, the technology has become more affordable, easier to install and less complex to manage, says Ken Amann, director of research at CIMdata Inc., an Ann Arbor, Mich.-based analysis and consulting firm specializing in PLM. Yet vendors are still learning how to package PLM appropriately for the midmarket and its diverse levels of IT capabilities, says Amann, whose firm tracks some 300 PLM providers. Competition for smaller enterprises also means that "a lot of new vendors are attacking this marketplace, putting pressure on the big guys to come down." (For more on pricing, see "Vetting PLM Vendors," at right.)
A typical midsized customer starting out with PLM vendor Agile Software Corp.'s on-demand offering, for example, will spend "between $8,000 to $20,000 max, including implementation costs," says Craig Livingston, general manager of SME solutions at the San José, Calif.-based firm. The traditional on-premises approach (with a variety of licensing options) starts at between $20,000 and $50,000, with an additional $10,000 to $20,000 for implementation and training, he adds.
"Depending on what you want to do, $200,000 to $300,000 will get you to a meaningful implementation," says Mike Segal, a senior VP with Enovia MatrixOne, the PLM division of Dassault Systèmes. A "full-blown PLM system with program management and supply chain hookup" will run $3,000 to $4,000 per seat, he adds.
Vetting PLM Vendors
With nearly 300 vendors in the product lifecycle management (PLM) software market, choosing a system for your midsized company can seem overwhelming.
For reliable advice, start with your own engineers and product designers -- and keep them involved every step of the way. "We're in IT, not mechanical or electrical engineering," says IT Director Brian Sossaman at ReliOn Inc. in Spokane, Wash. "They know what they're after, so get their input. It makes things so much smoother."
Next, survey your own industry. Frank McMaster, VP of IT at Carlsbad, Calif.-based Ashworth Inc., began his recent search for a PLM vendor by thumbing through issues of Apparel magazine and creating a short list from the retail IT companies advertising in the magazine's pages. Finally, he narrowed the field from half a dozen contenders to two finalists.
Navigating the Vendor Universe
Analysts from CIMdata Inc. in Ann Arbor, Mich., divvy up the PLM vendor world into three categories: comprehensive providers, focused applications vendors and tool suppliers. They further divide the PLM field into vendors that supply primarily computer-aided design (CAD) products and those that sell non-CAD PLM software, which manages product data in a broader lifecycle and includes program management and customer feedback capabilities.
The comprehensive PLM vendors -- those leading the enterprise market and generating the most revenue -- are IBM (through its software partner Dassault Systèmes), UGS Corp., Parametric Technology Corp. (PTC), SAP AG, Agile Software Corp. and Enovia MatrixOne (now owned by Dassault). According to AMR Research, other leaders include Lectra Systems Inc., Gerber Technology, MSC Software Corp. and Telelogic AB.
Although many of these vendors have midmarket strategies and product lines, those best known among midsized companies are Agile Software, UGS, PTC and MatrixOne, analysts say. For customers that don't want to own or operate their own PLM systems, vendors such as Agile will offer on-demand capabilities. But the clear leader in the pure-play on-demand PLM space is Arena Solutions Inc.
One challenge for software providers is "getting customers to really question the vendors," says CTO Chuck Cimalore of Omnify Software in Andover, Mass. "Any vendor will say, 'Sure, we can integrate with your systems,' but have they actually done it before? How easy was it?"
Cimalore notes that when engineering or operations groups leave IT out of the evaluation process, it makes a vendor's job far more difficult. "The IT group isn't always involved," the CTO says. "But it's the IT group that will challenge the vendor. They're the ones who know to ask the tough questions and drill into vendor weak spots."
This was first published in May 2007