Industrial companies today are striving to be efficient and grow amid increasing complexity, globalization and cost pressures. Being digital is direct path to achieving these goals. For businesses that manufacture products, this means creating smart and connected digital products and digital value chains enabled by specific PLM capabilities, such as simulation and validation, electronic/electrical design engineering, manufacturing and aftersales integration.
ARE YOU MAKING THE RIGHT INVESTMENTS TO FUEL DIGITALIZATION?
Industrial companies can create digital value through product lifecycle management, but many are not investing in the right capabilities.
Overview
Such capabilities allow integrated management of product data and software along the entire product lifecycle, improving readiness for digital business.
However, many businesses are not investing in these capabilities. Instead, they are focusing on tools/IT and capabilities around classical product development.
As it stands, companies are missing the opportunity for an $8 billion bottom line impact. Product lifecycle management (PLM) investments could generate up to 50 percent higher returns if companies apply a sharper prioritization toward digitalization and pursue PLM programs as a means for true transformation.
BACKGROUND
To better understand whether industrial companies are investing in the PLM capabilities that help digitalization of the value chain and digitalization of products, Accenture conducted a global survey to evaluate capabilities in relevant industrial clusters across France, Germany, Sweden and the United States.
The research targeted leads of PLM and IT, as well as managers of business functions that use PLM regularly (R&D / engineering), from 211 companies across Automotive Suppliers, Machinery and Electrical Equipment, Heavy Equipment and Medical Devices.
OUR SURVEY FINDINGS SHOW:
Overall, companies consider their own maturity of PLM high.
Across the board, companies expect PLM relevance to increase in the future.
Process maturity is significantly lower than tools/IT.
Alignment of business and IT functions is challenging in PLM.
KEY FINDINGS
Accenture’s survey results indicate that industry segments vary significantly in their level of PLM maturity, with different focus on specific capabilities.
Average scores among the Automotive Supplier, Machinery and Electrical Equipment, Heavy Equipment and Medical Devices companies show that the importance of PLM capabilities that drive digitalization will increase over the next five years. Digital capabilities will support virtualization of processes along the value chain and digitize the product.
PLM capabilities that drive digitalization are what will move the needle with return on investment.
Digital provides fuel for innovation, and a PLM strategy can be the engine for supporting innovation-fueled growth. This is why relevance of PLM is considered high, and will continue to increase. To realize the most value from PLM investments, companies must help drive change on a process and organizational level—not just on a technology level. Optimized processes can transform PLM investments into significant business value.
Maturity is imbalanced.
There is imbalanced maturity of processes and tools/IT is because there is a disconnect between engineering/R&D functions as the main users of PLM systems on one side. The IT departments, which typically drive PLM implementation programs, sit on the other side.
Analysis
Most organizations have a generic approach to investing in PLM. Specifically, they implement comprehensive PLM solutions versus sharpening their investment priorities to support the journey to digital. Data will continue to reign king in the digital world, and companies must harness its power—or they risk losing ground to competitors.
CASTING A WIDE NET YIELDS NARROW RETURNS
Budget allocation has been distributed homogeneously and broadly across all capabilities, and without proper prioritization. The primary focus has been on “classical” PLM capabilities that show high maturity already today and/or low relevance in the future.
To stop the squandering of dollars, future investments should be prioritized by comparing relevance vs. maturity today in addition to considering future relevance, which varies by industry.
Recommendations
Let the business define your digitalization agenda
Identify what your business needs to compete in the digital era—growing digital products, or process, or both? Define the set of PLM capabilities that will support that strategy and enable digitalization. In this paper, we have identified the top capabilities, but it will vary by industry and company.
Prioritize investment in PLM capabilities that enable digitalization
The digital world requires seamless integration of data across the value chain, so sharpen investment priorities around the capabilities that will enable such integration, and thus drive future business growth.
Drive true transformation
To be able to capture the full benefits of PLM, ways of working must evolve. Technology is important, but processes must also advance to truly enable change. This calls for putting greater emphasis on process improvements over tools/IT. PLM investments must also be prioritized continually to fully elevate digital capabilities to the next level. Establish metrics to track the improvement on a process level and continually measure the value and progress throughout the transformation journey.
Join forces between business and IT
Transformation priorities should be clear so that business and IT leadership can align around those priorities. When IT and the business collaborate to identify areas that can drive growth, the business will be equipped to invest strategically rather than across the board.
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