This is the second installment of a series of articles on measuring Product Lifecycle Management (PLM) value. The objective of the articles is to help provide useful information on determining the tangible value associated with PLM, and provides some practical methods you can use to help calculate why PLM is such an essential requirement for a Product Development organization, regardless of size. Click here to read the first article, The PLM State TBT: Measure This Part 1, Series Introduction.
Let's start with the question, why measure? The answers may seem fairly obvious, but it is important to understand what your objectives and motivations are before you embark on a scientific exercise, which is what measuring PLM should be. The most common motivation for measurement tends to center around justifying a purchase. As a concerned and motivated employee, you may see the need for a PLM solution but management does not. How do you gather the information necessary to persuade them to allocate budget for this critical tool? Other capital purchases have much simpler ROI equations; PLM's can be daunting. If your motive is to justify something, then your methods must be centered on tangible value like time and cost reductions. If your motivation is to prioritize how to deploy PLM, then your measurements can be more qualitative and can be based on obvious value areas that may be harder to define in pure dollars. The main take way here is to know why you are measuring and what you hope to accomplish. It is easy to get lost in the numbers and the vastness of PLM. There are so many potential avenues you can pursue, but only a few will yield the result you need.
As a PLM consulting company, we want to measure so that we can quantify value for our customer. This allows them to justify the purchase of software and services and gives us metrics to persuade other companies to adopt our solutions. Once a company has purchased a PLM solution, the importance of measurement diminishes. We have already convinced them about the value of the technology so the motivation to follow through is not there. Unfortunately, this is a short sighted attitude. Even though the client has achieved their objective in obtaining the software, the real objective was the promised improvements. Unless these improvements can be documented, the project will not be considered successful. Beyond that, measuring helps a company decide what processes to automate and how to prioritize. PLM is a fairly broad solution that addresses many aspects of a company's operations. While there are standard things that must be done in any PLM implementation, there are also many options as well.
From a selfish perspective, measurement is a sales tool; but, in most cases, the reason companies should measure is to guide the implementation and to ensure that the tool is being implemented properly. The measurement activity allows the company to create a blueprint for improvement initiatives and takes the guess work out of the equation. Management has a more complete understanding of why things are being done and how important they are to the future success of the company. All of this seems like common sense, but unfortunately, this practice is the exception – not the norm – when it comes to PLM implementation. In summary, the reasons to measure begin with justifying the process improvement and end with prioritizing and validating the deployment of PLM.
In the next article, we will start to explore which measurements are most useful to leverage when it comes to quantifying value in PLM. Not all measurements are created equally and some yield more value, while others are easier to document and prove. We will weigh the pros and cons of these different areas so that we can have a better understanding of how to proceed.
[Edit: repost from 2015]
