"Economic Benefits of PLM-enabled Collaboration"

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"PTC is all about helping discrete manufacturers succeed by meeting their globalization, time-to-market, and operational efficiency objectives in product development. As one of the world's largest and fastest-growing software companies, we deliver a complete portfolio of integral Product Lifecycle Management solutions to over 50,000 customers in the Industrial, High Tech, Aerospace & Defense, Automotive, Consumer, and Medical Device industries."
Source: PTC

Resources Related to Economic Benefits of PLM-enabled Collaboration:

• Product Lifecycle Management (PLM) (Wikipedia)

Economic Benefits of PLM-enabled Collaboration

This CIMdata-authored white paper presents CIMdata's perspectives on the economic benefits related to better managing internal and external collaboration, and how PLM solutions play an important and enabling role. The paper also provides insights into how PLM-enabled collaboration provides savings and supports the requirements for multiple industry verticals, including aerospace and defense, automotive, electronics/high-tech, and fabrication and assembly. Finally, the paper describes the results of CIMdata's interviews with a number of PTC's customers to illustrate why companies should, and in fact need to invest in PLM-enabling collaborative solutions during stressful as well as prosperous economic times.

1. Introduction

Methods of working collaboratively have existed as long as humans have joined together to accomplish tasks that could be done better by a team than an individual. The ways in which people collaborate are always restricted by the techniques that are available for flexible and timely sharing of information, feedback, and actions taken on shared data. In the past, business-support technologies have allowed real-time, synchronous collaboration only when people could work face-to-face or, in some simple endeavors, by telephone or audiovisual conferences. For the most part, today's Product Lifecycle Management (PLM)-enabled work environments support both synchronous and asynchronous collaboration by managing data and information access via a single logical shared workspace.

Many of today's PLM-enabling technologies allow complex information to be shared and worked upon by dispersed teams of people. Product data management (PDM) technology is used to organize and provide broad access to a company's intellectual assets within the context of an enterprise's complete PLM environment. However, simply organizing data better produces important, but limited value. The concept of PLM and its collaborative Product Definition management (cPDm) capabilities embraces the collaborative use of the managed information in an organization's decision-making processes. Today's PLM-enabled collaborative solutions go beyond asynchronous data sharing to include real-time viewing, discussion, annotation, and modification of all kinds of product information including 3D design models, analysis results, manufacturing processes, documents of all kinds, audio, video, and many, many others.

This paper has been written to provide CIMdata's perspectives on the economic benefit of better managing internal and external collaboration, and how PLM solutions play an important and enabling role. The paper also provides insights into how PLM-enabled collaboration supports requirements in multiple industry verticals, including aerospace and defense, automotive, electronics/high-tech, and fabrication and assembly. Additionally, the paper includes the results of CIMdata's interviews with a number of PTC's customers to illustrate why companies should (i.e., need) to invest in collaborative solutions during difficult as well as prosperous economic times. The paper's outline is as follows:

• Defining Collaboration-This section introduces the various forms of collaboration and how collaboration-enabling technologies can benefit companies in multiple industries.
• Maturity in Industries-This section provides a brief perspective on the state of maturity related to the implementation and use of collaborative-enabling technologies within some targeted industries.
• Industry Examples-This section includes the results of CIMdata's discussions with a number of PTC's customers in the targeted industries and how they have taken advantage of collaborative technologies to support their distributed and/or global teams.
• Why Invest-CIMdata describes the benefits that have, and can result from the implementation of collaborative enabling solutions.
• Conclusion-A brief summary and concluding comments are provided in this section.

2. Defining Collaboration

In general, collaboration is an iterative process where multiple people work together toward a common goal. As mentioned previously, methods of working together in a collaborative manner have existed as long as humans have joined together to accomplish tasks that could be done better by a team than an individual. This section describes the common objectives of collaboration, key collaborative concepts, some of the processes commonly supported by PLM-enabled collaborative technologies, and a sampling of collaborative technologies and their capabilities.

2.1 Objectives of Collaboration

Competitive advantage has always been the most significant factor driving business. In order to stay competitive, companies have had to address how to get products to market faster, remove costs from their products, and improve quality. In today's stressful economic times, this is more important than ever.

To continue to improve competitive position, companies who once designed, manufactured, and serviced their own products are now dramatically reorganizing the way they conduct business. Outsourcing of business-specific functions such as design, manufacturing, and service support often provides companies with significant cost advantages. In so doing, well-established communication channels, control procedures, and management practices, progressively built up over time, must change. Manufacturing companies face the challenge of extending their current capabilities outside the enterprise to include customers, suppliers, sub-contractors, and even competitors. This implies the support of new collaborative product lifecycle-related processes, organizational structures, and PLM-enabling technologies.

Ultimately, collaborative product-related processes support shared decision-making through improved communications across the extended enterprise (i.e., partners, suppliers, and customers), with the goals of improving change processes, broader use of product definition information in decision processes, reducing product time-to-market, removing costs, improving quality, and supporting product innovation-all important measures that must be strived for no matter how stressful the economic climate.

2.2 Key Collaboration Concepts

In general, there are two modes of collaboration: synchronous and asynchronous. Users working in an asynchronous manner carry out their assigned tasks and then forward the data to the next person. This way of working is serial in nature and only allows users to participate one at a time. Communication among collaborators is normally carried out using telephone or e-mail. Effective collaboration requires an information storage area from which product definition data can be shared with all those that require it. This shared area is commonly referred to as a data vault. Flow control and task execution is performed in an asynchronous way using workflow and project management tools. These tools allow data to be routed to users and progress to be monitored.

Synchronous or real-time collaboration enables users to view, work with 2D (e.g., specifications, drawings, documents, etc.) and 3D data (e.g., mechanical CAD models), and carry out interactive communications with each other in real-time. In addition, PLM-enabled collaborative solutions often support the ability to view, rotate, add notes and annotation pointers, and some also offer functionality to change the 3D design model data. This provides the same communication effectiveness as having all participants in the same room, at the same time, looking at the same data.

2.3 Commonly-Supported Processes

Today's PLM-enabled solutions support a host of business processes. A few examples related to how companies are using PLM-enabled collaborative solutions are presented below.

• Change Management and Design Review-Adopting a different design review process, where project teams join a shared collaborative review session can result in significant benefits as potential conflicts and errors can be identified early in the product development lifecycle.
• Supply Chain Management-The move to a partnership-oriented supply chain means that suppliers, partners, sub-contractors, and customers are all involved in product definition. For companies to embrace the true potential of the distributed supply chain, collaborative tools can be used to manage data and processes across a distributed environment.
• Sales and Bidding-Opportunities exist for sales, engineering, purchasing, and manufacturing to engage in collaborative sessions where product options, alternatives, and concepts are reviewed by each discipline at the same time. This is faster, more efficient, and can produce more accurate and cost-effective bids.
• Maintenance and Support-The application of collaborative tools in maintenance and support activities is gaining acceptance in a number of different sectors such as aerospace and defense, automotive, process, and machine tools. For example, animation and simulation tools are being used to demonstrate how products are operated and maintained.

As these examples illustrate, PLM-enabled collaborative solutions are being used to support a wide variety of business processes. CIMdata's research and experience indicates that the companies that receive the highest return-on-investment with regard to the implementation of these solutions, are those that also make corresponding process changes (i.e., process changes that allow them to take advantage of the new way of working enabled by the solutions).

2.4 Collaboration Technologies

Over the years, many technologies have evolved to support both asynchronous and real-time collaboration. Most of the older technologies, such as teleconferencing, video conferencing, e-mail, etc., have major limitations that lower their value in product development environments. The newer and still-evolving technologies that enable PLM allow the management of product information and the processes that are used to create, configure, and use the information in a manner never previously envisioned.

PLM-enabled collaborative technologies, within the scope of design and manufacturing businesses, provide an environment where users can log into a "project room" and share data, and often interact with other project participants in online sessions designed to discuss and share product information in a structured and managed way. Communication among participants utilizes a number of different methods including speech, video, textual data, and graphical information. The collaborative sessions usually focus on the review, investigation, or inspection of product data. Conferencing techniques are often used to manage sessions and track comments and discussions that take place during the collaboration. Some of the most commonly-supported collaborative capabilities include:

• Discussion Groups (web-based)-A structured approached to collaborative data exchange. Discussions can be structured to provide easier access to information often via URLs.
• Wiki-A collaborative set of web pages used to post information about a specific topic. Many companies have found that Wikis provide a good ad-hoc collaborative forum where ideas and expertise are shared.
• Instant Messaging (IM)-This involves immediate, ad-hoc correspondence between two or more users who are all online at the same time.
• Application Sharing-This is the means by which a desktop computer application, e.g., a CAD application, can be simultaneously viewed by more than one user across a network. This is usually accomplished by one user "sharing" their application with other users over a network.
• Electronic Bulletin Boards-These are efficient when posting textual information intended for many people to read. They support one-to-many asynchronous collaborative data exchange.
• Threaded Discussions-This form of conferencing functions like an electronic bulletin board; threaded discussions are electronic messages that are posted, archived, and viewable on a web site. Discussion participants can view postings and respond to them in an asynchronous manner.
• White Boards-Similar to bulletin boards, white boards are also able to provide an environment for exchanging graphical and pictorial information.
• Electronic Notebooks-These effectively combine the benefits of bulletin and white boards within a controlled framework where each entry in the notebook is recorded with time, author, and other attributes.
• Project Team Rooms-These "rooms" are usually web-based collaborative workspaces that enable distributed teams to work together in a virtual team room. Project teams throughout the extended enterprise can work on tasks and goals, optimize collaborative business processes, improve innovation, streamline decision-making, etc.
• Data Visualization-These capabilities encompass a number of technologies including viewing and markup, simulation, animation, digital mockup, and virtual reality. These capabilities allow users to examine graphical and textual data without needing the creating software.
• Computer-Based Conferencing-A fundamental requirement of collaboration tools is their ability to host and manage online conferences. Conference attendees have to be notified how to connect to the session, when it will take place, and what role they will play. Normally one user will host the session and serve as its moderator.
• Collaborative Geometric Model Modification-This is the ability to investigate a 3D product model in real-time in a shared collaborative session where members of the team can apply their domains of experience and competence.

The use of collaborative technologies is not new, but it has grown significantly over the past few years as companies in a number of different industries have realized their benefit.

3. Maturity in Industries

The implementation and use of PLM-enabled collaborative solutions are commonplace in many industrial sectors, especially those where highly-complex electromechanical products are designed, manufactured, and maintained. In some industries, such as aerospace & defense and automotive, commercially-available PLM-enabling collaborative solutions have been used for more than twenty years. In other industries, e.g., electronics/high-tech and fabrication and assembly, many companies can be found with mature PLM environments-environments that they rely upon to conduct business and that they view as critical to the survival of their business.

In the next four sections, we will take a closer look at the drivers for PLM-enabled solutions and how they are commonly-used within the aerospace & defense, automotive, electronics/high-tech, and fabrication and assembly industries.

3.1 Aerospace and Defense

design, manufacture, and support products that have extremely complex product lifecycles that must be managed for decades. The design of these products utilizes state-of-the-art technologies that must be documented precisely to ensure that the intended performance is achieved. Testing and validation of designs and materials are crucial parts of the process, and accuracy is required throughout. Engineering changes come in volumes and they must be reliably executed and communicated to all organizations affected to ensure correct execution.

Specific to military and civilian aircraft: no two aircraft are alike. Designs are continuously refined and the bill of materials for each aircraft is unique. This leads to a need for extremely reliable documentation and configuration management systems that are able to furnish the unique information to those organizations responsible for maintaining and inspecting these complex structures. Additionally, the design and supply chains found in this industrial sector are very complex. Often aircraft are designed, developed, and produced by consortiums of firms based in multiple countries.

Furthermore, aerospace is an extremely capital- and intellectual property-intensive industry. As a result, partners are the norm and product-related information needs to be produced for all of the items designed. This also means that coordination of purchasing, delivery, and assembly are crucial to the production process. Companies have to collaborate and effectively pool their resources to sustain major aerospace programs. Hence, design chain management, starting with fundamental and reliable communication among multiple collaborators that can be spread all over the world, is essential to develop effective working relationships. Costs associated with the development and production of aircraft are some of the largest capital outlays throughout industry. Decreasing large lead-times (years) is a high priority to improve cash flow and profitability.

The need for PLM-enabled collaborative solutions in this industry is crucial. Often, PLM is viewed as the only solution suitable for managing the product lifecycle-both its breadth and depth. Document control, security, engineering change management, product structure management, and reducing overall development time, are all necessary functions. In addition, PLM-enabled solutions offer companies the ability to coordinate the design process among hundreds of contractors and suppliers throughout the world, and to provide a coordinated approach for the use of standard components and approved suppliers to decrease material and inventory costs.

3.2 Automotive

There are two primary segments of the automotive market: Original Equipment Manufacturers (OEMs), and systems and parts suppliers. These segments are interdependent, sharing many of the same business pressures and therefore the same need for PLM-enabled collaborative solutions. These business pressures can be summarized by four overall trends:

• Globalization of markets
• Faster and more cost-effective innovation
• Mandated local production to penetrate growing markets
• Reduction of total manufactured vehicle cost

CIMdata's research and experience indicates that all four of these areas have led to the adoption of various PLM-enabled collaborative solutions.

Over the past several years, the automotive industry has shifted to global markets and the globalization of operations. Today, primary growth markets are in the developing countries of Asia, Latin America, and South America. Pricing pressure in these markets is intense, and suppliers are seeking low-cost-labor countries to produce much of their product lines. OEMs and suppliers alike who could be profitable with small volumes in times past are finding that they must consolidate, or at the very least enter into joint ventures with competitors or complementary producers to achieve sufficient volumes to survive. Consolidation of OEMs and the supplier community has continued and additional partnering and/or acquisition are expected, especially in today's uncertain economic times.

These factors drive the need to share design talent and respond to market requirements across companies and geographies. OEMs and suppliers have responded by establishing global platforms that have a great deal of parts and systems commonality. These global platforms enable companies to reduce costs of production and to more easily respond to fluctuations in demand throughout the world.

PLM-enabled collaborative solutions are being widely adopted to enable this globalization of design and the management of the design chain. Virtual design teams span continents and PLM solutions are being used to allow team members to access design information and status regardless of their location. Likewise, suppliers and OEMs can exchange information across borders seamlessly.

To accomplish the goal of globalization and simultaneously reduce costs, OEMs have contracted designs of entire systems to suppliers who were previously only responsible for the design and/or manufacture of parts. Many OEMs are out of the supplier business and the focus on supplier responsibility for design has accelerated the design process. There is no question that system and parts suppliers need PLM-enabled collaborative solutions to manage the design process and to communicate with their OEM customers. The reverse is also true.

Another factor is model diversity. Companies are responding to buyers' desires for more and more options so they can get "their" automobile. The OEMs are trying to leverage a common chassis while creating multiple car lines and models, each with a wide variety of options. Further, they are using components across multiple lines to reduce inventory and development costs. PLM solutions provide the environment for managing multiple configurations and variations of chassis, bodies, and options as well as the component and part classification facilities needed to enable part reuse and sharing.

In countries such as Brazil and Mexico, governments require a high percentage of local content in vehicles produced. Local production is also in the interest of the manufacturers because it results in lower labor and delivery costs, just-in-time manufacturing, and less currency exchange fluctuation problems. In order to ensure smooth production across continents, PLM-enabled collaborative technologies are necessary to establish an information architecture that provides configuration data as well as the more basic functions of document management and engineering change management in a widely-distributed environment.

Design efficiencies, commonality of parts, and use of low-cost labor are strategies for reducing costs. However, unless there is tight integration of all these activities up and down the supply chain, the synergy is lost. PLM is the approach being used by many companies to integrate the entire product development process with the production processes and tools. The functionality provided by many PLM solutions for parts classification is critical because it promotes the reuse of parts by multiple design teams thereby increasing lot sizes and reducing unit costs.

3.3 Electronics/High-Tech

The electronics/high-tech industry is composed of several distinct sectors, including microelectronics, computer equipment, computer networking equipment, telecommunications and navigation equipment, and household audio and video equipment. Common across all these sectors is the need for tight integration of Electronic Design Automation (EDA) tools and the information they define with the larger PLM environment. One of the major impacts on this industry sector is the growing inclusion of electronics and software into more and more products, ranging from toys, to appliances, to automobiles, to airplanes. This is driving the adoption and growth of PLM-enabling solutions that help define and manage the "complete" product.

In this industry, PLM-enabled collaborative solutions play a critical role in the support of global design and manufacturing processes, not only within a given company, but also across the entire design and supply chain. Suppliers need to give their customers design information for integration into their products, and OEMs and major sub-assembly manufacturers need to give suppliers their materials requirements for manufacturing. All members of the design and supply chain need to quickly transmit and share information on a 24/7 basis to stay competitive.

For many within this industry, PLM-enabled collaboration isn't optional; it is crucial to survival. High-end manufacturers with large volumes of designs and many people involved in the processes need PLM-enabling solutions that manage the design process, including configuration management, change control, and parts classification.

Computer OEMs probably have the strongest history of managing their supply chain with PLM-enabling technologies. On the design side, OEMs are contracting 60-100 percent of some computer designs to their suppliers. Hard drives, computer chips, motherboards, memory, power supplies, and even the cases themselves are contracted to be designed and manufactured around the world. The coordination of the design process alone is extremely complex given the thousands of electronic components and sub-components involved. On the computer assembly side, all of these component parts must be brought together on time, in specified quantities for quick assembly and shipment.

For many companies within this industrial sector, PLM is absolutely critical for management of all members of the design and supply chain from microelectronics suppliers all the way to final assemblers of the units. Configuration management and change control are two very important functions throughout the design and supply chain in addition to the standard access control and distribution of design and manufacturing data. Finally, the use of PLM to support parts classification promotes the reuse of standard parts and components, thereby reducing inventory and acquisition costs.

For the networking industry sub-segment, competition is fierce. Incremental technology improvements are vital, and time-to-market is always an issue to ensure profitability. The total manufactured cost of equipment is also a key competitive factor. Additionally, the threat of entirely new technologies is always on the horizon.

These competitive factors are drivers for the adoption of PLM-enabled collaborative solutions. The fundamental benefits of PLM in managing the design and supply chain are clear in this industrial sector. Deploying a PLM solution can speed the design process and enable sharing of data across company and geographic boundaries. Additionally, it can help newly-acquired companies integrate their design data with that of their parent. Lastly, PLM can expedite the conceptual design process and keep track of these alternative technologies until they are required for execution.

As with a number of other high-tech industry sub-segments, companies within the telecommunications industry face intense and worldwide competition. Designs are complex and are further complicated by a diverse set of telecommunications standards that vary from country to country. This leads to a complex set of product bills of materials and worldwide participation in the design process. In addition, cost pressures are intense, so the components and the finished products are made in low-labor-cost countries all over the world.

As with the other electronics/high-tech industry sectors, these complexities are also very important business drivers for PLM-enabled collaborative solutions. Design and supply chain management is absolutely critical in being able to serve these growing and diverse markets. PLM enables design sharing around the world, product visualization, configuration management, and engineering change management.

Finally, PLM-enabled collaborative solutions are also an attractive investment since it helps suppliers of consumer products reduce their costs in this highly-competitive commodity market. The ability to leverage existing designs efficiently through file management and control capabilities, to manage complex bills of materials, to exploit purchasing economies through the use of standard parts and suppliers, and to execute engineering changes have proven to be attractive business propositions in this industry.

3.4 Fabrication and Assembly

Although diverse in delivered products, this industrial sector, which designs and manufactures mechanical machinery, factory robots, and other highly-complex mechanical and electromechanical devices, includes companies that have many things in common regarding product design, manufacturing, maintenance, and management of the supply chain.

For the most part, this category includes complex products that are comprised of many subassemblies, electronic, software, and mechanical components, and close tolerances. These products are purchased by industrial customers and are often designed and made-to-order, working from a base design. These are major capital investments for companies with prices ranging from hundreds of thousands of dollars to millions. Suppliers of these products are under constant pressure to innovate as well as hold to high quality and performance standards, and competitive costs.

For these companies, a PLM-enabled collaborative solution is essential to support their design process. In addition to the basic functionality of document control, product structure, and change management offered, visualization and extended collaboration functionality is often critical to show a customer how the resulting design will look and function. Because design reuse is essential to leverage the intellectual assets of the machine manufacturers and move innovations forward at a higher rate of speed, PLM's ability to help people locate and share design data quickly is very important. The manufacture of these products involves complex bills of materials, and a combination of in-house and contracted manufacturing of parts and assemblies. PLM is often used to enable companies to streamline these processes through the ability to share design and other product-related data so that production operations understand what is involved. Additionally, PLM-enabled collaborative solutions provide the opportunity to document and control information regarding the ongoing maintenance of these machines.

4. Industry Examples

This section includes a summary of CIMdata's interviews with a select set of PTC customers that have taken advantage of collaborative technologies to support their organization. These companies have provided their perspectives on the value that they have received through the implementation of PLM-enabled collaborative technologies.

4.1 FN Herstal

FN Herstal, which is part of the Herstal Group, is known around the world for its FN Herstal, Browning, and Winchester brands. The Herstal Group designs, manufactures, and distributes a full range of firearms and accessories for defense, law enforcement, hunting and marksmanship, and is headquartered in Herstal, a suburb of Liege, Belgium. FN Herstal's Liege facilities house the departments responsible for the design, development, testing, manufacturing, marketing, and selling of light and portable weapons, integrated weapon systems, and ammunition to military and law enforcement agencies around the world. Additionally, FN Herstal has two wholly-owned U.S. subsidiaries: FN Manufacturing located in Columbia, South Carolina, and FNH USA located in McLean, Virginia.

FN Herstal has a long history of using PLM-enabling technologies, with their first installation of a commercially-available computer-aided drawing tool in 1976. They were also an early adopter of 2D and 3D modeling technologies; in 1986 they implemented Hewlett-Packard's ME10 and Matra Datavision's Euclid tools. They made their next major step in 1991 when the group's military area implemented an early version of PTC's Pro/ENGINEER mechanical computer-aided design (CAD) system. This implementation was followed by the rollout of Pro/ENGINEER to the group's civil area in 1992. Over the years, the use of Pro/ENGINEER has expanded significantly. Today, FN Herstal's CAD users utilize a number of Pro/ENGINEER's advanced functions, including those that support advanced assembly modeling, interactive surface design, thermal and structural simulation, machine path generation, and mold design, to name just a few.

FN Herstal's history related to the implementation and use of product data management (PDM)-related solutions is just about as long. The organization's first PDM system was implemented in 1986. This internally-developed system was focused on managing the data interactions between engineering and manufacturing. FN Herstal's first use of a commercially-available data management solution started with their implementation of Xerox's DocuPlex in 1994. For the next few years, FN Herstal utilized both its homegrown system and DocuPlex to manage engineering-generated documentation, and part and bill of material-related data. Then in 1996, the group replaced their homegrown system with SDRC's Metaphase (Giat Industries' standard solution; Herstal was owned by Giat at that time) and created a link between it and their manufacturing system. They also created a link between Metaphase and DocuPlex. FN Herstal further evolved its PDM environment with the implementation of Pro/INTRALINK in 1999 throughout its U.S.-based organization; Pro/INTRALINK was later deployed throughout the rest of the organization in 2001.

As mentioned above, FN Herstal's interaction with PTC dates from 1991 when it first implemented Pro/ENGINEER. The group further expanded its relationship in 1999 and 2001 when it deployed Pro/INTRALINK to manage its Pro/ENGINEER data and in 2002 when the group decided on PTC's product development suite as its unique tool for product management. This later commitment included the deployment of Windchill PDMLink throughout the organization, and execution of a worldwide partnership framework with PTC. Over the years, the organization has continued to expand its partnership with PTC and its reliance on PTC's product development supporting solutions. Currently, the group is in the process of migrating its legacy Metaphase-managed data to the Windchill PDMLink solution.

In a recent interview with CIMdata, Mr. Philippe Niesten, CIO of the Herstal Group, reported that its partnership with PTC has expanded over the years and that Herstal considers PTC to be a strategic partner. Mr. Niesten made specific reference to PTC's Product First initiative and how this initiative places focus on enabling a company's product development environment. He further explained how Herstal sees PTC's Product Development System as an excellent fit to Herstal's product-oriented operating model-where product innovation (e.g., Smartgun technology), product quality improvement (including eliminating warranty claims), and time-to-market reduction are all critical for effective competitive positioning in their market. Mr. Niesten went on to state that Herstal's success is highly dependent on its ability to collaborate internally as well as with its suppliers and customers (e.g., U.S. Department of Defense, multiple local law enforcement PLM-Enabled agencies, etc.), and to develop new products and integrated weapon systems quicker and more efficiently.

Given Mr. Niesten's comments, FN Herstal appears to be one of a growing list of companies that CIMdata has seen who have realized that the implementation and use of PLM-enabled collaborative solutions is critical to their survival. Mr. Niesten stated that the company views PLM as a way to ensure that everyone within the product development organization maintains alignment with their corporate strategies and associated policies. This helps reduce the organization's risks, especially those related to the danger of releasing a design to manufacturing before it is ready. Mr. Niesten also indicated that over the years, the group has realized a number of benefits as a result of following a PLM strategy. These have included a noticeable improvement of designer efficiency through the use of better design tools, being able to better collaborate through the use of visualization technologies (ProductView from PTC), easier access to previous designs and related product knowledge throughout the development process, and supporting and controlling different processes from within one logical environment.

Mr. Niesten went on to state that Herstal's ability to reduce R&D costs while at the same time delivering more products to the market over a shortened period of time (e.g., their development cycle has been reduced from around ten years to as little as three) has been quite valuable. These represent key drivers for Herstal's implementation of PLM-enabled collaborative solutions. CIMdata's experience and research indicates that Herstal is not unlike many other companies that design and manufacture complex, highly-regulated products where supply chain and customer interaction must be effective and efficient. Clearly, Herstal has realized the value related to the implementation of collaborative technologies and processes. Herstal's motivation is clear; namely enable their product development organization to be more efficient, develop more products in less time, and do all of this at a consistently high quality level while at the same time working more closely with customers and suppliers on a global basis.

Finally, it should also be mentioned that Mr. Niesten was quick to point out that they have much more work to do in order to fully achieve their PLM vision. The group's plans go well beyond fully migrating to Windchill PDMLink to include expanding the use of project management technologies (e.g., the continued use of Windchill ProjectLink for collaboration and task management support), and studying how PTC's Arbortext could be used to create dynamic videos and product documentation (e.g., manuals). In CIMdata's opinion, FN Herstal's PLM journey is not unique. Its need for more efficient product development operations and a more collaborative environment where it can work closely within its organization as well as throughout the world with its various customers and suppliers is no surprise. Clearly, FN Herstal is a good example of a company that understands PLM's value and necessity.

4.2 Schneider

Schneider Electric is one of the world's largest manufacturers of equipment for electrical power distribution, and for industrial control and automation. The company, with its headquarters just outside of Paris, France, helps power utilities distribute electricity; designs automation systems for the automotive and water-treatment industries; builds infrastructure for airports, road and rail networks, and port facilities; and manages electric power in residential, industrial, and commercial buildings. Schneider Electric's 120,000 employees support customers from offices spread over more than 100 countries. Like many of today's large multi-national companies, Schneider Electric has grown significantly through acquisitions. For Schneider Electric, its acquisition of Merlin Gerin (1992), Square D (1991), and Telemecanique (1988), among others, brought tens of thousands of new employees to the group as well as a significant number of new products and a wealth of knowledge.

In many ways, Schneider Electric's PLM journey has been focused on binding the large and global distributed company together-especially from a process and data perspective. According to Mr. Tim Freimuth, Manager of Schneider Electric's North American PLM Competency Center and Ms. Lori Michel, Staff Analyst and Team Lead for PLM, North American Operating Division, Schneider Electric's North American unit started looking at PLM some ten years ago. The initial driver for PLM was to consolidate seven disjointed engineering change systems spread across the continent into one web-based system that would be accessible to all. This initial foray into PLM led them to select and implement PTC's Windchill solution, upon which Schneider Electric's team built their own engineering change system that altered the way people throughout the North American Operating Division handle engineering change. This new system replaced a number of existing systems, as well as the use of email, snail mail, and other disconnected methods. Today, this PLM-enabled engineering change management application, which was built on Windchill Foundation, has approximately 700 users. According to Mr. Freimuth and Ms. Michel, this PLM application is only one of several that exist today.

In 2002, according to Mr. Freimuth, the Schneider Electric's North America Operating Division began working with the rest of the company on a major global PLM initiative. This effort is now part of the company's Product Information Management (PIM) Offer. This PIM Offer is one of three strategic systems offerings that support the company on a global basis-the other two are Enterprise Resource Planning (ERP) and Supply Chain Management (SCM). Schneider Electric's reliance on PLM has grown significantly as a result of this focused effort. Schneider reports that the PIM Offer currently has numerous global core applications based on the Windchill platform, with thousands of users each. Additionally, the initial engineering change management solution has been re-developed and re-implemented globally on Windchill PDMLink.

In the area of project-oriented collaboration, Schneider Electric has chosen to leverage PTC's Windchill ProjectLink solution. The North American Operating Division uses this platform as its base for document management across the division and to support their engineer-to-order (ETO) order management process. Ms. Michel and Mr. Freimuth reported that this order management application has provided the division with a number of significant benefits in support of their lean front office initiative. Not only has this allowed them to go paperless via integration with MS Office, but they were also able to consolidate a number of field offices and save hardware expenses by shutting down a number of disconnected systems. The 2,600 users of this application, which are scattered throughout North America, collaborate by sharing documents within the context of the ETO process as if they are co-located. Ms. Michel and Mr. Freimuth commented that this has ultimately allowed everyone to support anyone (internal and external customers), no matter where they are located. They further noted that plans call for this gated and milestone-based process to be integrated into the company's ERP environment so that the process will be seamless-from quote to invoicing.

The implementation of the ETO process has proven PLM's value in a number of different ways. According to Schneider, it has provided a level of visibility to the process that was previously not possible. It has reduced the ETO processing time by a few weeks, which undoubtedly has increased competitiveness and customer satisfaction. It has also allowed Schneider Electric customers, via Windchill ProjectLink, to be invited participants of the process. Schneider Electric is also taking advantage of Windchill ProjectLink's project management capabilities as they work more collaboratively internally as well as externally with more of their global customers.

According to Mr. Freimuth, Schneider Electric's PIM Offer is a critical enabler to the company's initiative to globalize processes and information across the enterprise. This initiative will ultimately allow Schneider Electric's current distributed divisions and multiple acquisitions to all display the same single face to its customers. As already mentioned, Schneider Electric has a long history of acquiring companies and the PIM Offer is seen by the company as a major enabler, helping them to incorporate the dozens of companies that have been purchased over the last several years and the additional ones that will be made in the future. Without PLM and its collaborative capabilities, it would be almost impossible for Schneider Electric to quickly take advantage of an acquired company's knowledge and people. It also would be difficult to achieve the CMMI level 2 rating it desires.

Finally, according Ms. Michel and Mr. Freimuth, Schneider Electric's management team realizes that its PIM Offer, and the various PLM-enabled applications that comprise it, provides significant bottom-line benefit to the company (in the order of millions of dollars a year) and directly supports their ability to globalize the company-especially its product-related processes and knowledge. The company understands that its PIM Offer enables it to truly design anywhere, build anywhere, and install and support anywhere. The company also fully recognizes that without the PIM Offer, its ETO order management and other PLM-enabled processes would see an increase in processing time. These realizations, and a number of others, continue to result in an appropriate level of funding for the PIM Offer, not only during strong economic times but also during uncertain ones. While today's uncertain economic climate have brought stress and budget constraints, Schneider Electric, like other companies that have realized PLM value, has continued to fund its PIM Offer in order to increase the realization of benefits for the entire company.

4.3 SKF

The SKF Group, headquartered in Göteborg Sweden, is a leading global supplier of bearings, seals, mechatronics, lubrication systems, and services. The Group's service offering includes technical support, maintenance services, condition monitoring, and training. SKF, which was founded in 1907, currently has 110 manufacturing sites in 28 countries, and sales offices distributed all over the world. Additionally, 15,000 distributors and dealers represent SKF in 130 countries. This organization has allowed the company to stay close to its customers, and has helped the company's research and development team to be an innovative leader in the markets it serves. SKF's more than 44,000 employees work very closely with customers throughout the world, and are divided into three divisions-Industrial, Automotive, and Service. Each division serves the global market, focusing on its specific technology and customer needs.

During the mid to late 1990's, SKF realized that its ability to collaborate internally as well as externally with its clients was lacking the level of support required to be as efficient as set by internal goals. Many of SKF's products play very important and integral roles in the complex designs of its customers. As a result, many of its customers work with SKF in a close partnership, making sure that SKF's knowledge and product related data are used at all stages of the design processes. This is why the ability to efficiently collaborate has become so important to SKF's Automotive Division.

According to Mr. Leo Potjewijd, Manager of Innovation Application in the SKF Automotive Division's Product & Systems Development department, the Division's journey toward PLM-enabled collaboration began in the mid- to late 1990's, when it implemented PTC's Pro/INTRALINK data management tool for Pro/ENGINEER. The initial focus of this CAD data management environment was on supporting the wide range of product definition information, much of which ended up being published in the division's catalogs. Mr. Potjewijd pointed out that the implementation of Pro/INTRALINK quickly proved that Pro/INTRALINK's workgroup capabilities were not enough, but rather a product like PTC's Windchill was needed to support the product data management requirements beyond the workgroup to the enterprise. This realization led the Automotive Division to invest and purchase Windchill in the 2000 timeframe; thus making SKF one of PTC's early Windchill clients. The initial focus for the division was to build applications on top of Windchill Foundation in order to achieve a better integration between engineering and manufacturing, especially in the area of design release, and drawing management and distribution. While much of this focused on internal collaboration, at the same time the division also began considering the use of commercially-available technologies to support external collaboration.

In the 1999-2000 timeframe, according to Mr. Potjewijd, SKF recognized that it needed to implement a neutral collaborative workspace where it could share product-related information with its customers throughout the development cycle of a product. This realization occurred during a collaborative development project with Bertone-a prototype "Drive by Wire" car. In order to support this need, SKF initially implemented Projectplace, an internet-based collaborative workspace developed by a Swedish company. Since then, SKF continues to use various tools to support external collaboration, including Projectplace and many of their client's own installed collaboration-enabling solutions. While many of these tools have evolved, SKF has continued to expand its internally-focused Windchill environment to support the company's need to leverage its product definition information throughout the company.

Mr. Potjewijd reports that their current internally-focused collaborative environment is primarily comprised of 26 Pro/INTRALINK workgroup instances for Pro/ENGINEER data management, an enterprise Windchill Foundation instance supporting product data management, and a Windchill ProjectLink installation focused on project-level collaboration support. According to Mr. Potjewijd, six of the Pro/INTRALINK installations are currently connected to Windchill Foundation via PTC's gateway product. He also mentioned that the company is currently migrating many of its 800 Pro/ENIGNEER CAD users to PTC's Workgroup Managers for CAD data management. SKF's Windchill Foundation implementation is extensive, with approximately 1,600 users spread across 14 locations in Asia, Europe, and North and South America, and a number of integrations, including a Windchill Info Engine-based integration to their customer relationship management (CRM) system. Because of SKF's relatively early adoption of Windchill, they developed their own application for data management (Windchill PDMLink had yet to be released), and this has contributed to their continued use of release 6 of Windchill Foundation. With regard to their Windchill ProjectLink instance, SKF is currently on release 7. Here too, SKF was one of PTC's earliest customers.

According to Mr. Potjewijd, the Automotive Division currently has approximately 1,000 internal Windchill ProjectLink users. The Windchill ProjectLink solution is mainly used for document sharing, support of their internal product development process, and the management of their automotive customers' Advanced Product Quality Planning (APQP) process and associated deliverables. Mr. Potjewijd stresses that SKF's Windchill implementation was driven by the need to ensure that its employees have access to current and accurate product data no matter where they are located. Fundamentally, SKF's PLM-enabling collaborative solutions are seen as part of their quality management environment. For the most part, according to Mr. Potjewijd, SKF's management team has come to the realization that PLM is a business necessity. Without a solution like PLM, they would not be able to efficiently manage the distribution of, and changes to their product data in a manner that would ensure the level of quality that is required by their clients. Additionally, their PLM-enabled collaboration environment is viewed by many in the company as a critical system to support their customers' ever-increasing quality-related requirements, such as APQP. In fact, Mr. Potjewijd reported that many within the company have stated that they can't live without it.

Finally, SKF, like many manufacturing companies dealing with the current economy difficulties (especially those who support the automotive industry), is under a significant amount of pressure to reduce cost in any manner possible. When asked about how the current economic environment has impacted SKF's PLM initiative, Mr. Potjewijd stated that for the most part, the company continues to view PLM-enabled collaborative solutions as necessary and core facilitators for their business. As a result, there has been no reduction in effort related to these solutions, including their use or expansion of their use as the capabilities are expanded throughout the rest of the organization. Additionally, Mr. Potjewijd mentioned that they are currently considering expanding their Windchill implementation so that it supports supplier collaboration. From these comments, it is easy to understand that PLM-enabled collaboration is viewed to be extremely important by the company.

5. Why Invest

For veterans of the business world, economic cycles are known to be a fact of life. The key to success is the way individuals and organizations adapt to accommodate these cycles. Since they are a fact of life, we know that we can't just ignore downturns and hope for a better day. So instead, those that are successful learn how to become more efficient while still ensuring that they deliver the best value to the markets they serve (i.e., making available the right product, at the right price, to the right market, at the right time, at the right quality, etc.).

Over the years, industrial companies frequently ask CIMdata about the best time to invest in PLM-enabled collaborative solutions. They ask, "Should we invest when times are good and we are running too fast to have the time to dedicate to PLM?" or "Should we invest when times are tough and we don't have the resources because money is tight?" CIMdata's view is that there is never a bad time to invest in making an organization more efficient and better enabling its ability to innovate.

At all times, CIMdata stresses to companies of all industries and sizes that it is critical to not lose sight of those high-priority strategies and tactics that are required to position them for future success. As we have already mentioned, an economic downturn is no new phenomenon. Economic cycles have long been a fact of business life and have been successfully addressed by companies in many different industries. A downturn in the economic climate doesn't change the fact that companies need to be more efficient and innovative. In fact, effective PLM strategies are even more critical during uncertain economic times, such as the one we are facing today. The key to survival is often based on what companies prioritize and establish during stressful times to both survive and effectively position themselves for the market growth periods that will follow. This is true for companies in all industry sectors.

Today's economic climate may be stressful, but it hasn't eliminated the need to implement PLM-enabled collaborative solutions, nor has it changed the fact that PLM-enabling solutions are critical to effectively address business needs no matter what industrial segment is considered. The bottom-line is that effective and efficient collaboration supports a company's need for both bottom as well as top-line benefits no matter what the current economic situation.

The benefits of PLM-enabled collaboration can be significant. Some of the primary benefits, as identified in published material and by companies with whom CIMdata has worked, include the following:

• Sharing data with suppliers and partners is much easier, especially when they are geographically dispersed. People don't have to travel to the supplier's site, saving on travel-related costs. In addition, reviews of critical product data can be more immediate and viewing information such as geometric models is less ambiguous than viewing drawings.
• Outside expertise can be brought into the product development process more easily. This helps companies develop more cost-effective and innovative products quicker.
• The time it takes to complete design team reviews is reduced and the reviews can occur whenever and wherever the team members want to do them.
• Design checking can be done more easily throughout the design cycle-allowing people to catch errors more quickly and allowing earlier resolution to critical questions and issues.
• More people are engaged in the early parts of the design process, taking better advantage of their collective wisdom and diverse knowledge. This can lead to better, more innovative products that, in turn, can lead to increased market share and happier customers.
• Fewer drawings and revisions need to be shipped to outlying sites to accommodate reviews; saving both time and money.

As illustrated above, a PLM-enabled collaborative environment can directly impact an organization's cost to define and deliver products to market, while at the same time enabling the process to be completed quicker and at a higher quality level. This type of bottom line savings can be and is often significant. As a result, companies in multiple industries, especially those with distributed supplier chains and complex products, view the implementation of PLM-enabled collaborative solutions as a necessity and not as an option. In other words, many companies view PLM as part of their business and technology infrastructure.

6. Conclusion

To make the most appropriate decisions for a business, it is important to understand if and how a PLM-enabled collaborative environment can best support the organization. Here are some key issues that are solved or improved by implementing and fully utilizing a PLM-enabled collaborative solution. These can be used as a checklist to determine if your company can benefit from such a solution.

• Distributed nature of your organization and your extended enterprise participants. Simply stated, the more sites that are responsible for product development, the more you can benefit from a PLM-enabled collaborative solution.
• Your level of reliance on extended enterprise participants. The higher the level of interaction required, the more you can benefit from a PLM-enabled collaborative solution.
• The speed at which you need to design, validate, and deliver new products to market. The faster you need to design, validate, and deliver, the more you can benefit from a PLM-enabled collaborative solution.

These are but a few of the main issues; there are many others that an organization should consider when understanding the importance of a PLM-enabled collaborative environment. If you have answered yes to more than half of the questions, CIMdata's experience indicates that some type of collaborative solution is required and should prove to be very beneficial to your organization if utilized appropriately.

Finally, it should be noted that CIMdata consistently emphasizes to companies of all industries and sizes that it is critical to never lose sight of PLM and other high-priority strategies and tactics that are required to position the company for future success. In many circumstances, effective PLM strategies are even more critical during uncertain economic times. Ultimately, the key to long-term business survival is often based on what companies prioritize and establish during stressful times to both survive and effectively position themselves for the market growth periods that will follow.

About CIMdata

CIMdata, a leading independent worldwide firm, provides strategic consulting to maximize an enterprise's ability to design and deliver innovative products and services through the application of Product Lifecycle Management (PLM) solutions. Since its founding more than 25 years ago, CIMdata has delivered world-class knowledge, expertise, and best-practice methods on PLM solutions. These solutions incorporate both business processes and a wide-ranging set of PLM enabling technologies.

CIMdata works with both industrial organizations and suppliers of technologies and services seeking competitive advantage in the global economy. CIMdata helps industrial organizations establish effective PLM strategies, assists in the identification of requirements and selection of PLM technologies, helps organizations optimize their operational structure and processes to implement solutions, and assists in the deployment of these solutions. For PLM solution suppliers, CIMdata helps define business and market strategies, delivers worldwide market information and analyses, provides education and support for internal sales and marketing teams, as well as overall support at all stages of business and product programs to make them optimally effective in their markets.

In addition to consulting, CIMdata conducts research, provides PLM-focused subscription services, and produces several commercial publications. The company also provides industry education through PLM certificate programs, seminars, and conferences worldwide. CIMdata serves clients around the world from offices in North America, Europe, and Asia Pacific.

To learn more about CIMdata's services, visit our website at www.CIMdata.com or contact CIMdata at: 3909 Research Park Drive, Ann Arbor, MI 48108, USA. Tel: +1 (734) 668-9922. Fax: +1 (734) 668-1957; or at Siriusdreef 17-27, 2132 WT Hoofddorp, The Netherlands. Tel: +31 (0)23 568-9385. Fax: +31 (0)23 568-9111.