Frank McMaster had a lot on his mind one day last fall as he looked around the table at Ashworth Inc.'s other top executives. The VP of IT for the $209-million golf apparel maker had a trio of technology initiatives actively in play: a new business intelligence system, an enterprise resource planning (ERP) rollout and a mobile sales force system.
He was sitting next to his boss, the new CEO who was brought in to rejuvenate the company's heritage business in selling high-end attire at golf courses and country club pro shops. The walls of the conference room were papered with charts, spreadsheets and presentations. The conversation eventually zeroed in on the inventory and production issues that had plagued the Carlsbad, Calif.-based retailer in recent years.
"The major business owners were telling us what's critical to them and where the gaps were," McMaster recalls. "We were talking about production and design and about nobody having the visibility they needed across the company."
Suddenly the IT chief knew exactly what they needed. "I leaned over to the CEO and said, 'I'm not going to develop this. It's a PLM system. We should just buy one.'"
Only a few years ago, the notion of installing product lifecycle management (PLM) software in a midsized company like Ashworth would have been a case of crazy overkill. "Just the term PLM used to scare midmarket companies away," says Michael Burkett, vice president of PLM research at AMR Research Inc. "They'd say, 'That's something Boeing puts in place.'"
But no one's saying that anymore. Today the midmarket accounts for at least $2.5 billion (or about 45%) of the PLM software sold annually, according to AMR. And these numbers don't even include the $5-billion computer-aided design (CAD) segment of the market, where many smaller enterprises often get their start on engineering and design workstations. Among midsized manufacturers, AMR expects 12% annual growth in PLM spending, versus 9% for the PLM market as a whole.
Product lifecycle management enables companies to manage and support all the information surrounding their various products and parts -- from initial design and engineering diagrams to bills of material, manufacturing documents, sourcing details and maintenance data. For midmarket and smaller enterprises, many vendors sell PLM as preconfigured software templates. These templates are geared to vertical industries in which CAD systems are integral to the manufacturing or design process.
Several macroeconomic trends are fueling the PLM market, including the offshoring of facilities and expansion of outsourcing and contract manufacturing overseas; escalating mergers and acquisitions within multiple business sectors; and the inexorable tide of regulatory and compliance laws. As if that weren't enough, toss in the relentless pressure to innovate with products that have shorter lifecycles than ever, especially in electronics and consumable goods, and the perfect manufacturing storm rolls onshore.
"The combination of those trends is what's new," says Roy Wildeman, a senior analyst at Forrester Research Inc. "Compliance combined with outsourcing -- and the challenges that creates -- or outsourcing and innovation pressures combined with shorter product lifecycles. We have a whole different combination of complexities going on today."
What PLM software brings to the storm center is the chance to enable company-wide collaboration to create whatever products are in play. "PLM is providing marketing, production, sales, services, even external suppliers, with increased visibility and engagement in the product development decision making," Wildeman explains.
Smaller companies often start with basic product data management to provide broader access and reliable documentation, Burkett notes. Once the data is under control, more sophisticated workflow, collaborative design and program management follow.
"There's a misconception that midmarket manufacturers are simpler operations," the analyst says. "Sometimes they're actually more complicated than much larger enterprises, because so much of the complex design stuff gets outsourced to them through the supply chain."
This was first published in May 2007