Manufacturing Decision Makers Have Shifted Software Investment Priorities to Include PLM with the Rollout of SaaS-Based Solutions

By James Iversen | 3Q 2024 | IN-7521

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The overall sentiment from manufacturing decision makers in the United States, Germany, and Malaysia is that on-premises and cloud-based Product Lifecycle Management (PLM) software is as critical an investment priority as other commonplace manufacturing software. When given a sliding scale of 1 to 10 (1 being not likely to be used in the next 5 years, 10 being definitely likely to be used in the next 5 years), PLM software ranked 7/10. This puts PLM software at the same level of importance for manufacturers as traditional, well-established software such as Enterprise Resource Planning (ERP), Quality Management System (QMS), and Supply Chain Management (SCM) solutions. Furthermore, there is an underlying desire by manufacturing decision makers to deploy PLM solutions in the cloud through cloud-native or cloud-enabled Software-as-a-Service (SaaS), as this ranked 8/10 on the 5-year technology deployment scale. Cloud-based deployment of PLM was only outranked by industrial Wi-Fi as the most pressing technology to deploy in the near future, likely due to the significant uptick in robots and autonomous vehicles in factories that warrant enhanced connectivity.

Garnering notoriety and adoption levels to the same degree as ERP, QMS, and SCM has been a top priority for PLM providers over the last few years. This has been a difficult task, as manufacturers en masse do not view on-premises PLM solutions as essential to running daily operations, but rather as an additional tool to improve product quality, team collaboration, and visibility throughout the manufacturing process. While the benefits of PLM solutions are critical to all growing manufacturers looking to optimize production, on-premises PLM solutions are not essential for small-scale production lines and teams. The consensus from Small and Medium Enterprise (SME) manufacturers is that on-premises PLM software is "nice to have," but not a necessity that warrants spending additional dollars, as on-premises PLM is, on average, 31% more expensive than its SaaS-based counterpart.

Large manufacturers, especially in discrete industries such as automotive and aerospace, have been longstanding users of on-premises PLM software, but penetrating the SME market has been a recent development with the introduction of SaaS-based PLM. SaaS-based PLM is a cheaper, more agile deployment method that is within the means of SME manufacturers. The development of SaaS-based PLM (often transitioned from on-premises solutions), along with an increase in adoption from SME manufacturers has led to PLM rivaling that of its software peers in notoriety.

Top-end PLM providers have been making the push to transition toward cloud and SaaS products over recent years with the release of Teamcenter X from Siemens, 3DEXPERIENCE ENOVIA from Dassault Systèmes, and Windchill+ from PTC. PLM providers are evidently trying to capitalize on this new desire by manufacturers for SaaS-based solutions and have witnessed significant growth (a 10% to 15% revenue Compound Annual Growth Rate (CAGR)) Year-over-Year (YoY) for these new offerings. As the majority of PLM providers are addressing the manufacturing market gap of cloud and SaaS, the addition of new technologies is now the distinguishing factor that can elevate or depress PLM solutions.

Examining the data collected from the survey regarding technologies to be adopted in the next 5 years, the most pressing additions PLM providers should look to include and expand upon are Generative Artificial Intelligence (Gen AI) copilots, and Augmented Reality (AR)/Virtual Reality (VR), which placed at 6/10 in importance. With the ongoing wave of Gen AI, adding copilots to aid in analyzing data, producing actionable insights, and assisting in new hire proficiency within PLM solutions is a defining feature that many manufacturers are looking to deploy. The push for Gen AI-infused products is coming from the top down, with C-suite level decision makers in manufacturing organizations seeing the value of Gen AI copilots in demonstrations from companies such as Microsoft and Amazon Web Services (AWS) and desiring those capabilities within PLM solutions.

AR in PLM has seen an uptick in demand as the predominant use case of quality inspection, and product integrity is now top of mind for manufacturers. AR through the use of tablets can quickly examine product defects with the data automatically uploaded through the PLM solution for notetaking purposes, potential fixes, root cause analysis, and the future identification of similar defects. VR is also witnessing a push in adoption with PLM vendors starting to partner with headset providers such as Apple (PTC), Vrgineers (Dassault Systèmes) and Varjo (Siemens). While VR capabilities are not typically offered by mainstream PLM providers, there is a market niche in manufacturing for this solution. VR, in combination with a PLM solution, provides an interactive workspace for analyzing designs, seeing finished products in a real-world setting, and facilitating enhanced team collaboration past that of traditional email and web calls.