What’s the real ROI for PLM? Many experts will say it’s time to market, and it’s hard to disagree with the concept of getting products out to market as fast as possible. Of course, it’s important to have faster design reviews, shorter ECO cycle times and better communication with contract manufacturers. But those are just a small part of what makes products successful. After all, what good is a fast product launch if your product costs more than your rival’s? Or if it gets 2-star customer reviews? Or no one knows how to install it?
Check out the PLM ROI infographic on the left that summarizes what a number of analysts, experts and software companies say about the ROI of PLM. It illustrates how PLM impacts strategic, revenue, cost and risk drivers.
Figuring Out Your ROI
If you’re looking at PLM software options and trying to figure out your ROI, it’s helpful to compare features across different PLM vendors. Fortunately (or unfortunately) most enterprise solutions will be remarkably similar when it comes to core PLM features. Everyone does Bill of Materials (BOM) management, ECOs, workflows, etc. So when it comes to evaluating PLM, what do you do? First, think more than just streamlining engineering processes. That’s just part of the picture. PLM solution A isn’t necessarily better because it takes 5 clicks to route an ECO, and you shouldn’t rate solution B poorly because it takes 6 clicks. The real question you should ask is whether the PLM software you’re considering will drive real product success and real ROI.
Here’s a brief framework for evaluating PLM ROI in your company:
- Direct revenue
- How will PLM help you identify new products and updates that customers will buy?
- What new service revenue streams (e.g., maintenance revenue, “product as a service,” etc.) can you grow with PLM?
- How does PLM help you identify add-on sales for current customers?
- How does PLM help enable better or easier purchasing with direct sales, distributors or eCommerce?
- How does PLM help enable a better pricing strategy for your products?
- Indirect revenue
- How would PLM improve products, customer usage and loyalty?
- How would PLM help you improve or resolve product quality issues during and after product launch?
- How does a reduction in time to launch improve your product margins?
- Product costs:
- How can PLM help you drive down product costs?
- How does product quality drive down overall product costs?
- Does better communication with partners and suppliers reduce supply chain costs?
- Operating costs
- Beyond the license costs of your PLM software, how much are support costs?
- What are the costs of updating the software?
- How much will it cost for training?
- Does PLM software you’re considering require hiring programmers or consultants?
There are many ways of slicing and dicing ROI. But as the points above show, don’t just focus on time to market. PLM can have a much broader impact than just getting products out the door.
For more information on cloud PLM software, visit propelPLM.com.