Recently several articles and discussions have taken place on the topic of the ROI of PLM and why it is so hard to sell PLM:
- 30 January 2020: PLM Myths and Business Reality by Oleg Shilovitsky
- 26 January 2020: The Myth-perception by Jos Voskuil
- 22 January 2020: PLM Circa 2020 – How To Stop Selling Myths? by Oleg Shilovitsky
- 19 January 2020: The PLM ROI Myth by Jos Voskuil
- 27 January 2015, but re-posted in January 2020: Defining the PLM Business Case by Lionel Grealou
A lot of initiatives have a hard time to sell themselves, but to me the question is not what is the ROI of PLM, or how we can sell PLM, it is about what is the ROI of doing the right thing. And if a PLM tool is part of the solution for doing the right thing, you will have a good business case to make. However this requires that your company must have a just cause. If your company pretends to have a just cause, e.g. To contribute to saving and sustaining lives, but the focus of leadership is in selling more products or growing market share over the needs of the customers, employees and its communities, it will be difficult to make your case. Leaders of companies with fake just causes only see cost and you will have a hard time linking your initiative to the just cause. The ROI of PLM or related initiatives is often times difficult to calculate upfront and difficult to communicate if people only think in terms of money.
Finite vs Infinite mindsets
I recently read The Infinite Game by Simon Sinek (I encourage everyone to read it). Which explains the difference between finite and infinite mindsets. Sinek explains the difference by using the following examples:
A football match is finite where all players are known, it has a start, middle and an end. You are in it to win it.
The world of business is infinite, some players are known, some are not, companies may come and go, but business will go on. You cannot win in the game of business, the goal is to keep going.
A human life is finite, but life is infinite. The purpose of life is to perpetuate.
Companies that are led by a finite mindset, will drive their decision based on shareholder value.
Companies that are led by an infinite mindset believe in a cause that is bigger than themselves, a vision that rallies others to commit and contribute to that cause and in the process make a profit.
Sinek also states that history has shown us that companies with an infinite mindset are more successful in business. There are also examples like Kodak, that flourished under leaders with an infinite mindset, but did not so well when these leaders were replaced with finite minded leaders. Or Ford Motor Company, that as only US car manufacturer was able to weather the 2008 downturn, thanks to infinite mindset of the then CEO, Alan Mullaly.
For a better insight check out the following video from Simon Sinek about The Infinite Game on Youtube:
Applying the infinite mindset
If you apply this mindset to the ROI of PLM. I have to agree with Jos Voskuil that you need a Myth. Well… maybe not a Myth but a cause, a long term vision that is linked to the purpose of the company and to the business strategy.
“Create a Myth. Perhaps the word Myth is exaggerated – it is about an understandable vision. Myth connects nicely to the observations from behavioral experts that our brain does not decide on numbers but by emotion. Big decisions and big themes in the world or in a company need a myth: “Make our company great again” could be the tagline. In such a case people get aligned without a deep understanding of what is the impact or business case; the myth will do the work – no need for a detailed business case.” Jos Voskuil– The PLM ROI Myth
As Jos states, humans decide by emotion not numbers. Therefore they need a cause to which they can align their initiatives. However in companies with a finite mindset focused on finite goals like shareholder value and market share, this will not fly and most PLM endeavours end in failure.
Secondly it should never be a PLM initiative on its own, it must be a business initiative to make a step towards the purpose of the company, where PLM can be one of the solution components. You should not try to convince management to buy a PLM system, instead you should listen to their needs and translate that in the business capabilities you need to put in place, possibly supported with a PLM system or maybe something else, whatever matches with your requirements.
So if your purpose as a business is ‘To contribute to saving and sustaining lives’, and you currently face issues because to keep adult and child intubation tubes apart you use a revision, which causes injuries to children being intubated with adult tubes. When this happens, as a company, you need to address the issue to find a structural solution that solves the problem and prevents any kind of mix up of parts in the future. Note this actually happens, see Joseph Anderson from IpX in this video that was recorded during the ConX19 event in San Diego: What is the ROI?:
If you sell a medical device to hospitals, one way of living up to the purpose, is to be able to upgrade the medical device when new capabilities are available that can save or sustain live or be able to predict when these devices will malfunction or need maintenance. To enable these things, not only you need your enterprise configuration management processes and roles in place, but you also need to have tools that can support a digital thread/digital twin. You need to connect your product data from design all the way to the field and back. This people can understand and relate to a cause, the purpose of a company. If the purpose of the company is to grow market share or something along those lines, while telling that a PLM system can help achieve these things, it is difficult for people to relate to and believe.
I’m not saying that you cannot be successful in selling PLM or any other initiative without a cause. I’m saying it will be a whole lot easier if there is a just cause to link your initiative to. Does this mean you do not need to identify the ROI? Sure you still need to do this, but there is a way to do this using a structural approach.
Identifying and quantifying benefits
Based on requirements and the link to the just cause define your list of required capabilities in terms of People, Process, Data and Tools. Not just one big capability, but small incremental achievable steps towards a vision that is linked to the purpose of the company.
Then identify the potential benefits using a value driver tree. A value driver tree is unique to a company as it starts with the just cause and values of a company as the value drivers and branches via opportunities and strategies to business initiatives that can be measured e.g. ‘Increase product modularity’ or ‘Improve Early Discovery of Design Conflicts’.
Each capability is assessed against the value driver tree to identify the business initiatives/improvements it can be linked to. When these potential benefits are identified you organise interview sessions with relevant stakeholders to verify if the potential benefits are recognised and if you can translate it into value. This value needs to be described not only in money but also in qualitative benefits like employee satisfaction.
With this information you can define a roadmap of capabilities based on functional/technical dependencies and on business priorities and value the capability will provide.
Now you have input that can help sell any capability or have insight to discard it when there is no business case to make. Which allows you to focus on the things that help to move towards the cause of the company.
Showing proof of value
I do agree with Oleg Shilovitsky that you need to show the value as soon as you can, nowadays with cloud solutions this can be easily achieved as some vendors offer this. When this is not possible you could opt for a proof of concept type approach to validate the chosen solution or compare multiple solutions.
Oleg also compares the PLM Myth to communism in PLM Myths and Business Reality:
“PLM Myths packaging reminded me of communism – a theory that packaged a very inefficient economic organization as a bright future for all people. The Soviet Union is the best example – the country that supposed to demonstrate the business case or centralized planning but failed miserably. PLM sold as a myth will fast become PLM communism.”
This comparison is one I can’t make, as communism is not a just cause hence does not qualify in this context. Though I do agree that the vision for the initiative should not be based on a fake or finite cause or be based on selling PLM, but on selling a business initiative that contributes towards the just cause of the company.
It is not just about the ROI or the business case in terms of money, it is not only about a vision, a story to sell the initiative and it is not only about showing the value. The ROI of doing the right thing is a combination of the vision and story linked to a just cause, the business case in both qualitative and quantitative cost and benefits for each capability and about showing proof of the value.
Header picture based on Photo by Yoav Hornung on Unsplash