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This article was originally written for and published by Fast Company.
Over the past three decades, the product lifecycle management (PLM) market has traditionally been served by on-premise solutions. Driven by changing business models and distributed work, cloud-based solutions are projected to dominate the market share and see the highest growth rates. According to Technavio, the global cloud PLM market size is estimated to grow by $1.38 billion from 2024 to 2028.
So, as legacy vendors re-platform or move to the Cloud and SaaS, many manufacturing companies that implemented those earlier solutions find themselves at an important juncture to support evolving business models.
Let’s look at some crucial issues to consider if you are one of the many who are in need of a new, modern PLM solution to help foster product and company innovation.
THE DIGITAL DILEMMA AND RISK OF INERTIA
‘Why do anything?’ is typically the first question most companies ask themselves after making those heavy investments to customize the solution and integrate it into other systems. But the real question to ask is, ‘Does the solution fit my needs today?’
The needs of product companies have evolved greatly in the last decade. Customer centricity, go-to-market agility, supply chain adaptability, and system interoperability underscore the demands of modern product development and lifecycle management.
Once deployed, legacy solutions have seen stagnation in innovation. Long and complex upgrades of customized solutions have led to the slow adoption of many vendor innovations. This contrasts with rapid technological advancements currently characterizing the cloud-based PLM space, where new capabilities, open architectures, and AI-driven insights are setting new benchmarks for efficiency, speeding product innovation, and driving customer satisfaction.
As companies evaluate their options, it’s imperative to widen the aperture and really understand how pervasive the need for product data is across the enterprise—beyond engineering and manufacturing, extending to marketing, sales, support, and service. Can the current solution evolve with the company’s growth and business model, or does it need a different enabling technology?
EMBRACING CLOUD INNOVATION IN PLM TRANSITION
Companies looking to invest in cloud-based SaaS solutions should prioritize adaptability, scalability, and ease of integration. Modern PLM platforms offer a way to de-risk business operations by providing a secure, flexible, and innovation-driven environment supporting today’s dynamic product development needs.
For businesses that don’t migrate to the cloud, the next option is to find another on-premise solution. The situations where this might make sense tend to center on (unfounded) concerns about control and security. Companies may opt for an on-premise system because they believe it yields complete control over data and infrastructure. This view might persist in industries that handle sensitive information, such as defense or pharmaceuticals, where data security and compliance with regulations are paramount.
There’s certainly a cautionary tale to be told when it comes to selecting your next PLM solution. These aren’t add-ons, quick fixes, or modules slapped onto existing cloud software. These are sophisticated, mission-critical applications that control core intellectual property.
If you’re beginning the process of moving to an alternative, step one is to identify your business needs. Step two is to research and shortlist your options. Step three is to be honest and open with yourself—and your vendors—about what you need. Establishing an open relationship about your company’s needs will help you learn more and have a better partnership.
UNLOCKING EFFICIENCY AND INNOVATION WITH THE CLOUD NEXT-GEN SaaS PLM
While cloud PLM may have been late to the game, it’s certainly demonstrating its value now, convincing naysayers to take the leap. Research from Tech-Clarity reveals the cloud PLM transition is well underway, with 97% of companies surveyed either currently, planning to, or open to using the cloud for PLM.
What held them back previously? While some cite security as the primary reason holding them back from the cloud, Tech-Clarity reports it was more a lack of available solutions—which has changed significantly—creating an entirely new opportunity for innovative product companies.
The good news is that if you decide to transition to a cloud-based solution, it doesn’t have to be an all-or-nothing approach. You can adopt a phased migration strategy, maintaining an on-premise solution for historical data while deploying new projects on the cloud-based system. This method minimizes disruption and allows you to gradually acclimate to the new system.
Next-gen cloud-based PLM solutions are inherently intuitive, reducing the learning curve and enabling faster adoption across teams and even supply chain partners. The burdens of maintaining hardware, performing updates, and ensuring system security are shifted from day-to-day tasks, allowing companies to focus more on product innovation and less on operational overhead.
Cloud-based PLM is often composable, so it can be tailored to fit various aspects of business without requiring additional systems or custom coding. This enables a cohesive and integrated approach to managing product lifecycles across different departments, democratizing access to product data across the enterprise. Composable solutions help companies embrace AI for PLM in areas such as criteria-based approval workflows, bill of materials (BOM) management, compliance, and authoring of promotional product content.
The ability of PLM systems to integrate with enterprise resource planning (ERP) systems represents another benefit. This integration bridges the gap between product development and broader operational aspects managed by ERP systems, such as procurement, inventory management, and financial accounting. By facilitating a smooth, automated flow of product data across these platforms, users benefit from a unified view of their operations, enabling more informed decision making. These are all positive steps companies need to take to be more strategic, effective, and profitable.
A STEP TOWARDS TRANSFORMATION: THE FUTURE OF PLM
For organizations reassessing their PLM strategies—driven either by evolving business models, vendor re-platforming, or end-of-life solutions—the transition may seem daunting. But the journey toward a modern, cloud-based PLM solution offers a promising path to overcoming current limitations, while unlocking new opportunities like AI, distributed workers, extended product data to the entire enterprise, and improved alignment with customers.
