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PLM is making its way into the cloud

By Bernd Pätzold

There is movement in the market for cloud PLM. If the relevant market surveys are to be believed, PLM in or from the cloud is also enjoying growing acceptance in Germany. All leading PLM vendors now have cloud offerings of some kind, which would indicate a growing demand. Even if only a small number of companies in Germany are making use of these offerings, everyone should be giving thought to this topic since cloud PLM is an important future trend.

The use of cloud-based applications promises numerous advantages not only for private individuals but also for companies. It facilitates IT administration, speeds up implementation by eliminating the need to install on-premises hardware and software, enables resources to be scaled according to need, reduces the capital expenditure required or at least makes it easier to calculate, and also simplifies the upgrade process. The specific potential benefits depend, of course, on the selected cloud or operator model. For example, it makes a big difference whether you use only the hardware infrastructure provided by a private cloud to host your existing PLM application (IaaS), or whether the PLM software is delivered from a public cloud in the form of software-as-a-service (SaaS).

According to studies carried out by IDC, the SaaS deployment of enterprise applications in new customer business is growing three times faster than the conventional software market and will reach a level of penetration of 25 percent by 2020 compared to conventional installations. According to forecasts from BetterCloud, 73 percent of companies will deploy almost all their applications from the cloud using the SaaS model. There is a lot of catching up to do, especially when it comes to product lifecycle management (PLM) applications, which are clearly lagging behind other areas of application such as ERP or CRM (customer relationship management).

The majority of market observers, however, assume that PLM will not be able to buck the trend towards cloud computing in the long run. We at PROSTEP also see it that way, even though the cloud certainly won’t solve all the problems in the PLM environment that companies are struggling with today. In many cases, these are organizational issues that have to be addressed even if the software is made available in the cloud. The advantage of using cloud-based applications, however, is that companies can concentrate on solving precisely these problems.

In the case of smaller companies that are not yet using PLM or perhaps only rudimentary product data management, the cloud undoubtedly offers the opportunity to introduce PLM technology quickly without incurring high startup costs. It's no coincidence that many PLM vendors are targeting small and medium-sized companies or small startups with their cloud offerings. This poses a challenge for their sales partners and system integrators, who need to rethink their business models, but it also offers them new opportunities. This is because the cloud makes PLM accessible to new customer groups.

Larger companies with well-functioning PLM installations will certainly not be moving towards the cloud overnight. They have to think carefully about the conditions under which it will be worthwhile for them to migrate to the cloud and how they can do so without risk. Basically, however, the timing is ideal because many are already thinking about converting their monolithic system landscapes in view of the current challenges posed by digitalization. The selective use of certain PLM functions from the cloud could make a significant contribution to making the modularization of existing PLM architectures more agile.

One of the biggest advantages of cloud-based PLM applications is that they greatly simplify and speed up the update process, which today is associated with an enormous investment in terms of time and money. Ideally, i.e. when using a multi-tenant solution in which several clients share a software instance in a virtualized infrastructure, the process could be automated to a large extent. The flip side of the coin, however, is that the SaaS models' update capability is usually at the expense of adaptability.

Since existing PLM applications are in most cases highly customized, their migration to the cloud poses a major challenge that requires special know-how. The first step that many companies take will probably be to move their own PLM instance to a private cloud and have it managed by the PLM vendor or one of its partners, which of course restricts the installation's ability to scale up and down dynamically. In the long term, however, we believe that multi-tenancy could also play an important role in the PLM environment, provided that PLM vendors offer native solutions and companies lay their existing security concerns to rest.

Admittedly, security concerns regarding the cloud are no longer as serious as they were at the height of the NSA scandal. This is because it is now characterized as a more secure solution. Many small and medium-sized companies with limited IT resources now realize their data is more likely to be at risk in their own data center than with a trusted cloud provider. But data security still plays an important role, as do closely related aspects such as what happens to the data if the provider stops offering its services or you yourself want to change provider?

At the top of the list of concerns is, however, the integration of cloud PLM with enterprise applications, as indicated by a report on the status of PLM in the cloud published at the beginning of the year by CIMdata. Unlike ERP or CRM systems, PLM applications are generally more likely to be interlinked with other IT systems. When PLM is migrated to the cloud, hybrid cloud-cloud or cloud-on-premise scenarios may therefore have to be created.

As a specialist for PLM integration and migration with its own cloud-capable applications, PROSTEP is ideally prepared to help customers on their way to the cloud. We believe that a sustainable cloud-PLM strategy must start with the analysis of the current PLM infrastructure and future PLM requirements. Consequently, it is part of a more comprehensive digitalization strategy. Advising and supporting customers when defining and implementing this strategy has always been one of our core tasks.