Why PLM is so costly? 4 tips to get full value out of your PLM spend

PLM cost

Businesses are hit hard and are struggling to survive. External contracts are terminated, and planned work is stopped or postponed. We need to find ways to save costs on all fronts and PLM is no exception.

You might have already implemented some of these measures but its worth checking. Here are my 4 tips to get most out of your PLM investment.

Tip 1: Pay per “work package” (fixed price model) instead of “pay per hour” (time and material or T&M model).

When you have more than a two week’s contract for support or development, the efficiency is very less if work package is not defined. It is difficult to engage supplier continuously over long time and get efficient outputs. There will be gaps and delays in giving inputs and checking outputs due to various reasons.

 A “break” between sprints or work package is also good so that deliveries are accepted and closed properly before moving to next. Benefits also must be realized. In T&M model customer ends up paying for delays, mistakes and gaps in deliveries.

The reasoning to pay per hour to retain talent in project is a “myth”. The supplier should hold resources if they are serious about customer and value engagement.

 For new concepts, uncertainties can be handled by planning sprints for POC, Adjustment, Design, Build, Test, Rework phases. Once setup, this Agile method works smoothly over time.

Tip 2: Programming, testing, documentation, support etc. should be done from low cost offsite locations

Better to save entire company than to save some jobs in a country. Globalization demands that your costs are globally competitive. We sell globally so should build globally.

If you have a solution architect, consultants, and project manager onsite then there is no need to have programmers, testers, and other resources onsite and pay 3-4 times than what it costs offsite.

Solution architect should gather requirements and convert to crystal clear work packages to be done from offsite. Same with testing, support and documentation.

On the other hand, having solution architect or project manager offsite does reverse effect. Requirements are not understood, and entire project effort is wasted.

Tip 3: Use small PLM vendors instead of big multinationals (Quantity vs quality)

Small companies tend to provide you with flexible, tailor made and affordable services. Multinationals have tremendous pressure to keep profit margins from shareholders and are inflexible to have such arrangements.

The big management is interested in big ticket projects typically more than 5 million USD deals. Small projects end up 9-10 levels below top management and never get attention. Escalations does not reach top. Whereas in small companies directly CEO or management is involved to deliver and adjust what you want and how you want.

Small companies tend to be specialized and they hand pick specific talented resources, whereas multinationals typically hire in 10,000-20,000 per year. Ensuring quality in such high number is not possible. Customer ends up paying training costs for freshers.

Tip 4: Use “Shared pool” or “pay per use” model

Typically, consultants will work remotely for 2-3 customers. Customer defines if they work 100% or 20% etc. continuously or for short periods. Good resources can be shared and less risk of losing them over long term. Knowledge & experience can be shared between participating companies on consent. Data Security can be ensured by various methods like NDA, workstation isolation etc.

Internal cost saving measures include Licence optimization, Staff efficiency, benefits realisation.



About PLM Nordic (http://norway.plmnordic.com/)

PLM and Digital Transformation require both business knowledge as well as technical competency.

Our goal is to provide more business-focused solutions using modern technologies.

We guarantee to increase sales and reduce costs using PLM and Digital Transformation technologies suitable for your business.

For achieving the same we have invested in our own digital labs where we are developing all-around competency that will guarantee success.

We are flexible and agile to customer requirements and offer innovative models.

We are a 3 P (Profit with a Purpose) company meaning we consider Profit, People, and the Planet equally while making business decisions.

Our KANO model ensures that we always deliver more than expected.

Our goal is customer success and not just customer service.

Book a meeting here to discuss further how you want your engagement to support your PLM.

Make an enquiry


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