“PLM is the bloodstream of the business process,” declares Lyndon Smith. As director of quality for the Radial Shaft Seal Division of Tier One automotive supplier Freudenberg-NOK, based in Plymouth, Mich., Smith is responsible for quality management at six plants—four in the United States, one in Brazil and one in Mexico. “The fundamental profitability of any business is reliant on the profitability of its products. That’s why PLM is an integral part of the fundamental business of any company.”

Prior to deploying a Product Lifecyle Management, or PLM, solution from Lawrence, Mass.-based Aras Corp., the disparate engineering groups at Freudenberg-NOK were all doing something different. Standardizing design enabled a centralized view of all projects across the company, as well as standardized reporting. Since the PLM implementation, Freudenberg-NOK has experienced some significant benefits.

“First, with proper resources supporting design and development, you have a better design for both your product and your process,” says Smith. “Second, with a more consistent product long term, it creates a more robust end-product due to reduced variation. Finally, you get closer to your cost targets for profitability. You’re not wasting money on excess scrap or inefficiency.”

According to Jim Brown, an analyst with Boston-based AberdeenGroup Inc., PLM has finally arrived as an enterprise application. “The solution now enables the business and works across the enterprise,” he says. “It really is a supply chain application now, rather than just an engineering application. If you’re just improving the engineering, but you’re not addressing the relationships at the enterprise level and with partners, you are missing the opportunity of PLM.” That’s the core of PLM, says Brown. “It’s about managing all the relationships of a product.”

The kitchen sink?

One of the challenges PLM had to overcome was definition; amid claims that just about everything up to and including the kitchen sink was covered by the PLM umbrella, many vendors and analysts had trouble articulating a clear message of what PLM does. Is it a super computer-aided design solution? Is it product configuration? Is it supply chain engineering? Does it actually cover every aspect of a widget’s lifecycle, from conceptualization to product retirement?

Even today, if you ask five industry analysts to define PLM, you will probably get five slightly different responses. But at the core, the answers will all be the same, and that crystallization has helped PLM vendors rake in a lot of cash. According to Daratech Inc., a Cambridge, Mass.-based research firm that specializes in tracking PLM, worldwide PLM spending in 2005 topped $10.4 billion—up 13 percent from 2004. Overall, the past 10 years have seen a healthy PLM compound annual growth rate of 13.2 percent. What’s more, Daratech projects growth in the space to increase again this year to 14 percent over the 2005 numbers, carrying the space to $11.95 billion.

The factors driving this market growth are almost as varied as the things that an enterprise can do with a PLM solution. On the one hand, the numbers benefit from some artificial inflation, thanks to the growing strength of the Euro and Yen, which boosts market values reported in U.S. dollars. But the positive economy has also led to more implementations.

“PLM is gaining traction because it’s now integrating the engineering world and the business much closer together,” says Bill Carrelli, vice president of Strategic Marketing for Plano, Texas-based PLM vendor UGS Corp., who points out some fundamental business drivers that are powering the acceptance and adoption of PLM.

“Greater innovation is at the top of the list,” he says. “It’s incredible how important innovation has become. There has been a shift [of focus] from cost cutting to organic top-line growth. Also, globalization is in the middle of the agenda for companies today. Partners are playing a key role in innovation.”

AberdeenGroup’s Brown agrees. “Increasing efficiency is important, but it is more important to innovate than to have two fewer engineers on staff. Even three years ago, we were in a ‘how to squeeze another penny out of the cost’situation. Now we are in a more optimistic economy, a growth economy.”

Executive visibility

And this means the buy decision, which used to be the province of the engineering manager, is coming more and more from the executive level. Says Chris Farinacci, vice president of Global Marketing for San Jose, Calif.-based PLM vendor Agile Software Corp., “The focus is moving from engineering-centric data management to managing the actual business processes, and now on decision support and executive visibility, and that’s what’s taking PLM into ...