1. Copyright © 2012 by CIMdata, Inc. 1 www.CIMdata.com Copyright © 2012 by CIMdata, Inc. Global Leaders in PLM Consulting What does a successful PLM Implementation look like? PLM Innovation 2012 22 February 2012—Munich, Germany Peter A. Bilello, President Tel: +1.734.668.9922 Email: p.bilello@cimdata.com

2. Copyright © 2012 by CIMdata, Inc. 2 Our Mission... Strategic consulting for competitive advantage in global markets CIMdata is the leading independent global strategic management consulting and research authority focused exclusively on the PLM market. We are dedicated to maximizing our clients’ ability to design and deliver innovative products and services through the application of PLM.

3. Copyright © 2012 by CIMdata, Inc. 3 Our Clients… A sampling of CIMdata’s international industrial clients

4. Copyright © 2012 by CIMdata, Inc. 4 Strategic business approach  NOT just technologies  Consistent set of business solutions Collaborative creation, use, management & dissemination of product related intellectual assets  All product/plant definition information – the virtual product MDA, AEC, EDA, CASE, analysis, documentation, …  All product/plant process definitions – the virtual processes Processes that plan, design, produce, operate, support, decommission, recycle … Supports the extended enterprise Spans full product/plant lifecycle, from concept to end of life Our Definition of PLM... PLM – integrating people, processes, information, and business systems Full Lifecycle

5. Copyright © 2012 by CIMdata, Inc. 5 PLM spans the life of any “product”  Manufactured products—automobile, computer, pill, soda, hat  Projects—building, bridge, highway  Plants—oil refinery, offshore platform  Assets & Facilities—airport, railway system, utility distribution network (e.g., electricity, telecoms, water, gas)  Others… What Products Are We Talking About? Companies can’t afford to only think about traditional discrete products!

6. Copyright © 2012 by CIMdata, Inc. 6 The Reasons for Investing in PLM Typical Cost Baselines Quantitative and Qualitative Measurements Topics to be Discussed

7. Copyright © 2012 by CIMdata, Inc. 7 For Business Performance and Opportunities For the Organization For the Users For the Product or Service For Process Performance Why Companies Invest in PLM… Main PLM benefit categories

8. Copyright © 2012 by CIMdata, Inc. 8 PLM lowers costs PLM provides more business opportunities Enables innovation, predictability, company flexibility, and better management PLM enables Quality Assurance PLM speeds business PLM supports industry regulations and requirements Provides access any time, anywhere to valid information and proves the capability to satisfy regulators PLM maintains a traceable system of record Benefits for Business Performance Product lifecycle cost and opportunities

9. Copyright © 2012 by CIMdata, Inc. 9 Improve corporate communications Support organizational change Allow product developers to easily re-use parts, designs, & processes Re-use proven designs with confidence Avoid prototyping and testing Avoid re-using failures and repeating the same old mistakes Benefits for the Organization Facilitate effectiveness of the organization “Up to 80% of the work done in an engineering department is identical or very similar to work done previously” From Research by Arthur D Little

10. Copyright © 2012 by CIMdata, Inc. 10 Retain configurations (too often dispersed) Manage engineering change processes Achieve faster response to customer queries Facilitate rapid product improvements early in product development cycle Reduce the severity of errors and product changes late in the product cycle Facilitate longer production runs Cut plant down-time with PLM and project management Facilitate hand-off of product data Benefits for the Product or Service Control product configurations

11. Copyright © 2012 by CIMdata, Inc. 11 PLM software & maintenance Hardware (additional needed for PLM) & maintenance  What gets charged to PLM? PLM appraisal, selection, and implementation planning Solution implementation  Including data migration Training Business and system administration Cost Model for PLM Solutions Typical cost elements

12. Copyright © 2012 by CIMdata, Inc. 12 Internal costs for:  System selection  Appraisal & justification  Implementation planning Internal cost of subject matter experts  E.g., development of requirements Cost of lost user productivity  E.g., time away from job External consultancy Training (internal and external) Data and process modeling Selection & Implementation Costs These costs are usually much more than the software itself (1 of 2)

13. Copyright © 2012 by CIMdata, Inc. 13 Testing Integration with applications Tailoring and/or customization  Including system configuration Data capture, cleaning & migration Business and system administration Cultural/organizational change management Selection & Implementation Costs These costs are usually much more than the software itself (2 of 2)

14. Copyright © 2012 by CIMdata, Inc. 14 People improve in areas that are measured—the reverse is also true  To realize full benefits of PLM you may have to change how you measure & reward personal & organizational success Measuring performance helps to:  Pinpoint problems and to find solutions  Communicate progress and benefits to the entire organization  Prevent or diminish “negative talk” that may undercut the success of a PLM implementation If it is important to your organization, then measure it! Metrics—Why Measure? They often play a critical part in PLM program success

15. Copyright © 2012 by CIMdata, Inc. 15 Business MetricsPLM Project Metrics Time to access data Plant down-time for maintenance Cost of changes No. of standard parts/no. of special parts No. of successful bids/month Tooling costs or assembly costs Scrap, inventory rates, or re-work rates Warranty costs, returns, or MTBF Software delivered against plan Tasks completed on time Cost of IT resources Number of processes (workflows) implemented Quantity of legacy data migrated Number of licenses delivered Number of users implemented Number of users trained Number of PLM solution errors reported Examples of Metrics Applicability & importance vary by company & PLM project

16. Copyright © 2012 by CIMdata, Inc. 16 When, where, and how people are using solutions The effect of technologies on the business & its processes How well the business objectives for a project have been satisfied If sponsors are receiving a return on investments Areas that need improvement Requirements for future implementations of technologies & processes The ongoing success of your business solutions They should measure costs & savings Metrics Help You Understand… Some of the reasons why metrics are important

17. Copyright © 2012 by CIMdata, Inc. 17 “The mistake people make is over-analysis of ROI. You need only a few key measurements that reflect the business and that you can leverage consistently over time.” David Linthicum, “Does ROI Matter,” Infoworld.com, 20 Feb 2006 Use a few metrics that are meaningful to users & management Measure what is important to your customers Measure what is important to your business Select a variety of metrics—for delivery, cycle times, quality, and waste Where possible, relate metrics directly to Key Process Indicators (KPIs) Choose Metrics Carefully Poorly conceived metrics may create wrong behavior!

18. Copyright © 2012 by CIMdata, Inc. 18 Metrics Must be Used with Caution You may achieve unexpected or undesirable results “The problem with any metric is that you maximize what you ask for at the expense of everything else. Be careful what you ask for; you just might get it. Generally, optimizing any single metric or small cluster of metrics results in a sub-optimal solution overall.” “The problem with any metric is that you maximize what you ask for at the expense of everything else. Be careful what you ask for; you just might get it. Generally, optimizing any single metric or small cluster of metrics results in a sub-optimal solution overall.” Gene Rogers, Boeing, “Does ROI Matter,” Infoworld.com, 20 Feb 2006

19. Copyright © 2012 by CIMdata, Inc. 19 Don’t Misuse Your Benefits Data How true it is! “ If you torture data sufficiently, it will confess to almost anything.” Fred Menger, chemistry professor (1937- )

20. Copyright © 2012 by CIMdata, Inc. 20 Strategic benefits may be the largest of all, e.g.:  PLM may be a catalyst for cultural changes  PLM enables management initiatives such as BPR, CE, TQM, CALS/CITIS Use group judgment to get a rough estimate If it can’t be estimated reasonably, it can’t form part of the cost/benefit analysis, NPV, or ROI Try to understand it better, & communicate this to the decision-makers and users Enhanced understanding will reduce risk & improve the future operation of PLM and the company Some Benefits are Difficult to Estimate Qualitative issues that PLM may support

21. Copyright © 2012 by CIMdata, Inc. 21 Product  Oil well equipment Business Problem  Modular design-build process  Diverse technologies and systems  Design assembly at multiple sites Benefits associated to PDM implementation  Searching for valid/current designs 5 days to minutes  Executing design reviews 5 days to 1 day FMC Technologies, USA PLM benefits example

22. Copyright © 2012 by CIMdata, Inc. 22 Product  Elevators Business Problem  Unable to manage complex product configurations while at the same time meeting customer requirements Benefits associated to PDM implementation  Reduced the time required to configure and design a custom elevator From 75 days to 15 days (80% reduction) Thyssen Ascenseurs, France PLM benefits example

23. Copyright © 2012 by CIMdata, Inc. 23 Product  Leading provider of “Low Floor” transit buses Benefits  Enabled Engineering to triple production With NO increase to Engineering staff!  CAD data vaulting eliminated: “Lost” data Copies of data becoming incorrect  CAD data vaulting enabled: Assembly based concurrent engineering  Solid Modeling/Assemblies resulted in: Faster design process Better quality through “design-in-context” of the assembly—fewer mistakes in mfg. New Flyer, Canada PLM benefits example

24. Copyright © 2012 by CIMdata, Inc. 24 Products  Large assortment of food products Benefits  Time to develop labels reduced from 45 to 7 days due to earlier visibility of recipe information  Increased productivity while decreasing product cost  Can now track supplier certification, corrective action reports, plant locations, and products and specifications instantly Heinz, USA PLM benefits example

25. Copyright © 2012 by CIMdata, Inc. 25 You cannot maximize benefits by improving one of these 3 in isolation Applying new technologies in out-of-date ways just allows you to create errors & take bad decisions more quickly People are adept at using tools incorrectly—they have to be trained in the tools & the processes 3 Key Factors People, technologies, and processes interrelate People ProcessesTechnologies

26. Copyright © 2012 by CIMdata, Inc. 26 Success = vision + organization + process + vendor(s) + approach + environment Use a broad vision and approach  People want a business solution, not another system Educate senior management & initial team Support and do not undermine company culture Select a partner; someone who understands your business needs and has a proven solution and track record Scope should be well defined and understood  Required functionality at each stage precisely specified Use pilot projects; the key to success  Pilots per discipline, or department are often possible Keys to Successful Implementations Important aspects and issues

27. Copyright © 2012 by CIMdata, Inc. 27 CIMdata Strategic consulting for competitive advantage in global markets World Headquarters 3909 Research Park Drive Ann Arbor, MI 48108 USA Tel:+1.734.668.9922 Fax:+1.734.668.1957 www.CIMdata.com Serving clients from offices in North America, Europe, and Asia-Pacific Main Office - Asia-Pacific Takegahana-Nishimachi 310-31 Matsudo, Chiba 271-0071 JAPAN Tel: +81.47.361.5850 Fax: +81.47.362.0472 Main Office - Europe Oogststraat 20 6004 CV Weert, NL Tel:+31 (0)495.533.666