Making the business case for PLM to SaaS deployment

It’s often surprisingly difficult to articulate a compelling business case for migrating from an on-premises product lifecycle management (PLM) system to a software-as-a-service (SaaS) deployment.

Most articles about the cloud include impressive testimonials of state-of-the-art technology, stronger security, and unlimited scalability that lowers costs. Yet, organizations have been reluctant to adopt the PLM SaaS proposition.

Organizations must first realize that migrating to a SaaS solution isn’t the same as simply moving to the cloud. When moving to the cloud as part of an Infrastructure-as-a-Service (IaaS) offering, companies outsource IT functions to a vendor by moving system infrastructure and daily administration from internal data centers and employees to a cloud provider.

IT departments have a firm grasp of how to gain financially from outsourcing labor, but what’s less understood is the added value and costs of the SaaS solution and how it gets justified in a business case.

What drives SaaS PLM value?

SaaS offerings include the benefits of migrating to the cloud but also provide application software licenses and services to manage the solution environment. While many SaaS offerings require customers to work with just the out-of-the-box (OOTB) capabilities of the solution, the ideal PLM SaaS offering should also be adaptable to changing business transformations.

This will allow a company to develop and maintain its long-term PLM goals, no matter how complex. To take advantage of the intricacy of digital threads, digital twins, product simulations, and other significant product development strategies, it’s beneficial to use a SaaS PLM that prioritizes functionality with flexibility.

However, the enterprise’s business transformation goals—not its cloud adoption plan—must be what drives most of the value for SaaS adoption. Tech-Clarity’s recent whitepaper, “Achieving the Business Value of Cloud PLM,” emphasizes IT needs to switch from a “cloud-first” mindset to a “solution-first” strategy.

A new perspective on SaaS PLM

Tech-Clarity’s research also recommends that enterprises “think business before software,” proposing that “the business case for SaaS PLM should focus on enabling broader strategies that drive innovation and profitable revenue growth. That's much more strategic than reducing software spend.”

This effectively conveys the strategic value of a PLM SaaS investment. Instead of just focusing on adopting a cloud management strategy, it’s key to concentrate on the benefits of a flexible, cloud-based PLM solution to build a strong business case. This strategy offers PLM capabilities that support the company's product innovation processes and enable digital transformations.

Since these factors determine a company’s profitability, the business case is found here, within the improved flexibility and security of the infrastructure. Furthermore, PLM SaaS often provides increased support and expertise to manage the PLM system, adding additional value to the solution.

Businesses must prioritize functionality with flexibility to preserve a PLM system’s value. SaaS solutions, with their frequent updates, are especially good at keeping applications current, addressing a common problem that occurs in many outdated PLM systems today. Flexibility is another aspect to consider.

Thanks to regularly scheduled upgrades, customers can access the vendor’s most recent capabilities. But what about their specific needs?

Some SaaS PLM solutions place restrictions on or outright prevent customers from customizing the solution and limit them to only the OOTB functionality, which isn’t practical. It also makes customers too reliant on their provider’s roadmap by not leaving room for businesses to operate in a manner that best suits their organization. Businesses must evaluate this when considering what PLM SaaS vendor to engage with.

Keeping up with shifting plans

As a project develops, business conditions typically change. The ability of the PLM system to quickly adapt to changing requirements is essential as these systems frequently play a crucial role in business transformation. PLM in the cloud offers special features to lessen the impact of change.

For example, let's imagine that an acquisition causes a company’s business transformation plan to shift, adding a sizable number of new users from various countries. Cloud deployments can increase capacity without the need for new hardware and, if necessary, relocate the system's main data center to one that’s physically closer to the users. The architectural impact of this approach is minor if the PLM deployment is in the cloud.

Getting more cloud value

IaaS enables businesses to benefit from the cloud, but companies may be losing out on a significant opportunity when compared to SaaS. While IaaS offers the tools and infrastructure needed to operate cloud architecture effectively, it’s left up to the customer to handle the complexity of enterprise software deployment.

Due to the high volume of data, highly secure IP, system integrations, and volume of users worldwide, PLM solutions can be quite difficult to implement. Most businesses often don’t have the knowledge and experience to configure the architecture efficiently for the nuances of every individual system.

System or performance problems that require time and consultants to fix can easily result from these knowledge gaps. SaaS PLM offers value in this regard, too. There are numerous providers with adaptable SaaS PLM solutions that employ the most experienced product specialists. These PLM product experts ensure the architecture leverages the most appropriate cloud capabilities of the solution.

Another advantage of SaaS PLM is more efficient support processes. If a SaaS deployment has a system outage, whether it's a cloud or software issue, the SaaS vendor is usually responsible for root cause analysis and correcting the problem.

Customization is essential to success

Several major PLM software suppliers today require their customers to remove or “de-customize” years of specialized functionality from their PLM solution to move to their SaaS offering. These cloud PLM solutions make it difficult or impossible for customers to alter their SaaS solution to fit unique, specialized requirements. This isn’t acceptable or sustainable, especially for larger enterprises.

To truly add value to business transformation, SaaS PLM must be customized to fit an organization’s unique needs. These customizations must also be upgradeable through future versions of the software.

Back to business value

While it’s taken longer than most analysts had anticipated for the PLM cloud migration to catch on, there are signs that interest in this sector is expanding significantly. Refer to the best practices above—including the need for customization—to plan or perfect a strategy for SaaS PLM that will convince decision-makers of its true business value.