With manufacturers having whittled their costs of doing business to the marrow, more are likely to turn to software for product-life-cycle management to help them more quickly develop new products. "They already went through large rounds of cost cutting, and more cost cutting isn't going to get them anywhere," says Kevin O'Marah, VP of research at AMR Research. "They're now looking for innovative new products."
AMR recently surveyed business-technology executives at 100 U.S. manufacturers within the automotive, aerospace, high-tech, and other industries about their current and planned PLM software initiatives. While 93% of manufacturers surveyed currently use CAD software and 84% rely on enterprise resource planning, only 30% currently have a PLM application in their toolkit. Around 25% of those surveyed report they're either implementing or evaluating software for product-life-cycle management this year. Some 45% say they currently don't have any plans to deploy or even evaluate PLM software.
But some of those 45% may be persuaded to change their minds soon, O'Marah says. There will be a lot more attention paid to the market as PLM software maker UGS Corp. readies an initial public offering later this year. UGS, which just broke the $1 billion mark in annual sales last year, has the financial resources to market the potential benefits of PLM to manufacturers to help them create, manage, and share information in the design and manufacturing process. Other major software makers, such as Adobe, Microsoft, and SAP, are aiming for a piece of the growing PLM budget, O'Marah says. AMR estimates the total PLM market to be about $10 billion a year.
Even so, a bright outlook for the PLM market isn't a certainty, says O'Marah. "If vendors overpromise what PLM can accomplish for their customers," there will be a backlash and demand for PLM software could dwindle.