Product Life-Cycle Management Market in a Period of 'Digestion'
IMT Staff posted on September 26, 2014 | 7089 views

product, lifecycle, management, marketThe product life-cycle management (PLM) market is growing. After the 2009 recession, PLM investment from 2010 onwards showed a higher growth rate than most general IT spending. But there is a dark cloud: The growth rate fell by more than half in 2013.

Here are some numbers from analyst CIMdata:

2011: Overall investment in PLM was up 15.2 percent to $29.98 billion compared to 2010.

2012: The PLM market grew 11.6 percent to $33.4 billion.

2013: The growth rate fell by more than half to 4.8 percent for a total market size of just under $35 billion.

Clearly, the growth curve is flattening out. But why? Is it a result of gloomy economics, or are there industry-specific explanations arising from new technologies, business, and license models? The short answer is it's a little bit of everything.

The PLM market is not immune to fluctuations in the global economy. When industrial activity in the United States, China, or Germany slows down, it affects IT and PLM investment. Generally speaking, many of the world's regions are still in recovery mode, including, "locomotive zones" like North America and Western Europe. This leads to economic caution and fragile spending, which won't change until the economic recovery is well entrenched. To make matters worse, IT investments generally are made late in the business cycle.

Of the three major global economic regions, the Americas, EMEA (Europe, Middle East, Africa), and Asia-Pacific, the first two showed growth in PLM investment last year, while the latter was slightly down. For 2013, the Americas and EMEA each had around 35 percent of global PLM market investment, while Asia-Pacific had 30 percent.

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Time to Digest and Develop PLM 
Despite the weak economic conditions, PLM spending is still growing, and this trend will continue, according to CIMdata. For 2014 the analyst forecasts 5.5 percent growth, and looking toward 2018, it sees an annual growth rate of 5.8 percent to a $46.3 billion market.

The growth figures are much lower than the "extreme" growth levels of 15.2 and 11.6 percent in 2011 and 2012.

Marc Halpern, Gartner’s vice president of research, pointed out, "The large companies have already made significant investments in PLM, and they have less incentive to spend at the same levels as the past until they get the business value they expected from the investments they already made." 

Halpern’s message is essentially that companies have bought what they basically need, at least in terms of software, and it's now time to "digest" and develop effective use of those purchases. Normally, a "digestive period" like this should have brought new opportunities to service providers, particularly in the cPDM (collaborative product data management) field. This time, it didn't.

"That cycle seems to be broken or to have less impact," CIMdata concluded in its August report.

There may be different spending patterns arising from different segments of the PLM market. Halpern asserts that there has been a higher level of inquiries from clients about PLM vendor selection and implementation practices. "PLM software still needs improvements in usability to further advance its use outside of traditional technical user communities into areas such as sourcing, manufacturing, marketing, etc,” he explained.

This statement is in line with what Accenture's senior general manager, Eric Schaffer, said in an earlier Engineering.com interview, "Large companies want to make the best use of the software like deeper integration to (enterprise resource planning) and (manufacturing execution systems), as well as advanced solutions for program/project management, supply chain management, and more."

On top of this, software developers like Dassault Systèmes, Siemens, Autodesk, and PTC have invested heavily in making their solutions easier to install and use, and more customers are using the out-of-the-box capabilities that are provided. This suggests that the types of services needed may shift away from installation to IT integration and connecting the value chain all the way through the life cycle, which is a focus of the large global companies.

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This article was originally published on ThomasNet News Industry Market Trends  and is reprinted with permission from Thomas Industrial Network.  For more stories like this please visit Industry Market Trends

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