The Third Platform – A Quantum Leap for PLM and ERP

The Cloud, Mobility, Big Data and Internet of Things are driving new software developments for product manufacturers

Frank Gens, Chief analyst, IDC

The Cloud, Mobility, Big Data and The Internet of Things are driving manufacturers to rethink the way they design and deliver their products. These big trends in turn are driving a series of corresponding demands on the software developers who serve those manufacturers.  Now analysts at Gartner and IDC are talking about a “developmental quantum leap” for technology platforms.

IDC’s Chief analyst, Frank Gens, calls it The Third Platform of PLM, MES (Manufacturing Execution Systems) and ERP solutions.  “The cloud, mobility, and big data is about to be woven together into a single cohesive unit,” he says and the third platform technologies will play a crucial role when almost all of the planet’s industries are becoming “amazonified”.

What that means for software developers is that, “We’ll see every major player make big investments to scale up cloud, mobile, and big data capabilities, and fiercely battle for the hearts and minds of the developers who will create the solutions driving the next two decades of IT spending”, said Gens.


The Third Platform in PLM and ERP
So how are the PLM and ERP developers responding? On the PLM side, all of the big four – Dassault Systemes (V6/3D Experience), Siemens PLM (Teamcenter/Industry 4.0), PTC (Windchill/Integrity, Servigistics/ThingWorx) and Autodesk (PLM 360) have initiatives pointing in the direction of the Third Platform.

The same is true of the major ERP vendors such as SAP, Oracle, and Infor. Even the midmarket segment players are picking up on this trend.

Alastair Sorbie, CEO, IFS’s Verdi Ogewell has spoken with the ERP and PLM vendor IFS.  Their CEO, Alastair Sorbie said, “IFS definitely plans to stay in the game when the business world is about to reshape not only its operations but also its business models”.

In coming articles we will also cover other ERP/PLM vendors from these perspectives (SAP Business Suite/Hana), Oracle (E-Business Suite/Agile PLM), and Infor (Infor 10x/LN/M3/ION), as well as Dassault, Siemens, PTC and Autodesk.  But first there is a lot to learn from IFS.


Market drivers for the Third Platform
The logic of the Third Platform is simple: The cloud is essential for accessibility, regardless of location or device. Accessibility is also the great driver behind the growth of mobility. At the same time this increasing number of connected devices, including M2M (machine-to-machine) and The Internet of Things, is creating zettabytes of Big Data that needs to be sorted, filtered, and organized in a way that enables real-time access and interpretation of this “information tsunami”.

Gartner and IDC have underpinned their predictions with numbers:

  • According to Gartner the value of investments related to cloud offerings like SaaS and IaaS (Software-as-a-Service, Infrastructure-as-a-Service) between 2013 and 2015 will grow by over 60 percent reaching a total market value of 42 billion dollars during the course of the next year.
  • In the mobility space it is estimated that 50 percent of business applications – including ERP, CRM and PLM – will be available as mobile solutions by 2015.
  • Big Data is forecast to see exponential growth: According to IDC, this year the world’s enterprises will invest $ 14 billion on analytics and services, up 30 percent compared to last year.

These trends have led to the most dynamic development environment for PLM and ERP developers since the launch of the Internet. The same is true for their customers who are those manufacturers launching new products that are creating new sets of customer expectations.

IFS Applications 8, user interface


ERP Vendor IFS sees a perfect storm
So are these trends a threat, or an opportunity for software developers? IFS’s CEO, Alastair Sorbie talks about “the perfect storm”. He says that most of these dynamics fit this Swedish ERP company well. In response, IFS has introduced an increasingly broad solution called IFS Applications – version 8 is the latest.

Sorbie agrees with the analysts on The Third Platform and he insists that it is a typical example of valuable synergies being created where 1+1+1 may paradoxically equal 3.2. Technology reporters often relate the current environment to a fourth industrial revolution. To get the promised leverage, however, each new technology must hook into the other while integrating seamlessly with legacy systems. “It’s not an easy task, but trying to maintain the status quo may be riskier still,” he said.

Microsoft’s evangelist, Mike Opal (watch him in PLM TV News report: Big Data – Big Problem?) spoke about the need for Business Intelligence and analytics tools in the context of Big Data.  Mike pointed out that there is  definitely a watershed between the companies that understand how to use Big Data, and those who don’t. He says that if you fail you will soon be swept away in a market where literally everyone is preparing to adapt to the new technologies.

Sorbie also stated that their IFS Applications ERP suite has been rewarding from a technical development perspective, particularly the success of their  mobile solutions, “2013 has been an important year for IFS in terms of mobile solutions”, he said, “and it has given us an even greater incentive to continue investing in this area. The mobility trend will continue to boost profitability and efficiency in any organization, from the shop floor to the boardroom.”


Hans Vestberg CEO, Ericsson

Business-critical mobile solutions at telco giant Ericsson
Telecom giant Ericsson has invested in the IFS mobile package, specifically  the IFS field service software.  “Ericsson has hundreds of technicians and they are all equipped with our mobile solutions”, said IFS specialist, Martin Gunnarsson.

This mobile solution is business-critical for telecom providers to help them meet the demands of their customer SLA’s (Service Level Agreements). These SLAs detail things like installation procedures, up and response times, and set penalties for non-performance. “Mobility solutions like IFS’ provides tools that can deal with the SLA’s, but it’s just a piece of what our ‘field service menu’ can offer”, Gunnarsson continued. “Other capabilities involve everything including appointment scheduling of service initiatives.

“The Ericsson case is a good example of our role as a global partner”, says Alastair Sorbie who pointed out that the company has installations in 60 countries all over the world.


External endorsements for the IFS ERP roadmap
Most modern ERP solutions include some PLM functionality, and IFS is no exception.  IFS splits  the product life cycle into two parts with the first being the product as a solution from the manufacturer while  the second is seen from the perspective of the buyer/user. Ideally, this  means that both the manufacturer and the customer can access and use all data generated by each individual process, from design to manufacturing and in the field, to create an integrated view for service and maintenance in the aftermarket. Sorbie says the goal of IFS Applications is to manage products from cradle to grave within the framework of one  “true lifecycle solution”.

This product vision resonates with analysts. IFS Applications has been named a leader in Gartner’s Magic Quadrant for single-instance ERP for product-centric midmarket companies.

Dennis van Bregt, Global Head of ERP at APM Terminals

But IFS has its challanges too. According to Dennis van Bregt, Global Head of ERP at APM Terminals, global reach and localization are two such challenges. He explains that as an international container terminal operater, APM is expanding into countries like Ghana, Turkey, Costa Rica and Mexico.  These new territories give rise to challenges like local legislation and tax law compliance and reporting.

“Localization becomes an issue here and we have come up with the actual specifications ourselves and ask IFS to modify the software to meet local demands. We have to be tax legal and compliant in every country where we operate, because our main stakeholders who grant us the rights to operate a terminal are governments”, he says.

The main issue for IFS according to van Bregt is their relatively small size and footprint in these countries, especially compared to larger and more established vendors. “We have very aggressive expansion goals, but we need IFS to help us achieve them”, says van Bregt. “This means agile implementation, to get it on the ground quickly, without having to think about local legislation, and having to translate it to business requirements ourselves.”

“We certainly take customer demands seriously and this is a challenge that we’ll spare no efforts to solve”, Sorbie commented.  


Dan Matthews, CTO, IFS

Product as a Service for manufacturers and for software developers
Praise and blame, yes – but “IFS Applications 8 has been enthusiastically received and so far, 150,000 individual users have gained access to the system”, notes Sorbie.  To keep up with customer demands, IFS has implemented nearly 1,000 enhancements since Applications 8 was released  in 2012 including certification for the Microsoft Windows Azure Cloud.

“In the North American market, IFS offers customers the ability to run “IFS Applications-as-a-Service”, according to IFS’s CTO, Dan Matthews. In 2013, 25 percent of the company’s customers chose this solution for new installations.  In these cases, IFS manages operations and maintenance of the underlying infrastructure as well as the software itself. Matthews adds that Big Data solutions are also a part of IFS’s suite offerings, IFS Business Intelligence, Business Analytics and Demand Planner.

“There are two well-known sources of big data”, he continues, “social media and the Internet of Things. At IFS we state that there is a third key source: Everything that happens in a business application. This is not just all the orders, shipments etc, but also the behavior of the people using the application. What things are they searching for? How often do they access certain information?. Only by combining and analyzing these three sources of data together can you maximize the business insights from Big Data”.

Gripen fighter jet – maintenance

Through these solutions, IFS has provided their portfolio with PLM capabilities to give their customers the ability to manage data not only during product development, but also throughout the product lifecycle including the aftermarket. This broad functionality is one of the reasons that IFS counts defense contractor Saab among its customer base.  Saab, among other things develops, builds and markets the jet fighter Gripen.

In the PLM TV News TV-report, Big Data – Big Problem Saab’s CIO, Mats Ran, explained how they use IFS Applications to provide this product as a service, “We are definitely moving towards a market characterized by ‘product-as-a-service'”. Both businesses and consumers today tend to be more interested in the functions and the services they can get out of a product, rather than to own it. For SAAB’s Gripen this means that the combined aircraft, operation and maintenance can be bundled in a package deal, to be sold under the “power-by-the-hour” concept. In this environment the life cycle perspective is of utmost importance. In the case of an aircraft, the company has to keep track of product data for 20, 30, or even up to 40 years.

So, it’s not only manufacturers who are being impacted by the market forces of Big Data, Mobility, Internet of Things and the Cloud.  Software vendors are also rapidly evolving to help their manufacturing customers compete in this new world of products and services.