Home Featured The Consumer in the PLM Workflow: ‘The Future of Business’

The Consumer in the PLM Workflow: ‘The Future of Business’

0

In his first guest post for WhichPLM, David Courtier-Dutton, CEO of SoundOut, discusses the relationship between ERP, PLM and C-data, using the recent acquisition of Qualtrics by SAP as a representation of a new paradigm shift. SoundOut collects insight from a consumer panel of more than 2.5 million people and combines this with advanced machine learning to create algorithms to map predictions to your business to drive material and measurable improvements to your bottom line.

On 30 January 2019, the CEO of SAP stated that combining the voice of the customer with existing ERP processes was the ‘future of business’ and represented ‘the biggest growth opportunity I’ve ever seen’.

SAP touches 77% of the world’s transactions and in November 2018 paid $8 billion for a relatively unknown survey/CX software business called Qualtrics – at an eye watering valuation of over 20 times revenue. Just 4 months on, the SAP CEO is heralding Qualtrics, currently just 2% of the size of SAP, as the ‘crown jewel of the company’.

The Qualtrics acquisition signals the starting gun on a fundamental revolution in the way businesses are run. ERP providers have spent the past 40 years building software that help companies run their business. This is powered by the manipulation of internal operational data (O-data) to streamline workflows and optimize business performance. But companies looking to the future increasingly want more – they want every decision to be customer informed/led. For this, they need granular consumer insight (C-data) which, when combined with O-data, provides a true 360-degree dataset that, combined with AI/machine learning has the potential to transform business into a truly customer led paradigm. Delivering real-time customer foresight in an actionable way deep into the workflow is now seen by many businesses as a commercial imperative. In the words of Qualtrics CEO, Ryan Smith – “Very soon there will be two kinds of companies: either you’re intentionally racing to the top focused on customer experience, or you are unknowingly racing to the bottom”.

Given the closeness of the relationship between ERP and PLM, what impact is this business evolution likely to have on the PLM market? If ERP answers the ‘when’, ‘where’ and ‘how much’ of business, PLM answers the ‘what’ and the ‘how’. If C-data is going to transform ERP, just imagine what it is going to do to PLM. ERP and related systems deal with the business infrastructure while PLM operates at the sharp end – deciding, on a product by product basis, what to push through that infrastructure and present to the customer. PLM is focused on the creation and optimization of new products at a price and volume that matches consumer demand; so for a product company, integration of C-data into the ideation and creation process is even more fundamental. Put simply, asking the customer what they want before you make it is nothing more than common sense.

While PLM providers may all strive to be customer led, this reactive approach can risk a commonality of features and functions between providers that, while they all address real business issues, fail to offer true differentiation or enable them to stand out from the pack. The reality is that going forward, PLM players must also facilitate their customers to become consumer led – extending platform capabilities to deliver real time C-data on products under development and providing persistent added value to their customers, rather than just streamlining existing processes.

So how will PLM companies ride this wave and provide this kind of insight to their fast growing user base? Is integration of C-data in PLM platforms going to be a must have or a nice to have? After all there are already a small number of businesses that sell consumer powered predictive insight direct to retailers separately from the PLM and ERP processes. To answer this we need look no further than the SAP transaction – they did not decide to ‘partner’ with Qualtrics, they decided to consume them, just a day before Qualtrics IPO, something SAP saw as a strategic imperative if they were to own the future of business and ensure a seamless integration between ERP and C-data across the workflow.

An executive from a market leading PLM vendor stated earlier this month that, in his view, it is inevitable that within 5 years every PLM platform would provide C-data directly into the PLM workflow. A PLM customer does not want to be combining C-data and PLM data on an excel spreadsheet to then feed back into the ranging and allocation process – this is a retrograde step for any business on the PLM/3D/IoT journey. Once SAP’s 15,000 sales force has converted retailers to the C-data religion, customers will inevitably also want this as an integral part of the PLM workflow. Whether a customer is perfecting a design, rationalizing a range or optimizing depth of buy it is inevitable that they will want C-data integrated into the design workflow – not siloed in a separate system.

But where should a PLM vendor start on their C-Data journey?   Build, buy, partner or do nothing?

  • Building would require a whole new set of skill sets – growing, running and maintaining consumer panels across multiple territories is neither simple nor inexpensive. Add to that the need to normalize, weight and benchmark consumer feedback at scale and then master machine learning to map this onto the retailer’s business is a daunting prospect.
  • Buying an existing player in the CX or consumer survey space (as SAP did) would be a bold but risky strategic move when no PLM platform has yet tested the market, but may be an option for one of the larger players with strategic vision.
  • Perhaps the best approach may be to enable the front end functionality in the PLM platform while partnering with businesses already active in the C-data market to power the consumer insight collection, analysis, data processing and machine learning. From a commercial perspective this would be a relatively low risk, low resource approach that would enable a forward thinking PLM company to demonstrate true innovation, test the market for customer adoption and get unique market insight into which elements of the PLM value chain could benefit most from a real-time consumer interface. Dependent on the partnership it could also generate significant additional subscription based revenue.
  • Inaction is, as ever, the easiest option – and for many PLM executives there are numerous competing priorities fighting for attention. However integrating consumers into PLM is not simply going to be an added feature, in the same way as Qualtrics was not simply a bolt-on acquisition for SAP. In a press release announcing the Qualtrics deal, SAP CEO, Bill McDermott said: “Together, SAP and Qualtrics represent a new paradigm, similar to market-making shifts in personal operating systems, smart devices and social networks.”

Whatever approach is taken, C-data in the supply chain is coming and the question for PLM vendors is more likely to be ‘when’ rather than ‘if’.

Lydia Mageean Lydia Mageean has been part of the WhichPLM team for over six years now. She has a creative and media background, and is responsible for maintaining and updating our website content, liaising with advertisers, working on special projects like the Annual Review, and more.Joining mid-2013 as our Online Editor, she has since become WhichPLM’s Editor. In addition to taking on writing and interviewing responsibilities, Lydia has also become the primary point of contact for news, events, features and other aspects of our ever-growing online content library and tools.