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Monetize Your PLM

 

When you have achieved proper financial control of PLM, you will have the facts and figures to justify new projects and to show the benefits that are achieved as they are followed through.

   

 

For really advanced implementations this financial integration can be developed in more depth, so that PLM targets and results become visible and reportable in the ongoing monthly accounts.

 

At a corporate level, this enables you to monetize PLM - to make it a tool for the benefit of the whole business.

 

It enables you to look at PLM in purely strategic terms, not just for product management but from a pure, high-level business point of view.

At Board level, they look at how the corporation is structured; how the various divisions relate to each other and to the market; the future position the business is aiming for; and what needs to be done to enable this.

When you have monetized your PLM, you can shape it to meet this vision of the business future.

 
   

 

Basic Financial Management

 

Everybody knows about project justification.  It is the presentation of sufficient potential cost savings or financial benefits in any form so that the project is approved by the Board or by the relevant Approval Authority.

For those who still believe that PLM is 'unquantifiable', then that in itself is an achievement.  But proper financial management and control goes much further than that:-

 

"PLM Financial Management is the proactive management, control and development of a PLM implementation via financial targets and results.

It entails the development of a comprehensive and useful set of financial metrics that relate to the performance of the implementation, either as 'one off' improvements or on a continual, year-on-year basis; and the use of those metrics to show the positive impact of PLM on the business."

 

Every major PLM implementation should achieve this level of Basic Financial Management if it is run properly.  It should be considered as normal good practice.

 
   

 

Advanced Financial Management

 

Implementations that consider themselves to be among the best in the world should raise their horizons to the Advanced Level:-

 

"In advanced environments, PLM Financial Management embodies its metrics into the company accounting system from the operational level up to the management accounts used by the Board.

This enables PLM targets to be set in response to financial opportunities, as well as to the normal product-related drivers."

 

It is likely that this will require a completely fresh look at PLM and the possibilities that it can provide for the business.  The PLMIG provides the methodology and tools to guide you through this process.

 
   

 

Features and Benefits

 

Operating at this Advanced Level requires detailed collaboration between the PLM Team, the Finance Department, and a wide range of stakeholders.

The PLM Team actively develops financial metrics and targets with all of the main departments, divisions and locations.  Financial metrics are embodied within the accounting system, so that they are measured automatically as the company accounts are generated.

The effects of this are that:-

 

the impact of PLM is worked into all areas of the company;

 

new benefits are discovered which become part of planning and justification;

 

the overhead of monitoring metrics is minimised;

 

the Board receives submissions that can be approved on the grounds of overall business benefit;

 

future PLM initiatives can be based on 'What If' financial projections.

Over time, this collaboration tends to become more and more positive and productive.

 
   

 

Methodology

 

There are two main parts to the Methodology:-

 

establishing the PLM environment in which this advanced collaboration can take place

 

performing the detailed calculations

 

Advanced PLM Environment

 

Before anything else can happen there needs to be proper PLM Governance.  There must be an active management structure that extends from the PLM Team up to the the Board, otherwise the high-level business planning decisions cannot be made.

The PLM Governance Standard allows you to assess whether this is in place.

There needs to be an agreed and published PLM Vision, to establish the direction in which PLM is heading; and this needs to be validated, so that it is clear that everyone understands and supports it.

Thirdly, there needs to be a comprehensive working group or cadre that represents all of the business: departments, divisions, geographies, Sales, Marketing, Manufacturing, Quality, HR, Field Service, Purchasing, Customers and Suppliers.

And finally, the hardest part - the PLM Team must have a proactive and detailed working relationship with the Finance Department.  You have to understand how the Accounts are set up, what the accountants are doing, the difficulties they face and the ways that they can help.

In most companies, the Finance Department is a distant area "behind closed doors".  It require some care and effort to build this new relationship.

 

Performing the Calculations

 

The complete methodology is contained in the PLM Financial Handbook, including the Analyis Algorithm and Metrics Algorithm that are used to run the calculations.

However, the methodology is much more thorough and comprehensive than just two algorithms.

It starts with Preparation, covering First Principles, Technical Issues, Management Issues, and how to mobilise.  A 7-Stage process then moves from the Validated Vision through Reconstruction and Calculation to Management and Reporting; and on to Business Transformation, if that is the overall aim.

By the time the process is complete, you will not only have the financial facts and figures for high-level and detailed planning, but you will know more about your implementation than you ever have before.

Creating the Navigation Model, validating the Vision, producing the Maturity results, and internal benchmarking all produce facts and insights that enable much more accurate guidance for PLM.

 
 

 

PLM Financial Handbook

 

The PLM Financial Handbook contains everything you need for PLM financial management:-

 

PLM Justification at the project level

 

Basic or 'Core' Financial Management

 

Advanced Financial Management, as needed for monetization

Survey  

The Handbook sets out a structured methodology that PLM Teams from major corporations can use to generate, in a very constructive way, an environment of full financial control that reaches from the Board down to the operational level.

 

Everything in the methodology is constructive, and yields immediate benefits.  This means that the PLM Team can work on any section they wish without harming the ongoing implementation.

 

The new knowledge is not abstract theory but is always directly useful, and the collaboration with stakeholders raises the profile of PLM within the organisation.

All that is required is that the PLM Team applies the same level of effort and diligence to the methodology as it does to its everyday work.  This is not a 'plug and play' activity - but then, neither is anything else in PLM.

See the Table of Contents >>>

 
 

Related Pages
 

 

Getting Started

 

The PLM Financial Handbook is an entirely self-contained document that contains the full methodology.  It is provided as part of PLMIG Membership so that support is available as it is being used.

The reason for this is that the methodology is at a very advanced level of PLM.

It was produced over an 18-month timeframe by a series of 5 workshops run by the PLMIG, with participants from several different countries.  This level of concentrated, iterated thinking has produced a very thorough and well-structured Handbook, but each user of the Handbook will start from a different PLM scenario.

PLM environments that are advanced enough to monetize will always be complex, and monetization is to some extent transformational.  There are likely to be "What If?" questions and issues that are best resolved by active Q&A, and this is what Membership provides.

 

Find Out More

 

For more information about the PLM Financial Handbook, or advice on how to monetize PLM, contact .




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