The comparative advantages of hosting your solution and data internally or externally have been widely discussed. However, we want to share our take on how this specifically affects your decisions when considering, planning or starting your PLM (Product Lifecycle Management) journey. ERP (Enterprise Resource Planning) or CRM (Customer Relationship Management) solution providers have been offering both for years. Relatively, the PLM sector started more recently, mostly because manufacturers took quite a time to trust someone else with their product data, which is understandable. Although more and more cloud PLM solution vendors now offer both internal and external hosting, this is still not a standard in the CPG industry.
Cloud and SaaS adoption has drastically increased in the span of just a few years. Today, PLM buyers are facing the same fears, questions and opportunities than they did with other technologies. Let’s dive into them!
Cloud PLM: 101 of internal and external hosting
If you are not familiar with PLM concepts, features and benefits yet, read our dedicated page PLM– Product Lifecycle Management. We answer basic questions such as: “What is product lifecycle management?”, “What is PLM software used for?”, “What companies use PLM software?” and others.
“42% of companies say providing access to data anytime, anywhere, is the main driver for cloud adoption.” The need for mobility increased because of the globalization and fastened pace of our markets ; but with associates having access to critical product data from anywhere, from any hardware, from any network and at anytime, comes the question of data safety and security. Consider how heavy such a first level consideration is in our current situation, where everyone has been pushed to work from home for months.
Cloud PLM solutions offer different types of hosting:
- On-Premise PLM solution: the software and all its data are physically stored on your servers.
- Externally hosted PLM solution: the software and all your proprietary product data used by the software are stored on your provider’s or a third party’s (Microsoft, Amazon Web Services, Google, etc.) servers. With a slight language abuse, this is what is often meant by “cloud PLM” or “SaaS PLM”, opposed to “on-premise”.
Allow us an analogy. Most of us keep our money at the bank, and not under our mattress. Because we do not want to endorse the responsibility and stress of securing and guarding it. We trust someone whose specialty it is, deploys (theoretically) the appropriate means to do so. Same logic goes with your New Product Development (NPD) data.
If you have the internal expertise, available workload, appropriate hardware and an emergency-proof organization, on-premise solutions can definitely be your “go for”. However, if, for any reason, your IT Managers don’t have any bandwidth, your IT physical infrastructure is not robust enough for a PLM database or you simply would not know how to react in the scenario of a security breach, you should consider externalizing the hosting of your cloud PLM solution.
Cloud PLM: cost considerations for your hosting choice
- Are generally priced on a monthly or yearly basis, thus benefiting a low entry cost.
- The subscription includes support and updates.
- The subscription is considered as “operating expenditure”.
- Include additional costs such as training or professional services.
- Are generally sold under perpetual licences, thus showing a substantial initial investment.
- The initial purchase does not include support and updates. They are extra-services with a yearly (usually) subscription.
- The purchase is considered as a “capital expenditure”.
- Include the same additional costs.
Although the acquisition cost can be a deal breaker or maker, a PLM solution buyer must look at the Total Cost of Ownership (T.C.O.). Depending on your needs, the size of your organization and your financial capabilities, both options can be perfectly viable. Also, making your decision based solely on cost considerations is a big mistake.
One may think SaaS solutions have been designed for Small and Medium Businesses (S.M.B.s) prioritizing low initial investment and simplicity of access ; but the truth is that wide international organizations can benefit as much as them from it. Indeed, externally hosted cloud PLM solutions offer a way greater scalability and long term peace of mind.
Cloud PLM solution: the trouble free and scalable experience of external hosting
One of the major advantages of a cloud PLM solution is that every new feature you chose to deploy or any new user you need to give an access to can be activated or deactivated at the flick of a switch. You can decide to implement a single module of the software and expand its scope afterwards, feature by feature, module by module and user by user.
This saves precious time and useless worries that will echo to organizations who suffer a failed past PLM project or are making their PLM project the backbone of their digitalization journey. You can chose the entry package and make sure your provider is reliable, your end users genuinely adopt the solution and Return On Investment (ROI) is real before moving on to the next stage.
However, further considerations come into play when choosing your hosting options.
With an on-premise solution, whenever your provider releases a software updated, you have to either take on your own time or pay an extra-service to install it and check it runs properly. As years go, your hardware will become obsolete and require investments to update to the new standards. Also, any organization is a living entity and changes over time. Your needs in performance, features or number of users will inevitaby shift. Is your infrastructure nimble enough?
When externalizing the hosting of your cloud PLM solution, you automatically access any update, don’t need to worry about your hardware and can scale up your performance requirements at a pace following your needs. Also, you ensure that every external stakeholder enjoys the same seamless experience as you.
Despite that our article seemingly glorifies the external hosting for cloud PLM solutions, the on-premise alternative should not be overlooked. Yet, trends show an ever-growing popularity of SaaS offers and that is where the biggest opportunities rely. It took years but organizations got rid off their fears and aknowledged the accessibility, low-risk and scalability of SaaS solutions.
 Cloud ERP vs. On-Premise ERP. By Zach Hale for Software Advice, 09/04/2019