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Why PLM? Why Now? An Introduction to SAP's Product Lifecycle Management Solution and What It Can Do for Your Organization

by Thomas Ohnemus | SAPinsider

April 1, 2006

Speed to market is just one measure of a successful product launch -- overlooking product compliance standards or incurring costs from inefficient processes can quickly erode your anticipated product revenue. The newest version of SAP’s PLM solution offers a high level of process integration with features to improve the speed, cost, and compliance of product-development processes.

In a global environment that demands greater responsiveness to change, customer needs, and shareholder requirements, businesses must make their product-development processes faster and more productive than ever before. But it's not just about bringing new products to market in the shortest amount of time. How well your company manages the different phases of product innovation and development is a key measure of your success. After all, it's at the development phase that product price is determined, and the launch phase dictates whether you will be able to leverage potential sales volume and earn a higher margin than later entrants.

Managing each of these phases, however, can be a challenge. All parts of the product life cycle — from product development to aftermarket service — cross departments and disciplines, and can even involve multiple enterprises. This problem only becomes more complex with the increasing trend toward outsourcing, which requires collaboration with large networks of external business partners, suppliers, and development partners. Add in heterogeneous, homegrown IT landscapes, where product-development processes can be characterized by disconnected information and process flows, and what is the result? Increased costs, slowed time-to-market, and jeopardized product quality.

For companies to achieve their product-development goals, they need an end-to-end solution that helps improve:

  • Speed — The velocity of change in customer needs and trends makes innovation a key competitive differentiator. Many companies make most of their revenue from new products, so bringing as many products to market as possible within a shorter timeframe and at lower costs is vital. In industries like pharmaceuticals, for example, getting products to market quickly is essential because of the short duration of patents.

  • Cost — Inconsistent, inflexible product-development processes that are not tied to business needs can be expensive, derailing a new product and the profits it is supposed to generate. Consider, for example, the cost of a missed product launch date. A six-month delay, even if the product launch itself remains within budget, can lead to huge losses in sales volume and reduced profits of up to 33%.1

  • Compliance — With heightened focus on corporate governance, companies looking to introduce new products must adhere to a growing list of compliance standards. Governments and other legislators are enforcing compliance with numerous regulations, such as the US Sarbanes-Oxley Act, the European Union's Waste Electrical and Electronic Equipment (WEEE) directive, and the US Food and Drug Administration's requirements for improved tracking and drug pedigree information.

An integrated product lifecycle management (PLM) solution provides the technological infrastructure to address these challenges, enabling product and process information to flow flexibly within and across company borders. This article looks at the key goals companies are trying to achieve when implementing PLM solutions, how SAP's PLM solution meets these needs, and why the new functionality included in the latest release of mySAP Product Lifecycle Management (mySAP PLM) makes now the time for companies to implement a PLM solution.

How mySAP PLM Can Help Overcome Product Lifecycle Management Challenges

To help address customers' speed, cost, and compliance challenges, SAP offers mySAP PLM, a comprehensive solution that combines technology, best practices, and key functional elements, such as:

Global communication and collaboration capabilities to improve speed and enable compliance — Productivity largely depends on a company's ability to effectively share information along the value chain. mySAP PLM supports collaborative processes for engineering, product development, and project management by allowing all parties, both inside and outside the enterprise, to share information quickly, easily, and in compliance with global standards. mySAP PLM helps control information flow across the extended engineering supply chain, using Web-based interfaces to share data and designs among development partners, contractors, suppliers, and customers.

One information backbone for all product-related data to increase speed and lower costs — Product-related data is often spread over different systems and applications with separate data repositories and several interfaces to develop and maintain. Too often, data is entered in more than one system, making it partially redundant and causing errors and costly delays. At the foundation of mySAP PLM, all product-related data is managed consistently along the entire life cycle (see the section "Lifecycle Data Management" later in this article).

Best-practice solutions to manage and comply with regulatory standards — Forward-leaning organizations are taking a strategic, proactive approach to governance, recognizing that regulatory mandates provide an opportunity for companies to distinguish themselves in the marketplace. For example, the capabilities of the Environment, Health, and Safety (EH&S) solution within mySAP PLM help companies comply with worker-safety and environmental regulations, such as emissions standards.

A Closer Look at SAP's PLM Solution

A high level of integration (see sidebar) means that mySAP PLM supports and optimizes the processes of the entire product life cycle (see Figure 1), enabling companies to streamline overall integration costs, achieve superiority in product innovation, differentiate successfully against their competition, and increase their revenues by speeding deployment of new products to customers.2


Figure 1

mySAP PLM Application Map

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The following sections provide a more detailed look at the PLM solution's end-to-end functionality for the phases of the product life cycle.

Product and Project Portfolio Management

mySAP PLM provides advanced capabilities for systematic idea management and concept (or business case) evaluation for fast decision making. Its project management functionality provides product and project managers with a complete set of capabilities, from project structuring and scheduling to resource management, cost management, and reporting. Project execution functionality focuses on process methodologies, deliverables, commitments, and responsibilities — all the factors that can make a difference in a project's outcome. Strategic portfolio management allows companies to monitor, analyze, evaluate, and optimize the overall portfolio, including concepts, projects, and products (see Figure 2).


Figure 2

Strategic Portfolio Management Through SAP xApp Resource and Portfolio Management (SAP xRPM)

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Lifecycle Process Support

To keep product costs to a minimum, companies must support the product-development process from the early stages of ideation (the process of generating new and valuable ideas) and design to the handover to production, sales, service, and maintenance — whether a company belongs to discrete or process industries.

For discrete industries such as industrial machinery and components, automotive, high tech, or aerospace and defense, requirement structures can be transformed into concept structures and finally into product structures. In addition, mySAP PLM provides tight integration into authoring environments, such as CAD systems (see Figure 3),3 and it supports development collaboration on product structures with external business partners in a secure, Web-based environment.


Figure 3

SAP Integrations Provide Real-Time Links Between CAD Systems and mySAP PLM

mySAP PLM can also be used in the context of strategic sourcing due to its tight integration into supplier relationship management. Prototyping allows for dedicated procurement, production, and evaluation of prototypes, while production ramp-up ensures a smooth transition to the shop floor. All product structures and configurations are provided to sales, and equipment and technical asset structures are provided to service and maintenance.

For process industries such as consumer products, pharmaceuticals, chemicals, or oil and gas, the solution handles all types of product specifications. Multilevel recipe management allows you to transform centrally developed product recipes, also known as enterprise recipes, into recipes on site and at the plant level — all while adapting to local regulations, on-site plant capabilities, and available materials. Trial management can also be used to optimize the recipe before the data is handed over to production.

Quality management and product-costing capabilities are important features for all types of industries and underline the value of an integrated solution.

Lifecycle Data Management

A consistent, reliable base for product-related data is the foundation of integrated product lifecycle management. At the document-planning phase, this includes technical document management, parts management, and product and process structure management (see Figure 4). It also includes support for classification and variant configuration. For discrete industries, the solution uses bills of material (BOMs) and routings. For process industries, it uses specifications and recipes. The solution also provides "as-built" and "as-maintained" structures for the service and maintenance phases.4


Figure 4

Bill of Material Management with Expanded Product Structure and the Corresponding 3-D Model Viewer

Corporate Services

As part of its EH&S capabilities, mySAP PLM allows enterprises to monitor complex regulations, manage data and documents, track dangerous materials and products, carry out waste disposal, enhance employee and public safety, and support preventive health care. In addition, audit management supports companies to carry out assessments via supplier, product, process, system, or environmental audits (see Figure 5). This leads to:

  • Increased safety of products and work environments, resulting in optimized support for business processes

  • Reduced financial risks and costs associated with regulatory noncompliance or unexpected events through greater transparency and standardized processes

  • More positive public image through support for compliance and enhanced health and safety features
Figure 5

Audit Management Validates, Tracks, and Manages Audits and Provides Status and Progress Insight

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SAP Provides Integrated, Compatible PLM

mySAP PLM is an integrated solution that works seamlessly with other solutions within mySAP Business Suite: mySAP Enterprise Resource Planning (mySAP ERP), mySAP Customer Relationship Management (mySAP CRM), mySAP Supply Chain Management (mySAP SCM), and mySAP Supplier Relationship Management (mySAP SRM). As a result, mySAP PLM allows you to extend and improve communications among all departments, including marketing, sales, engineering, manufacturing, and service (see figure below).

Built on the SAP NetWeaver platform, mySAP PLM is open and compatible, also providing interfaces to non-SAP solutions and a variety of partners. This includes compatibility with leading solutions that complement SAP's own portfolio, such as the ability to link to the leading CAD interface packages.*

Based on SAP NetWeaver, All Layers of the mySAP PLM Solution Work Seamlessly with mySAP Business Suite Applications

* For more information on mySAP PLM's support for CAD integration, please see the article "Fully Integrate Product Design Into Your Business Processes for Faster Time-to-Market" by Thomas Klee in this issue of SAP Insider (

Enhanced Functionality with mySAP PLM 2005

Beyond the broad functionality included with SAP's PLM solution, SAP has continually enhanced and extended mySAP PLM to support your business processes and provide visibility, control, and data consistency. The result is a solution that manages all product-related data through the entire life cycle while creating full process transparency.

With the mySAP PLM 2005 release, slated for general availability in May 2006, SAP's goal is to focus on expanding our PLM solution suite for visibility, control, and transformation to a service-enabled lifecycle data management architecture. The sidebar below highlights the new functionality available with the latest release.

What's New in mySAP PLM 2005?

mySAP PLM 2005 includes enhanced support for the business processes listed below.

Product and Project Portfolio Management

Idea management
  • Expanded capabilities to facilitate targeted ideations, conduct sophisticated idea evaluations, and initiate idea workflows
Concept development
  • Enhanced support for the business-case creation, concept assessment, and approval processes
  • New ability to manage product requirements
Project planning
  • Flexible structuring of projects, further enhancements in scheduling, and a new Gantt chart
  • New self-services provide guidance for various project-planning activities
Time and resource management
  • Shared user responsibilities, multiple user assignments per project role, and new functions to reconcile resource demands between the strategic layer and operational staffing
  • Integration of external service procurement or the cross-application time sheet component for time recording provides more flexibility and openness
Project execution
  • Collaboration Room (cRoom) integration provides a new project dashboard and worklist for improved collaboration
  • A user-oriented self-services feature guides various project-execution activities
  • Multilevel project accounting, which allows variable assignment of cost collectors such as work breakdown structure (WBS) elements, to project tasks and integrate travel costs
Strategic portfolio management
  • Ability to build flexible portfolio hierarchies and manage the portfolio life cycle
  • New strategic resource level
  • Expansion of scoring and portfolio reviews
  • Upgrades to the simulation and analytical functions

Lifecycle Process Support

Product development
  • New features on the CAD Desktop, including integration and preview of digital mockup viewing, export to Collaboration Folders (cFolders), integration to the SAP Easy Document Management application, and a new "Delete Working Directory" function that deletes files in the working directory that are no longer in use
Development collaboration
  • cFolders will provide BOM comparison, extraction of BOM information for external users, support of manufacturer part numbers and reference designators (especially for the high-tech industry), integration with integrated product and process engineering (iPPE) and the CAD Desktop, a workset for development collaboration (single point of access for all activities related to development collaboration), and extended integration into SAP Knowledge Management
Quality engineering
  • New function to plan multiple specifications
  • New "quality inspector" role to ease quality inspections

Lifecycle Data Management

Document management
  • New features for the document management system and SAP Easy Document Management, including enhanced document structure support, an enhanced authorization concept, and support of thumbnails
Product structure management
  • Enhanced environment for configurable products
  • New features based on iPPE
Engineering change management
  • Enhanced undo functionality
  • More flexible status management
Recipe management
  • Enhanced engineering change management usability
  • Enhanced process parameter management

Corporate Services

Audit management
  • Wider range of usage scenarios and the ability to create links to the data-warehousing component of SAP NetWeaver and quality notifications in mySAP ERP
Dangerous goods management
  • Major enhancements in dangerous goods packaging regulation compliance and dangerous goods checks in sales, shipping, and transportation
  • Support for the release of packaged products in the process of product definition
Waste management
  • Enhanced generic reporting functions for waste lifecycle analysis
Industrial hygiene and safety (IHS)
  • Integration of its classification system into IHS measurement management
Occupational health
  • Integration of scheduling with the SAP calendar
  • Greater flexibility in proposing health surveillance protocols
  • Easier recording of diagnosis, document printing, and document assignment through integration with the document management system
Emissions management
  • New capabilities for managing tasks, facilities, permits, equations, and emissions reporting
  • New general capability for the trading of emissions credits


Developing innovative products and quickly introducing them to market is becoming more and more of a strategic priority for many companies today. But with increasingly complex collaborative networks — including suppliers, business partners, customers, and even outsourcing partners — the challenges of keeping product information consistent, flexible, and compliant across company borders and through all phases of the product life cycle have made a PLM solution an essential part of companies' system landscapes.

mySAP PLM is the most comprehensive and integrated product lifecycle management system available. With the release of mySAP PLM 2005, the solution offers additional new capabilities that extend across the whole application map and that easily integrate with your existing solution landscape. For more information about SAP's PLM offering, please visit To see how a PLM solution could play out in your company, see Frank Spiegel's article "Jump-Start Product Innovation with PLM" in this issue of SAP Insider (

1 According to an Accenture study.

2 To learn more about SAP's support for an integrated approach to new product development and introduction (NPDI) processes, see Doug Macdonald's article in this issue of SAP Insider (

3 See Thomas Klee's article in this issue of SAP Insider ( to learn about SAP's support for CAD system integrations.

4 Different structures accompany a product as it moves from design to maintenance. Accordingly, these structures move from "as-planned" to "as-built" and "as-maintained" structures.


Thomas Ohnemus is Marketing Director in SAP Global Solution Marketing for mySAP Product Lifecycle Management and new product development and introduction (NPDI). He is responsible for PLM and NPDI marketing strategy, market analyses, and analyst relations. He is a PLM expert with more than 17 years of experience. Before joining SAP he was head of key account management at a leading PLM vendor. Thomas has spent most of his career in the PLM software area, working primarily in implementation consulting, product management, and marketing. He holds a master's degree in engineering.


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