Peter A. Bilello, President Tel: +1.734.668.9922 Email: p.bilello@cimdata

1. What does a successful PLM Implementation look like?PLM Innovation 201222 February 2012—Munich, Germany Peter A. Bilello, President Tel: +1.734.668.9922 Email: p.bilello@cimdata.com

2. Our Mission...Strategic consulting for competitive advantage in global markets CIMdata is the leading independent global strategic management consulting and research authority focused exclusively on the PLM market. We are dedicated to maximizing our clients’ ability to design and deliverinnovative products and services through the application of PLM.

3. Our Clients… A sampling of CIMdata’s international industrial clients

4. Full Lifecycle Our Definition of PLM...PLM – integrating people, processes, information, and business systems • Strategic business approach • NOT just technologies • Consistent set of business solutions • Collaborative creation, use,management & dissemination ofproduct related intellectual assets • All product/plant definition information – the virtual product • MDA, AEC, EDA, CASE, analysis, documentation, … • All product/plant process definitions – the virtual processes • Processes that plan, design, produce, operate, support, decommission, recycle … • Supports the extended enterprise • Spans full product/plant lifecycle, from concept to end of life

5. What Products Are We Talking About?Companies can’t afford to only think about traditional discrete products! • PLM spans the life of any “product” • Manufactured products—automobile, computer, pill, soda, hat • Projects—building, bridge, highway • Plants—oil refinery, offshore platform • Assets & Facilities—airport, railway system,utility distribution network (e.g., electricity, telecoms, water, gas) • Others…

6. Topics to be Discussed • The Reasons for Investing in PLM • Typical Cost Baselines • Quantitative and Qualitative Measurements

7. Why Companies Invest in PLM…Main PLM benefit categories For Business Performanceand Opportunities For the Organization For the Users For the Product or Service For Process Performance

8. Benefits for Business Performance Product lifecycle cost and opportunities • PLM lowers costs • PLM provides more business opportunities • Enables innovation, predictability, company flexibility, and better management • PLM enables Quality Assurance • PLM speeds business • PLM supports industry regulations and requirements • Provides access any time, anywhere to valid information and proves the capability to satisfy regulators • PLM maintains a traceable system of record

9. Benefits for the OrganizationFacilitate effectiveness of the organization • Improve corporate communications • Support organizational change • Allow product developers to easily re-use parts, designs, & processes • Re-use proven designs with confidence • Avoid prototyping and testing • Avoid re-using failures and repeating the same old mistakes “Up to 80% of the work done in an engineering department is identical or very similar to work done previously” From Research by Arthur D Little

10. Benefits for the Product or ServiceControl product configurations • Retain configurations (too often dispersed) • Manage engineering change processes • Achieve faster response to customer queries • Facilitate rapid product improvements early in product development cycle • Reduce the severity of errors and product changes late in the product cycle • Facilitate longer production runs • Cut plant down-time with PLM and project management • Facilitate hand-off of product data

11. Cost Model for PLM SolutionsTypical cost elements • PLM software & maintenance • Hardware (additional needed for PLM) & maintenance • What gets charged to PLM? • PLM appraisal, selection, and implementation planning • Solution implementation • Including data migration • Training • Business and system administration

12. Selection & Implementation CostsThese costs are usually much more than the software itself (1 of 2) • Internal costs for: • System selection • Appraisal & justification • Implementation planning • Internal cost of subject matter experts • E.g., development of requirements • Cost of lost user productivity • E.g., time away from job • External consultancy • Training (internal and external) • Data and process modeling

13. Selection & Implementation CostsThese costs are usually much more than the software itself (2 of 2) • Testing • Integration with applications • Tailoring and/or customization • Including system configuration • Data capture, cleaning & migration • Business and system administration • Cultural/organizational change management

14. Metrics—Why Measure?They often play a critical part in PLM program success • People improve in areas that are measured—the reverse is also true • To realize full benefits of PLM you may have to change how you measure & rewardpersonal & organizational success • Measuring performance helps to: • Pinpoint problems and to find solutions • Communicate progress and benefits to the entire organization • Prevent or diminish “negative talk” that mayundercut the success of a PLM implementation • If it is important to your organization, then measure it!

15. Examples of MetricsApplicability & importance vary by company & PLM project Business Metrics PLM Project Metrics • Time to access data • Plant down-time for maintenance • Cost of changes • No. of standard parts/no. of special parts • No. of successful bids/month • Tooling costs or assembly costs • Scrap, inventory rates, or re-work rates • Warranty costs, returns, or MTBF • Software delivered against plan • Tasks completed on time • Cost of IT resources • Number of processes (workflows) implemented • Quantity of legacy data migrated • Number of licenses delivered • Number of users implemented • Number of users trained • Number of PLM solution errors reported

16. Metrics Help You Understand…Some of the reasons why metrics are important • When, where, and how people are using solutions • The effect of technologies on the business & its processes • How well the business objectives for a project have been satisfied • If sponsors are receiving a return on investments • Areas that need improvement • Requirements for future implementations of technologies & processes • The ongoing success of your business solutions • They should measure costs & savings

17. Choose Metrics CarefullyPoorly conceived metrics may create wrong behavior! • Use a few metrics that are meaningful to users & management • Measure what is important to your customers • Measure what is important to your business • Select a variety of metrics—for delivery, cycle times, quality, and waste • Where possible, relate metrics directly to Key Process Indicators (KPIs) “The mistake people make is over-analysis of ROI. You need only a few key measurements that reflect the business and that you can leverage consistently over time.” David Linthicum, “Does ROI Matter,” Infoworld.com, 20 Feb 2006

18. Metrics Must be Used with CautionYou may achieve unexpected or undesirable results “The problem with any metric is that you maximize what you ask for at the expense of everything else. Be careful what you ask for; you just might get it. Generally, optimizing any single metric or small cluster of metrics results in a sub-optimal solution overall.” Gene Rogers, Boeing, “Does ROI Matter,” Infoworld.com, 20 Feb 2006

19. Don’t Misuse Your Benefits DataHow true it is! “If you torture data sufficiently, it will confess to almost anything.” Fred Menger, chemistry professor (1937- )

20. Some Benefits are Difficult to EstimateQualitative issues that PLM may support • Strategic benefits may be the largest of all, e.g.: • PLM may be a catalyst for cultural changes • PLM enables management initiatives such as BPR, CE, TQM, CALS/CITIS • Use group judgment to get a rough estimate • If it can’t be estimated reasonably, it can’t form part of the cost/benefit analysis, NPV, or ROI • Try to understand it better, & communicate this to the decision-makers and users • Enhanced understanding will reduce risk & improve the future operation of PLM and the company

21. FMC Technologies, USAPLM benefits example • Product • Oil well equipment • Business Problem • Modular design-build process • Diverse technologies and systems • Design assembly at multiple sites • Benefits associated to PDM implementation • Searching for valid/current designs • 5 days to minutes • Executing design reviews • 5 days to 1 day

22. Thyssen Ascenseurs, FrancePLM benefits example • Product • Elevators • Business Problem • Unable to manage complex product configurations while at the same time meeting customer requirements • Benefits associated to PDM implementation • Reduced the time required to configure and design a custom elevator • From 75 days to 15 days (80% reduction)

23. New Flyer, CanadaPLM benefits example • Product • Leading provider of “Low Floor” transit buses • Benefits • Enabled Engineering to triple production • With NO increase to Engineering staff! • CAD data vaulting eliminated: • “Lost” data • Copies of data becoming incorrect • CAD data vaulting enabled: • Assembly based concurrent engineering • Solid Modeling/Assemblies resulted in: • Faster design process • Better quality through “design-in-context” of the assembly—fewer mistakes in mfg.

24. Heinz, USAPLM benefits example • Products • Large assortment of food products • Benefits • Time to develop labels reduced from 45 to 7 days due to earlier visibility of recipe information • Increased productivity while decreasing product cost • Can now track supplier certification, corrective action reports, plant locations, and products and specifications instantly

25. People Technologies Processes 3 Key FactorsPeople, technologies, and processes interrelate • You cannot maximize benefits by improving one of these 3 in isolation • Applying new technologies in out-of-date ways just allows you to create errors & take bad decisions more quickly • People are adept at using tools incorrectly—they have to be trained in the tools & the processes

26. Keys to Successful ImplementationsImportant aspects and issues • Use a broad vision and approach • People want a business solution, not another system • Educate senior management & initial team • Support and do not undermine company culture • Select a partner; someone who understands your business needs and has a proven solution and track record • Scope should be well defined and understood • Required functionality at each stage precisely specified • Use pilot projects; the key to success • Pilots per discipline, or department are often possible Success = vision + organization + process + vendor(s) + approach + environment

27. CIMdata Strategic consulting for competitive advantage in global markets World Headquarters 3909 Research Park Drive Ann Arbor, MI 48108 USA Tel:+1.734.668.9922 Fax:+1.734.668.1957 Main Office - Europe Oogststraat 20 6004 CV Weert, NL Tel:+31 (0)495.533.666 Main Office - Asia-Pacific Takegahana-Nishimachi 310-31 Matsudo, Chiba 271-0071 JAPAN Tel: +81.47.361.5850 Fax: +81.47.362.0472 www.CIMdata.com Serving clients from offices in North America, Europe, and Asia-Pacific