Small and Medium Enterprise (SME) manufacturers (defined as sub-500 employees with an Annual Recurring Revenue (ARR) below US$1 billion) have been purchasing Product Lifecycle Management (PLM) solutions at higher rates as new advancements such as flexible models, lightweight solutions, and Software-as-a-Service (SaaS) deployments have opened the door to smaller manufacturers that do not require the same level of functionality as traditional on-premises incumbent solutions.
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SME Manufactures Are Closing the Gap to Large-Scale Manufacturers
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NEWS
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Total Product Lifecycle Management (PLM) solution spending by manufacturers in 2023 was US$6.60 billion, with a growth rate of 13%, reaching US$25.5 billion in 2034. Currently, large enterprises account for 83% of the market spending, due to the inherent need for large manufacturers to track, monitor, and assess multiple product lines. By 2034, large enterprises and Small and Medium Enterprises (SMEs) will start to converge in regard to spending on PLM solutions, with SMEs growing to 29.2% due to PLM vendors tailoring solutions to fit the needs of smaller businesses. The growth of SME spending on PLM systems will come from solution providers that meet the decreased input and functionality requirements of smaller manufacturers. Providing lightweight PLM solutions that only require Computer-Aided Design (CAD) in conjunction with personalized solutions that display time-sensitive information will open up the PLM market for SMEs. With these changes to PLM solutions, spending by SME manufacturers will out-perform the market average with a Compound Annual Growth Rate (CAGR) of 19.3%.
SME Manufacturers Cannot Be Overlooked as "Small Players" in PLM Adoption
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IMPACT
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Full saturation of SME manufacturers in the PLM market will not be possible, as some will hold out due to new tech ambivalence, but there is a strong and growing appetite for solutions that offer low functioning, flexible, and industry-specific functionality. With concrete Go-to-Market (GTM) strategies that target SME manufacturers, fast-moving PLM vendors can establish dominant industry niches in the market such as pharmaceutical manufacturing, which is seeing the highest growth rate among manufacturing industries with a CAGR of 15.9%.
At the current growth rate of SME adoption, PLM solution providers will lose out on US$20.1 billion by 2034 if solutions are not built out to encapsulate the market. PLM solution providers will need to scale down and personalize software to overcome the barriers to entry, most notably price sensitivity, lack of tailored solutions, and deployment methods that lock end users in place through perpetual licenses.
The Qualities PLM Solution Providers Must Prioritize to Capitalize on the Growing SME Market
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RECOMMENDATIONS
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Develop Flexible Models for Personalized PLM Solutions:
Flexibility within PLM solutions is a large pain point for SME manufacturers. System architecture that cannot be configured or customized disincentivizes SME manufacturers from adoption, as these businesses are looking for personalized PLM solutions for fast and effective oversight into operations. To address these issues, PLM vendors must provide a system architecture that allows for configuration and customization. Configurable solutions can be edited to precisely use specific enterprise applications for data inputs that can be scaled up or down based on company needs. Custom PLM solutions allow the manufacturer to change the User Interface (UI) of a PLM solution to increase employee productivity by putting the most critical Key Performance Indicators (KPIs) and analytics measured by PLM solutions on the homepage for easy access.
Provide Lightweight PLM Solutions to Attract SME Manufactures:
SMEs do not benefit from complex PLM solutions that use input from multiple data sources because software availability is not on par with large-scale manufacturers. Large-scale manufacturers integrate existing enterprise applications such as Enterprise Resource Planning (ERP), Manufacturing Execution System (MES), and Supply Chain Management (SCM) solutions for the best results when using PLM solutions. These applications are not readily accessible for SME manufacturers that typically have access to the bare essential applications such as CAD. PLM solution providers must provide lightweight PLM solutions that operate with simplistic data inputs from minimal sources. Additionally, backbone functionality within PLM solutions such as Quality Management Systems (QMSs) must be prioritized as areas of investment due to the current lack of availability among SMEs. If PLM solution providers deploy lightweight solutions that use CAD for data inputs and prioritize QMS functionality, the barrier to entrance into the PLM market will significantly fall to the point that SMEs can widely adopt.
Use SaaS Deployment for Best TTV and New Technology Implementation:
Software-as-a-Service (SaaS) deployment of PLM solutions is a natural fit for SME manufacturers. As price-sensitive companies, SMEs must justify all purchases with tangible benefits and a clear Time-to-Value (TTV). By providing PLM through a SaaS deployment, SMEs will benefit from the inherent advantages of SaaS, such as being cheaper than on-premises solutions, along with the ability to cancel or suspend services in times of low growth. Deploying PLM SaaS will allow for further integration of new technology that is currently out of range for SME manufacturers. Artificial Intelligence (AI) and generative AI can be deployed via cloud services and run on SaaS PLM for insights into product workflows and tangible solution fixes for pending problems. Low or no-code software changes are also possible with SaaS deployment to create customized software without the need for diligent Information Technology (IT) departments that are not readily available among SME manufacturers.
