While PLM is often seen as a specialized discipline, digital transformation encompasses everything.
In simple terms, digital transformation is about using modern technology to make organizations run better and drive more value to their customers, employees and partners. It often encompasses improvements in decision-making, operations and customer service, and it opens opportunities to rethink and reshape how a business operates. Whether through Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), Product Lifecycle Management (PLM), Manufacturing Execution Systems (MES), or advanced technologies like Artificial Intelligence (AI), Machine Learning (ML), and the Internet of Things (IoT), digital transformation helps redefine business operations for the future. However, the term is often used loosely, becoming synonymous with general technology adoption.
On the other hand, business transformation goes beyond simply implementing new tools. It involves structural changes, strategy overhauls, and redefined goals in response to evolving opportunities, challenges, or long-term visions. Digital tools may be central to enabling these shifts, but the key to successful transformation is in rethinking how the business operates.
To stay competitive, businesses need to undergo both digital and business transformations in tandem, as technological advancements often necessitate cultural, workflow, and strategic changes to fully unlock their potential.
Value drivers for digital transformation
Digital transformation rests on four foundational pillars that enable organizations to improve and innovate. These pillars include:
- Process and operating model transformation: Redesigning how work gets done across the organization to improve effectiveness, efficiency, agility, speed and value delivery.
- Technical debt improvement: Reducing reliance on outdated processes and systems that are expensive to maintain and limit the business’s ability to innovate quickly.
- Integrated ecosystem and data flow: Breaking down silos to ensure seamless data sharing across systems, departments, and possibly organizations—improving decision-making and operational alignment.
- Data analytics and insights: Leveraging data as a strategic asset for real-time decision-making, predictive analysis, and improved business outcomes.
These four pillars, when combined, create a holistic approach to digital transformation that looks beyond short-term gains. The focus should be on creating a long-term roadmap that acknowledges the complexity of transformation, ensuring the initiative is aligned with the business’s strategic objectives and future growth. It is essential to see digital as “transformational” as it not only about managing technical upgrades but reshaping the entire business ecosystem and ways of working.
Linking digital and business transformation
Despite the overwhelming focus on technology, from cloud to AI, people are the true heroes of successful transformations. For digital initiatives to work, business and technology subject matter experts need to be fully engaged, and open to adapting to new processes and tools. Without their buy-in, even the most advanced technologies or processes will fall short. Effective leadership and a strong change management approach are essential to foster the cultural shifts required for successful digital transformation.
Digital transformation is inherently linked to business transformation because the introduction of new technologies often necessitates changes in strategy, workflows, ways of working, and business models. This is not a one-time effort but an ongoing process that involves constant adaptation. As businesses evolve to remain competitive, digital tools provide the platform for that transformation, enabling greater flexibility, agility, and innovation.
The importance of cultural factors cannot be overstated. Digital transformation initiatives that fail to address the human element—training, collaboration, mindset shifts—often struggle. A culture of continuous learning and openness to change is crucial to realizing the full potential of any digital transformation effort.
Digitalizing the end-to-end product lifecycle
PLM, or whatever it is referred to in the organization, is not just about technology; it is a strategic approach that spans the entire enterprise. From initial concept and design to production, service, delisting, and circular economy, PLM ensures a seamless flow of information and processes throughout a product’s lifecycle. It powers collaboration, automation, and data-driven workflows that are essential to innovation. However, while PLM focuses primarily on managing product data and development processes, it complements other enterprise solutions like ERP, which handles broader financial, procurement, learning and development, and several downstream operational tasks.
Contrary to common misconceptions, PLM and ERP are not in opposition; they are complementary and often integrated. I am on the view that the wider PLM scope spans across ERP and into MRP/MES. Altogether, these disciplines and associated digital solutions enable organizations to manage both product-specific and operational data, creating a holistic view of the business. The scope of PLM has expanded, and many solution providers now refer to their offerings as part of digital transformation rather than PLM specifically. This reflects a broader strategic focus that includes upstream (idea and design phases) and downstream (customer service and product updates) functions, blurring traditional boundaries between departments and roles.
The broader appeal of digital transformation
At the executive level, the term “digital transformation” resonates far more than PLM because it encompasses a broader range of business functions and opportunities, including:
- Broader business impact across customer experience, operations, and innovation—whereas PLM is often seen as limited to product development and management.
- Strategic alignment with long-term business goals like growth, agility, and competitiveness, making it more relatable to board-level discussions focused on overall business strategy.
- Customer-centric focus: While PLM is product-centric, digital transformation places greater emphasis on improving customer experience, which is a top priority for board members looking to drive revenue and loyalty.
- Cross-departmental relevance as digital impacts all parts of the organization, from finance and marketing to supply chain and HR, making it a more comprehensive initiative that engages the entire leadership team; PLM often remains primarily associated with R&D functions.
- Future-proofing the business by adopting emerging technologies like AI, IoT, and data analytics that create new opportunities for innovation.
- Easier to communicate and measure at the executive level—such as improved operational efficiency, cost savings, and better customer satisfaction—compared to the more specialized and technical benefits of PLM.
While PLM is often seen as a specialized (engineering rooted) discipline, digital transformation covers everything from improving customer experience to streamlining operations and driving innovation. In many cases, PLM’s associated technical complexities make it harder for board members to grasp its full value, whereas digital transformation offers a more expansive narrative that aligns with the company’s broader goals. Key questions about PLM ownership at board level remain prominent in many organizations and across industries, from the Chief Technology Officer (CTO) to the Chief Data (or Digital) Officer (CDO), and across with other management board executives.
Vendors and analysts have capitalized on this shift, with all enterprise platform providers positioning their offerings under the banner of digital transformation. This shift often emphasizes transitioning from legacy systems to new technologies like digital threads, digital twins, and cloud platforms. Once again, true transformation goes beyond technology—it comes from the adoption of these tools by the business and the realization of their value in day-to-day operations.
Digital transformation goes beyond the adoption of new tools; it is about enabling and reshaping the entire business. In this journey, PLM plays a critical role, but its contribution is part of a larger, more interconnected strategy that involves every aspect of the enterprise. Ultimately, for businesses to thrive, they need to embrace the full scope of transformation—leveraging technology, people, and processes together to create lasting value.
