Tamara de Rezende
What is PLM?
Product Lifecycle Management is a category of software that manages product portfolios for retailers. The lifecycle is defined as the journey from initial concept or idea, all the way through to the sale of the last piece of inventory from the store or website.
What is vertical PLM?
Software companies can target specific verticals such as automotive or pharmaceutical, or alternatively they can target specific areas of the business common to many verticals, for example Customer Relationship Management (CRM). Here is a simple visualization of these concepts:
Horizontal vs Vertical Comparison
As their positioning would suggest, both types of software come with contrasting strengths and weaknesses.
| Factor | Vertical | Horizontal |
| Data | Strong - likely will come pre-loaded with industry-specific dataset to save customers the effort to populate & then govern going forward | Weak - no software firm can govern datasets for multiple industries, so horizontal PIM and / or PLM will come empty. You will need to create & govern your own dataset. Beware of limitations of dependencies in generic tools |
| Features - standard | Neutral - all core features shared by all industries should be present, possible exceptions to watch out for during the buying process | Strong - likely will have a full feature set |
| Features - specialization | Strong - likely will come with existing features that meet industry-specific needs. The more complex & unique the industry is, the greater the weighting on this factor | Weak - necessarily needs to be flexible enough to meet many vertical needs, inevitably lowest common denominator features will prevail |
| Innovation - cross-fertilization | Neutral - software companies focused on specific verticals will not immediately implement ideas and innovation from other verticals until the innovation becomes standard pratice for the software category | Strong - software companies focused on specific horizontals will always benefit from cross-fertilization of ideas and innovation from other verticals |
| Innovation - specialization | Strong - propensity for future iterations and adaptions relevant to specialist needs is very high. You are unlikely to face high customisation bills / maintenance burden | Weak - propensity for future iterations and adaptions relevant to specialist needs is non-existent. Now you are in the era of cloud, heavy customisation is no longer an option so you will likely be pretty stuck with starting feature set |
| Network | Strong - likely will already be used by large number of industry players, propensity for easier partner adoption is very high | Weak - unlikely to be used by large number of industry players, propensity for partner adoption is low |
Summary
For business functions that are relatively generic - such as CRM - horizontal is likely the best choice for most companies. For business functions such as Product Information Management (PIM) that are highly specific - consider the different information the automobile industry would require compared to the pharmaceutical industry - vertical is likely going to deliver superior outcomes, particularly in highly specialized / complex verticals.
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