How to Get PLM Selection Right: The 7-Phase Process from Strategy to Contract

The 7-Phase Process from Strategy to Contract

PLM selection without methodology is like building a house without blueprints. You might get lucky — but the odds are against you. After more than 30 years of experience in IT and PLM projects, we have developed a 7-phase selection process that systematically leads to the right outcome. Each phase has clearly defined objectives, deliverables, and decision points. And each phase builds on the previous one. Shortcuts come back to haunt you — almost always.

Phase 1: Strategic Preparation

Before a single vendor is contacted, the foundations must be in place. Phase 1 establishes three things: a steering committee with decision-making authority that governs the project from the executive level; a business case that quantifies the expected ROI and defines strategic goals; and a change strategy that clarifies from the start how the organization will be prepared for transformation.

This phase is most frequently skipped – and this is precisely why projects fail later.

Phase 2: As-Is Analysis and Maturity Assessment

Phase 2 captures the current state – honestly and completely. Existing processes are mapped, the entire system landscape is documented, and data quality is assessed. Critically, the system landscape includes not just the current PLM system, but all integrated systems – ERP, CAD, MES, DMS, ALM. Only by knowing your starting point can you define realistic requirements.

Phase 3: Requirements Using MoSCoW

Phase 3 transforms insights from the as-is analysis into prioritized requirements. The MoSCoW method ensures requirements do not become an endless wish list: must-have requirements are non-negotiable, should-have are important but deferrable, could-have are desirable, and won’t-have are consciously excluded.

Additionally, concrete use cases are defined that will serve as the basis for PoC evaluation in phase 6. Non-functional requirements — performance, scalability, security – are documented as equally important.

Phase 4: Market Analysis and Shortlist

Only now does the market review begin. Based on prioritized requirements, a longlist of potential PLM vendors is created and narrowed to 3 to 5 vendors through criteria such as industry fit, integration capability, and strategic alignment. References are checked – not those offered by the vendor, but ones that match the organization’s profile.

Phase 5: RFP and Evaluation

A standardized Request for Proposal is sent to shortlisted vendors. Standardization is critical: only when all vendors answer the same questions can their proposals be compared. Evaluation is transparent, using predefined criteria with weighted scoring.

Phase 6: PoC and Live Demos — Reality Over Marketing

Phase 6 gets concrete. Remaining vendors demonstrate their system using the actual use cases from phase 3 – not standard demos. Key users evaluate the demonstrations from the perspective of their daily work. Reference visits to existing customers provide insight into reality beyond the sales presentation.

• The Scoring Matrix: Creating Objectivity

A professional PLM evaluation is based on weighted criteria, not gut feeling. Typical categories include functional coverage, integration capability, usability, scalability, vendor stability, and cost. The critical point: weights are established before vendor demos – not after. And evaluation is conducted by the entire steering committee, not by a single person.

• What Makes a Good PoC

A PoC is the litmus test for any PLM system – but only when set up correctly. This means specific use cases from phase 3, key users simulating their daily work, and reference visits to companies of similar size, industry, and complexity. What were the challenges? How was support? Would they choose the vendor again?

Phase 7: Decision and Contract

• TCO Over License Costs

Total cost of ownership over at least five years is the only valid comparison criterion. License fees often account for only 20 to 30 percent of total costs. The remainder goes to implementation, customization, integration, training, maintenance, and ongoing support.

A system with low license costs but high customization needs can be significantly more expensive over five years than a pricier system that fits better out of the box. This calculation must precede the decision – transparent and traceable.

• The Contract: Settle Today What Matters Tomorrow

SLAs, exit clauses, and governance are best negotiated when bargaining power is strongest – before signing. Key questions: what performance metrics apply to support? What happens if SLAs are not met? Under what conditions can the contract be terminated? How is data returned at contract end?

Conclusion: Not a Sprint, but a Process

The 7-phase process is not bureaucracy. It is insurance against the typical mistakes that cause PLM projects to fail. The time invested in the early phases saves multiples later – in money, in frustration, and in user trust.

Most failed projects did not get phase 6 or 7 wrong. They skipped phase 1 or 2.