Software-defined products demand a new approach to product lifecycle management
Software-defined products are products whose functionality, performance and customer value increasingly depend on software, electronics and connected systems. Successfully developing software-defined products requires manufacturers to manage software, hardware, requirements and lifecycle processes as a single connected ecosystem.
The products we use every day are changing.
Cars gain new functionality long after they leave the factory. Medical devices receive software updates that improve performance and usability. Connected industrial equipment relies on software, electronics and embedded intelligence to deliver capabilities that were once defined primarily by hardware.
For manufacturers, this shift creates a new reality: products are increasingly defined not only by their physical components but are architected around the ability to update the software that powers them. Software-defined products require manufacturers to continuously manage software releases, product configurations and hardware dependencies throughout the product lifecycle.
As organizations navigate this transformation, they face a growing challenge: How do you manage, test and validate software, electronics, mechanical design together while increasing quality, compliance and traceability?
The answer requires more than traditional product data management. It requires an integrated, systems engineering driven approach empowered by product lifecycle management that connects and feeds every discipline involved in product development.
We believe that’s one reason that Siemens received the highest score in the Software-Defined Products Use Case in the 2026 Gartner® Critical Capabilities for PLM Software in Discrete Manufacturing Industries report. Learn more and access complimentary reports.
While analyst recognition is encouraging, what matters most is what it means for manufacturers working to deliver increasingly complex products.
The software challenge isn’t just about software
When people hear “software-defined products,” they often think about software development.
In reality, the challenge is much larger: Software is not just enabling the product, the product is defined around the capability to enable functional updates through software. Developing and managing software-defined products is a multidomain engineering challenge that extends far beyond software development alone.
Modern products combine mechanical systems, electronics, embedded software, requirements, configurations, simulations, manufacturing processes and service information. Changes in one domain can have consequences across many others.
- A software update may affect hardware compatibility.
- An electronics design change may require updates to software configurations.
- A new product requirement may drive modifications across multiple engineering disciplines.
- The result is growing complexity that can be difficult to manage when teams work in disconnected systems and processes.
Gartner notes “As discrete manufacturers incorporate more electronics and software into their physical products; PLM is evolving to manage multidomain complexity.”
Connecting the digital thread for software-defined products
Successfully developing software-defined products requires a complete view of the product – not separate views for mechanical, electrical and software teams.
That is why Siemens continues to invest in a digital thread approach that connects product information across the lifecycle and across the development disciplines.
Teamcenter serves as a digital backbone that connects mechanical, electrical, electronics, software, manufacturing and service domains through a common product definition and digital thread.
Rather than managing software independently from the rest of the product, organizations can connect requirements, configurations, product structures, manufacturing information and lifecycle processes.
This creates greater visibility into dependencies and improves the ability to understand the impact of changes before they become costly problems.
Learn more about Siemens’ approach to the digital thread and how it connects people, processes and product information across the lifecycle.
Bringing software and hardware development together
One of the defining characteristics of software-defined products is the need to coordinate hardware, software and systems development through a connected lifecycle approach.
Manufacturers need to understand how software relates to physical product structures, electronics architectures and product configurations. They need traceability across requirements, development, testing and release activities. And they need confidence that changes remain synchronized across domains.
Teamcenter and Polarion deliver software architecture and configuration management, software-on-chip relationships, and the ability to connect software, electronics and mechanical development through common lifecycle processes enabling to drive the CI/CD pipelines from a common configuration and variability model, to test and validate not just ‘a’ configuration but all combinations of software and hardware.
This integrated approach helps organizations manage increasing software complexity while maintaining product integrity across the lifecycle.
Organizations looking to connect software and systems development can also benefit from a model-based approach to product development. Siemens helps manufacturers align requirements, systems architecture and product development through systems engineering solutions designed to improve collaboration across engineering disciplines.
Managing multidomain complexity
As products become smarter, software is no longer developed in isolation.
Engineering teams must coordinate mechanical, electrical, electronics and software development while maintaining a common product definition. They need visibility into dependencies, configurations and changes across disciplines.
This is particularly important for industries such as automotive, aerospace and defense, electronics, semiconductors, industrial machinery and medical devices, where product performance increasingly depends on the interaction between hardware and software.
Gartner identifies multidomain engineering and software-defined products as key drivers shaping the future of PLM.
The ability to connect these domains through an integrated lifecycle approach helps organizations reduce risk, improve traceability and accelerate innovation.
Preparing for the next generation of products
Software-defined products are no longer limited to a handful of advanced industries.
Manufacturers across industries are navigating growing software and systems complexity, along with increasing pressure to innovate faster while maintaining quality, compliance and product performance.
To succeed with software defined products, we believe organizations need:
- A strategy for managing software-defined products across the lifecycle
- Integrated development across mechanical, electrical, electronics and software disciplines
- End-to-end traceability through a connected digital thread
- A scalable PLM foundation capable of supporting future product innovation
We believe the highest score in Gartner Software-Defined Products Use Case reinforces our commitment to helping manufacturers address these challenges. More importantly, it reflects our continued focus on enabling customers to develop the next generation of intelligent, connected and software-driven products.
Organizations that successfully manage software-defined products can improve traceability, accelerate innovation, reduce development risk and deliver continuous product value through software-enabled functionality.
Learn more
Learn how manufacturers are using Teamcenter, Polarion and the digital thread to develop, validate and deliver software-defined products at scale.
Frequently asked questions
What are software-defined products?
Software-defined products are products whose capabilities, functionality and performance can be enhanced, updated or modified through software after the physical product has been delivered. Examples include connected vehicles, medical devices and industrial equipment.
Why are software-defined products challenging to develop?
Software-defined products require organizations to coordinate software, electronics, mechanical engineering, requirements, testing and manufacturing processes. Changes in one discipline can impact multiple others.
How does PLM support software-defined products?
PLM helps connect product data, requirements, configurations and lifecycle processes across engineering disciplines. This improves traceability, collaboration and change management.
What role does the digital thread play in software-defined products?
The digital thread connects information across product development, manufacturing and service processes. This allows organizations to understand dependencies and manage changes more effectively.
How do Teamcenter and Polarion support software-defined products?
Teamcenter and Polarion help connect software, electronics and mechanical development through integrated lifecycle processes, requirements management, configuration management and traceability.
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Gartner, Critical Capabilities for PLM Software in Discrete Manufacturing Industries, Marc Halpern, Sudip Pattanayak, Rajan Saini, Brady Barnes, 10 June 2026.
Gartner, Magic Quadrant for PLM Software in Discrete Manufacturing Industries, Sudip Pattanayak, Marc Halpern, Brady Barnes, Rajan Saini, 9 June 2026.
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