SaaS PLM – New, Complex, Expensive?

SaaS PLM – New, Complex, Expensive?

Last week I had healthy debates with one of my blog readers about different options to deploy PLM for the small manufacturing companies. Here is the part of this conversation

[…yet SaaS PLM presents a difficult decision for most engineering managers. “Do I want to have my company data hosted off-site or on-site?” The primary reason for answering “yes” is the perceived complexity of managing a PLM on-site. So we directly address that complexity, and give them a simple product – available as a subscription, if that’s also an important benefit – which lets them keep their mission-critical data under their direct control. I’m sure it won’t shock you that we also have a web page devoted to the on-site versus off-site debate: http://www.buyplm.com/best-plm-software-license-decision.aspx …]

I recommend you to have a look of PDXExpert PLM website and make your opinion. The following passage is actually very interesting:

SaaS is new & complex… and complexity is expensive. On-demand PLM moves your product data into an off-site facility with out-sourced IT resources. The PLM application service provider (ASP) lets you to rent, rather than buy, your software as a service (“SaaS”). Your data is hosted off-site (in the “cloud”) where details like physical location, update schedules and network infrastructure are hoped to be irrelevant.

My experience with cloud applications in consumer space is slightly different. Almost all my moves to “cloud-base” option was driven by reducing of complexity. I can bring some, pretty obvious, examples. Migration from Microsoft Office to Google App allowed me to reduce a complexity of dealing with Microsoft Outlook, to forget about the complexity of handling Outlook pst and other local files. My files and emails are available now for every device in a seamless manner. Another case is Evernote. Previously, I used Microsoft Office tools. Evernote allowed me to capture notes simultaneously on multiple devices, synchronize them between devices and making them available for me at anytime. My last example is dropbox. I’m using dropbox for short time file sharing and exchange information between different devices. USB stick was a previous solution. Now, I can drop a stick in favor of Dropbox. No hassle, I shouldn’t care about USB sticks, viruses coming from Windows and can access it from multiple devices.

What is my conclusion today? The idea of SaaS is not new. We used to call it ASP, Hosted, OnDemand… Today it comes as SaaS. Some PLM vendors tried this option before with more and less success. Can we make a conclusion about SaaS PLM cases today? I think, it is still too early to drive a simple decision. Massive influence of consumer internet software, in my view, will influence individual and company decision makers towards SaaS solution. I’m interested to know what is your opinio and experience.

Best, Oleg

*Picture credit of The Hindu.

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  • Oleg, I think the point is not that SaaS is a bad idea, it’s just you have to decide if the cost of failure is worth the perceived savings. I think that the perceived savings are often overstated, and the cost of failure is under-appreciated. Think how safe mortgage-backed derivatives were until we got an actual failure 🙂

    SaaS also has performance, cost, security and flexibility implications but these can be analyzed and accepted. Forecasting the impact of a service outage is far more difficult.

    There are very large companies with very deep experience and resources (far more than the largest PLM suppliers) who have had SaaS failures: Microsoft, Google, Salesforce, HP, Amazon, T-Mobile. In most cases, people can work around the failure. But the closer one gets to “mission critical” — essential for your operations — the less acceptable is an outage. You’re simply out of business until the system comes back.

    SaaS is great: use your Gmail, outsource your payroll, manage your travel expenses, work within on-line office alternatives. But all uses of SaaS are not equally valid. Four hours without Google apps is not the same as 4 hours without your PLM system.

    Kind regards.

  • Suwon Chung

    Our team tried to begin SaaS PLM towards Samsung Electronics partners, but could start at all. A company which used ERP ASP wasn’t willing to pay for PLM as well as SaaS PLM. With PTC, we were willing to give an option like subscription model to them, but no company wanted it. Recently we installed the SMB sized PLM on 4 SEC partner companies. They all pay only half of the charge by getting support from the goverment which wanted them compete well.

  • beyondplm

    Ed, Do you have any statistic information about IT outages (i.e. MS Exchange servers, etc.). Internal email, SharePoint and PLM servers are safe for an outage. PLM system is indeed a mission critical for many of the companies. For most of the companies I know, email is the top mission critical system (I’m talking about engineering environments). Private or corporate clouds are not like Gmail and Salesforce. It is an environment very closed to corporate IT. I believe, manufacturing and ERP system use case might be a bit different. Thank for comments. Best, Oleg

  • beyondplm

    Suwon, thank you for sharing of this information. What is your main conclusion? Do you think, subscription cost is the issue? Thanks, Oleg

  • Ed A

    Oleg, I don’t believe this failure data is publicly available: SaaS suppliers with outages have no incentive to publish their problems. We read about only those systems that are so large that their failure can’t be masked (RIM, T-Mobile, Google, Microsoft, etc.). Everyone else flies under the radar.

    I do not want to be entirely negative: for non-mission critical systems, SaaS can be a great convenience and, in many applications, a necessary solution to efficiently use scarce IT resources. However, there’s literally nothing more essential to a company than its own product IP.

    Simply choosing to host your company’s intellectual property off-site – constantly exposed, however carefully, to the Internet – is a self-imposed risk that ought to be weighed by the most senior management. I suspect many (most?) directors and shareholders would be astonished and horrified to learn that their product content and control had been voluntarily handed over to a third party.

    I often wonder if any of the SaaS companies use off-site source code repositories and build their applications using SaaS tools. The only SaaS supplier I’d trust would be one who could demonstrate this level of commitment to the concept. Frankly, it’ll be a very long time before our application’s source code repository is hosted off-site!

    Kind regards.

  • beyondplm

    Ed A, thanks for sharing your insight! There is certainly something reasonable in how you position SaaS and security. I think it is still too early to see how SaaS solution will diffuse into all industries. However, I can see things are changing, especially when the biggest questions are cost and time to market. Connectivity and collaboration that can be proposed by SaaS vendor can be huge. Combined with cost it can be “a killer solution”. Then it will be only a question of “risk vs. payoff”. Don’t you think so? Best, Oleg

  • You are quite right: it is “risk vs. payoff”. In ten years I hope we won’t be faced with this choice. But today, I’m quite happy letting others take the risks. Product development has enough complexity without worrying about “leakage”.

  • beyondplm

    Ed A, thanks! It is hard to predict how fast change will go. The last numbers about SaaS / Cloud I’ve seen presented faster movement compared to what was predicted before. Just my opinion… Best, Oleg

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