PLM Innovation and Packaging Trajectories

PLM Innovation and Packaging Trajectories

Innovation is a popular word these days. It sounds modern and trending. Everybody wants to jump to this bandwagon. I found myself reading and listening a lot about innovation during last time. The best book, I can recommend you is Peter Druker’s bestseller – Innovation and Entrepreneurship. It was re-printed many times. You can buy one on Amazon for a price less than one buck. However, the book is exceptional.

I spent Thursday listening and talking about innovation in engineering software during COFES Israel Forum in Hilton Tel-Aviv. You can get an idea about who attended by navigating your browser to COFES Israel website. Brian Shepherd of PTC brought the idea of packaging in PLM. It made me think about some interesting trajectories related to the innovation in general and more specifically in PLM.

Packaging and Roles

The idea is to split application into pieces and providing different applications to people in a company. It sounds to me as a blend of the old “role-based” portfolio and trending App Store ideas. The fundamentals of this model are very healthy, in my view. However, the execution of this “re-packaging” is mostly important. The ability of apps for inter-play and exchange information is one of the most critical aspects. The second will be usage of heterogeneous Apps coming from different vendors. As you can see the backside of flexible packaging is the same data problem. PTC has something called Common Data Model. You can listen Mike Campbell of PTC is speaking here about Creo Common Data Model. It will be interesting to see how it will be different from Dassault V6 platform.

Enterprise Open Source

Another idea how to charge people for PLM in a less painful manner. Aras Corp. is leading this PLM innovation. You can get PLM software for free – no associated license cost. However, you will be able to get extra services by paying maintenance, subscription and services. This model, re-package a very complicated PLM sales process as well lower entry barrier. An additional aspect of this innovation is to prove software maturity by enabling people to run free download and evaluation.  The last is only half true, in my view. Yes, you can download for free. However, your organization time is not free. In most of the situations, you can have a free PLM software for evaluation from other PLM vendors.

Services

This business model started many years ago as ASP model. Later, it was renamed as “on-demand” and SaaS. Now this model is associated with so called “cloud” platforms. The leader of SaaS offering, San-Francisco based Salesforce.com is selling the software by charging service money per month/year contracts. PLM early innovators in this space is bom.com (later re-branded as Arena Solutions). To sell services is an interesting approach and provide some financial benefits. However, PLM by nature removes one of the most strong advantages of SaaS model – flexibility to stop service at any time. At the time your data will be locked into PLM database, you need to pay to both providers until you will transfer your assets in an alternative system.

What is my conclusion? Reading the same book by Peter Druker, you can find, innovation may happen in different places. Product, Technology, Services, Business Processes, Logistic and Business Model. Edward Lewis from Hollywood fairy tale Pretty Woman is buying up businesses to break them up and sell them off in piece with a profit. It is hard to sell large PLM Platform these days. PLM vendors are trying to find an alternative model, which will be more successful in 2010s. Services, Open Source, Re-packging – all these models have one single root – to find an appropriate way to match customer needs and product offering. The innovation is in a business model. However, the simplicity of products is probably the key to success.

Best, Oleg

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  • MarcL

    Oleg,

    Good points in this post. Re-packaging a product can actually transform its value proposition. I like a lot what PTC is doing with Creo, this kind of “applification” of CAD is long overdue IMO.

    Think you got what we’re doing to enterprise PLM at least partially right. We are redefining the way companies get & use PLM. Instead of the big sales process w/ lots of pressure, we enable companies ot validate that Aras is “right” for them w/o commitment. That way they know it will work, instead of the old way where you spend a lot and hope it works in 3-5 years. The implication of this is that we’re not going to pressure you or spend endless hours trying to convince you that it’s right for your company. We blogged about this a bit in Why Aras Doesn’t Sell PLM http://aras.com/plm/001169

    You’re right that nothing in this world is “free”. You can get the Aras Innovator suite with no PLM license cost, and you do need to allocate employee time to implement and oversee the system once operational. We’re making PLM easier, more cost effective… not magic 🙂

    And for what its worth, there are companies all over the world that moved past evaluation and are running Aras that have never spent any ‘out of pocket’ money. They just figured it out and use it.

    MarcL
    http://www.aras.com

  • beyondplm

    Marc, I think the comparison with Aras is not “apple to apple”. The whole point of Brian’s speech was about how we sell PLM today. However, Aras model wasn’t part of this comparison. This is just because the core Aras package license is free. However, if I will move this conversation to Aras modules that requires licenses (i.e. CAD integrations), the notion of packaging can be articulated as to sell them all together or piece-by-piece, which makes sense sense, in my view. What do you think?

  • MarcL

    completely agree!