Open source PLM conundrum

Open source PLM conundrum

open-plm-mirage-in-desert

Once open source software was a no-go solution in enterprise software. I remember debates and discussions about open-source code with legal department in a large PLM development company back in 2000s. They asked me to bring good reasons why to use open source software… Fast forward in 2016 – open source software goes mainstream these days. It is not limited to web. There are some interesting examples of open source software usage for enterprise.

The question about open source and PLM is entertaining engineering and software industry for the last few years. It is not a simple task to understand all nuts and bolts of open source software – licenses, distribution, business models, ownership, etc.

My attention was caught by TechCrunch article – The Money in Open-Source Software. It gives a detailed perspective and examples of companies associated with open-source software. I captured few interesting notes.

VC companies poured a significant amount of money into open-source businesses for the last 5 years.

According to industry estimates, more than 180 young companies that give away their software raised roughly $3.2 billion in financing from 2011 to 2014. Even major enterprise-IT vendors are relying on open-source for critical business functions today.

Open source is a great delivery model. Just give away software as open source is not creating viable business. The business model behind is a differentiation factor that can make it financially successful.

Despite the growing popularity of open-source software, though, many open-source companies are not financially healthy. Just like eyeballs didn’t translate into actual online purchases during the first dot-com era in the late 1990s, millions of free-software downloads do not always lead to sustainable revenue streams. Make no mistake, open-source software is a brilliant delivery model to drive user adoption, and it’s poised to drive increasing market value in the coming years. But it’s not a business model on its own.

There are very few examples of financially successful open-source businesses

Just how challenging is it to build a big, profitable open-source business? Consider this: Besides the ongoing success of Red Hat — the company now boasts a $14 billion valuation, built over 20 years — and MySQL’s acquisition by Sun for $1 billion in 2008, there are few other landmark exits in the history of open source.

PLM open source lessons

For the last few years, I’ve been asked about open source PLM projects and vendors. Some of these projects went dark. Here are just few with live websites – OmniaPLM, beCPG, OpenPLM, DocDokuPLM. However, the only company with strong traction and visibility is Aras Corp developing Aras Innovator.

Aras claimed something unique called “Enterprise Open Source PLM”. How open is Aras PLM source code? I’ve been trying to find the answer on this question on Aras PLM website.

Our approach was to combine multiple software formats, OSI-compliant open source,community source and commercial platforms, in a mixed source structure to provide the assurance necessary for business-critical solutions while delivering the flexibility for collaborative innovation. We call it enterprise open source.

Complicated? Not much. In a nutshell, Aras open-source is a combination of Aras commercial platform (read- traditional PLM software), free distribution and community solutions developed on top of Aras core platform. Most probably, Aras won’t give you to fork their code, but you might check it with Aras. Here is an old comment from 2011 I captured from Aras forum with request to get Aras open source. According to the comment, you don’t need source code to customize Aras.

But, make no mistake, Aras enterprise-open source is a brilliant business that put Aras in a unique position to challenge top 3 major PLM providers. The jury is still out.

Open source vs Free

Without go too much into legal terms, you would like to differentiate between open source and free software. I shared some of my thoughts about it back in 2010 in my article – PLM: Open Source vs Free. I think what we’ve seen in the past few years in PLM and more specifically with Aras Innovator project. It was mostly around building a subscription business around free software distribution. In a nutshell, Aras Corp. gives away Aras Innovator that allows you to do anything you want- use, implement, build solutions. But devil is in details and there are many use cases of Aras’ implementations that will force you to pay for Aras subscription. I guess, it is a good news for Aras and it drives Aras revenues up.

What is my conclusion? Manufacturing companies are looking for alternatives to expensive PLM solutions. This is a main driving force behind supporting open source PLM projects. At the same time, all manufacturing companies are highly sensitive to potential risks related to vendors without solid financial base and unproven business models. It can potentially drive their decisions against open source PLM projects and vendors with unproven business models. Just my thoughts…

Best, Oleg

Photo credit – Mirage in the Western Desert in Egypt. © Damien Lovegrove

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  • Stan Przybylinski

    Hi Oleg, a tough topic indeed. The community model can work, but technology has repeatedly shown us that giving people tools to create things (in this case software, Web sites, UIs) does not make them experts or often result in high quality, effective solutions.

    I have a long meeting with Aras today. Anything you want me to ask?

  • beyondplm

    Hi Stan. Here are few questions to Aras…

    1- How important “open source” element of Aras for their business today? Is it just marketing around “free” distribution? How widely open-source community developed solution distributed among customers using Aras.

    2- Is it possible to fork Aras platform as opensource code on GitHub or alternative location?

    3- How open-source free distribution is combined with cloud-based delivery model. Can I create Aras free distribution on AWS or Azure and sell service to customers?

    Thanks a lot! Look forward to hear about outcomes of your meeting with Aras.

    Best, Oleg

  • marclind

    Oleg – Nice post, good topic. Yes, business is good at Aras.
    We added more than ever new Aras subscribers last year – Airbus, BAE Systems, Lockheed Martin, Hitachi, Kawasaki, etc, >> can hear from many next month
    at ACE 2016 in Detroit http://www.aras.com/ACE2016 (it’s Free)

    The way we make money is simple: 9 years ago we brought a Red Hat model to PLM market

    Software’s free and we sell optional enterprise subscriptions (inc everything like PLM maintenance and way more like free training and upgrade services no matter how much you customize)

    We don’t “force” anyone to pay for anything – your choice, always

    In fact, we don’t “sell” you anything – once you decide, we help you buy

    You can use Aras Innovator in production operation for vast global deployments, integrate to other systems, create new functionality, build mobile apps, whatever you need… forever… and never pay a penny to us

    Can take a look at a Tier 1 automotive supplier open user with 600+ weekly active users worldwide for product dev, CAD, parts/BOMs (mech & elec), routings, tooling, quality, supply chain (slides 6, 11, 47 and 57 show scope of what they’ve done) http://aras.com/plm/003158

    Great story, only their time and effort

    Bottomline, we have better technology than our competitors
    and we’ve found a better business model – that’s our take

    Answers to your other questions

    1 – How important is OSS to our business? It IS our business… it’s “how we roll” 🙂

    2 – Possible to fork Aras? Anyone can fork our applications, not the platform (as you point out in your post)

    3 – Run on Azure or others? Of course, we’re a native web architecture – runs cloud, hybrid, on-prem, wherever, however you want – you want to stand up on cloud and sell,
    we’d love to talk (we’ll help you 🙂

    Hope this helps

    MarcL
    http://www.aras.com

  • beyondplm

    Hi Marc,

    Congrats with great business results! and thanks for your comments and answers! Nice slides -thanks for sharing too. I guess Aras invented something unique. I’d probably consider it as a freeware rather than open source, but it is semantic and marketing.

    Can you share how many active community developers are around for Aras and how many solutions that can be forked as an open source? Is there a link to list of community projects with source code available?

    Btw, speaking about Aras and cloud. What will be the cost of Aras/Azure? I’ve been playing with Azure website, but numbers are confusing. There are too many numbers and it is not what type of machine I need. – https://azure.microsoft.com/en-us/marketplace/partners/aras/aras-innovator-plm-suite/

    Give me a call – I will try to explain what I’m looking for about Aras/cloud.
    Best, Oleg

  • marclind

    Oleg – Sure thing, here’s some more info. Don’t know # community members, but it’s getting bigger every year – more than hundreds these days, but depends on what you mean ‘active’. Literally thousands of people working/developing with our technology around the world (a lot more if you take into account actual end users, power users working on Aras, etc.)
    Here’s a link to our projects http://www.aras.com/projects/ and there are more at various locations around the web like Git, etc. These can all be forked if you so desire – what are you up to?

    Here’s a link to Azure Marketplace which is easiest, fastest way to ‘spin up’ an instance to work with https://azure.microsoft.com/en-us/marketplace/partners/aras/aras-innovator-plm-suite/

    Will give a call to discuss when back from travels!
    Take care,
    MarcL
    http://www.aras.com

  • beyondplm

    Marc, thanks for sharing links. Look forward talking to you. Best, Oleg

  • Another difference between Aras and the other Open Souce projects is that Aras started as a non open source solution and in the late 90s where the funding were there for IT. It allowed them to create their first PLM framework even though it has been reworked then.

    Even if you can’t get the sources and fork Aras. I think one of their strong point is that their technology is good enough to be publicaly available. I’ve recently worked with some other technologies where It would be impossible to share a setup of their software. The install is way to complicated. I think it can make people more confident about the solution.

  • beyondplm

    Hi Yoann, thanks for the comment!

    I guess I’ve got your point – Aras tech is mature enough to be used. But it has nothing to do with open source IMO.

    But I agree 100% with you about complexity of installation and implementations. Most of existing on prem PLM systems require qualified service provider to install and bring it to production.

    The good news is that cloud PLM is eliminating the need to do so. Unless, it is hosted PLM solution that requires “hosted” work to be done for every customer. This is IT work. I guess T-System is doing it for Aras. Not clear how it works with Aras running on Azure.

    Have you had that experience?

    Oleg

  • Agreed for Aras & Open Source.

    I think there is a risk by saying that cloud will eliminate the need to have an easy install, and think that former solutions will be just fine. This is what I will try to talk about in an article I’m preparing about “Should we know that we have horsemeat in our PLM ?” (this is in French, I’m thinking about blogging again in english, but not sure how/where).

    My point is that short term, the horse meat is not an issue. long term not knowing what is in the software often reflects a lack of resilience, and create a risk on the capability for the software to evolve with the company without cost extensions.

  • beyondplm

    Yoann, you are right – to say “cloud is eliminating install” is very optimistic and short term looking statement. It might fight back and actually it will… I can see some points. I have an article in my draft list speaking about. Maybe we should do an article together in English? Let’s talk about it offline…

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