Does it worth to pay for on-prem PLM?

Does it worth to pay for on-prem PLM?

on-prem-cloud-cost

Cloud is one of the top trending topics in PLM space. After initial resistance, all PLM vendors are currently supporting some sort of “cloud PLM”. The devil is in details and sometimes it is hard to understand what type of cloud software provided by a specific vendor. I published my comparison between different aspects and characteristics of cloud PLM software offerings in my earlier article here.

My attention was caught by an article – So You Wanna Go On-prem Do Ya. I found it interesting and fascinating. It speaks about challenges of SaaS business to go on-prem. You can find an excellent outline of complexities and costs from private installs of your cloud software – operation, support, monitoring, maintenance, distribution, packaging, development and infrastructure.

Article brings a list of potential reasons of having private installs. Some of these reasons are completely legitimate.

If your product is in the dependency chain of your customer’s release management
If your product is security in nature
If your product is a core dependency for normal operation of a product
If your product is metered based on storage or transit OR if your product has high storage or transit requirements
If your product has stability issues due to multi-tenancy
Customer requirements around tenancy
Customer requirements around visibility of data
Varying degrees of industry requirements
Control of upgrade cycle
Payment restrictions for monthly services

In my view, this is a great list of reasons why manufacturing companies might decide not to use cloud PLM software.

This article took me back in thinking about what is the real cost of PLM software and how to compare on-prem cost to different kind of SaaS / cloud offerings

PLM industry is coming “in reverse” to the cloud. The well-established PLM vendors are developing on-prem for many years. Top 3 platforms (ENOVIA, Teamcenter and Windchill) have history of 15-25 years of development. Few “newcomers” step into cloud PLM development as a differentiation factor, but larger vendors successfully played catch up game and came with own “cloud stories”. It doesn’t mean their cloud tech are the same, but marketing catch up story is pretty damaging for newcomers claiming “cloud PLM” as a differentiator.

You can separate all PLM vendors into 2 groups – only SaaS/ Cloud and both (SaaS and on-prem). SaaS / cloud vendors are praising the advantages of “true cloud” and how cloud technology is removing the cost of IT, maintenance, updates, etc. The story provided by second group of PLM vendors is a bit more complicated and sounds like – “cloud is just a delivery model, our PLM technology is capable to run in different configurations – private or public cloud as well as on-prem”. So, which one customer should choose?

In my earlier article – Cloud PLM cost and lessons from Uber, I compared prices for cloud PLM available online. You can see the numbers and make a calculation how much will cost cloud PLM for your organization.  As you can see from the article above, private installations are significantly more expensive from every standpoint. While organization might consider on-prem as a right model for PLM, the real question is how many organizations will be able to afford it.

What is my conclusion? One of opportunities for cloud technology is to drive cost of PLM down through the computing infrastructure utilization, operation efficiency and lower support cost. Because of enormous amount of legacy in manufacturing, customers and vendors will try to balance between keeping existing systems to preserve investment and exploration of new products with better ROI. Cloud PLM technology will be an alternative to expand existing products. Does it worth paying a premium price for “on-prem” installs? This is a question most of manufacturing companies will be asking in coming years. Just my thoughts…

Best, Oleg

Want to learn more about PLM? Check out my new PLM Book website.

Disclaimer: I’m co-founder and CEO of openBoM developing cloud based bill of materials and inventory management tool for manufacturing companies, hardware startups and supply chain.

 

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  • Velmurugan Kandasamy

    Great article Oleg, what about cloud SaaS PLM which lets the customer to choose the hosting platform of their choices like Amazon AWS, Microsoft Azure or Google Cloud. What would be your input on this?

  • beyondplm

    Hi Velmurugan, thanks for your question. I’m not familiar with such system that can give you so many “cloud” hosting options. Do you know one?

  • Velmurugan Kandasamy

    Hi Oleg, I was wondering if there is any but I don’t think it exists today.. Back in December 2013 I did try out a Google Cloud PLM system for a Google challenge.. but it didn’t take off afterwards. In my opinion it might solve some of the legitimate reasons of on-prem need.

  • beyondplm

    What is “Google Cloud PLM”? I never heard about it….

  • Velmurugan Kandasamy

    Hi Oleg, I was talking about my PLM initiative on the Google Cloud Platform, sorry if I have wrongly worded.. That didn’t take off well. Now three years later I still see no one picked up this approach..

  • beyondplm

    Velmurugan, thanks for clarification! I’d love to learn more if you’re ready to share. What was the reason it didn’t take off? you write me to oleg @ beyondplm [dot] com.

  • Velmurugan Kandasamy

    Sure Oleg, I will share more details to your email. Thx.