Microsoft cloud business is growing. How PLM vendors can follow?

Microsoft cloud business is growing. How PLM vendors can follow?

Few days ago, I was sharing my thoughts about Microsoft Azure Stack and hybrid could. Check this link. Are there cloud PLM solutions available from Azure cloud? Not many, according my observations (If you know about one, let me now). Based on CIMdata research, cloud PLM adoption was much slower than vendors were anticipating. Value proposition and clear differentiation are partially to be blamed. Also, the fact PLM vendors are lacking good solution for midsize manufacturing companies is an additional challenge for cloud PLM business.

Meantime, Microsoft cloud business is growing. Early today, my attention was caught by the following article – Microsoft’s Q4 earnings surpassed expectations thanks to the cloud. It includes productivity apps such as Office365 (with commercial revenues growth 44% YTY). But, even more interesting Intelligent cloud, which houses Azure, increased 11% to reach $7.4 billion, and accounted for 30% of total revenue.

Here is an interesting passage:

Microsoft Azure’s hybrid cloud approach and wide reach likely set it apart from other cloud service providers. Enterprises can use Microsoft’s public cloud while also running some applications in their own data centers — Microsoft says 80% of companies they talk to prefer a hybrid cloud approach, according to TechCrunch. Microsoft also has an enormous footprint in the enterprise as the company leverages its customer base by getting as many clients as possible to use at least some of Azure’s services.

The cloud segment will become increasingly important as the digital ecosystem moves away from being device-centric and toward cloud-oriented solutions. This shift will be more pronounced in the years ahead, as businesses and consumers seek greater mobility, and the IoT brings more devices into the digital fray. Microsoft is already taking advantage of this by launching Azure IoT Edge, a new service that enables businesses deploying the IoT to use all of the capabilities of the Azure IoT cloud. By moving further into a space that’s set to grow in the coming years, Microsoft could attract even more clients that otherwise couldn’t have deployed IoT solutions.

It seems like Microsoft is catching up on cloud business. Microsoft might be loosing some positions in consumer services and apps, but it is strong in business relations and B2B product offering. The numbers above speak for themselves.Office365 and Azure cloud are changing the trajectory of cloud adoption and my hunch many of these businesses are manufacturing companies.

What is my conclusion? I think, PLM vendors are missing cloud opportunity. However, to user this opportunity won’t be a simple task for PLM vendors with heavy focus on high end enterprise and old fashion PLM platform architectures.The new wave of public and hybrid cloud solutions will emerge for under-served segment of manufacturing companies. It will leverage new solution architecture, cloud scale and reach as well as new business models. It is time for PLM business to move forward. 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. My opinion can be unintentionally biased.

 

 

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  • marclind

    Oleg – Agree with you on this. Fits right into our/Aras perspective that the lines will continue to blur as a “Distributed Computing” paradigm becomes the norm moving forward, especially in large enterprises.

    You can see it with Azure Stack offering and others and it’s what we’re hearing as well.

    BTW, of course from a PLM on Azure standpoint right now… Aras is available at: https://azuremarketplace.microsoft.com/en-us/marketplace/apps/aras.aras-innovator-plm-suite

    Take care,
    MarcL
    http://www.aras.com

  • beyondplm

    Hi Marc, thanks for comment and link! However, as I mentioned many times before, Aras pricing on Azure cloud is completely confusing. It looks like you’re 100% focused on enterprise cloud initiatives with no SaaS option for cost. I doubt mid-size manufacturing companies will ever understand “price per time or VMs”. Do you have some examples about Aras cost in cloud configuration including subscription price?

  • marclind

    Sure thing, glad to help. Azure pricing – similar to Amazon pricing – can be confusing as you must know running OpenBOM.

    We’ve found that many companies already have a buying agreement in place that sets price and which they tell us they want to use anyway.

  • beyondplm

    Marc,

    Great point!

    What you mention as “confusing” are details about how price is calculated to host servers. And one of the advantages SaaS can offer is to shield user from such details by providing simple price / per user / team / month / annual, etc. At openBoM we charge per team without the need from user to understand “hosting” details.

    From your explanation it seems like Aras strategy is only to support dedicated hosting in which Aras will be installed on cloud hosted machines that belonging to customer. Therefore, you probably prefer to use machines hosted by customer and don’t create Aras cloud environment. I wonder what is minimum size of the manufacturing company that is ready for such hosted configuration?

    From my experience one of the reasons why small and medium manufacturing companies are interested in cloud / SaaS is to simplify IT. To create own hosted machines on Azure is not very different from dedicated data center or private hosting company. It might create advantages for IT, but unless I’m missing something Aras PLM installation will be dedicated to this company.

    As a reference check my blog where I shared my view on PLM cloud evolution – http://beyondplm.com/2016/08/31/plm-strategists-can-learn-plm-erp-debates-true-cloud/

    Main point – companies are moving from corporate servers to multi-tenant cloud applications. Cloud servers is an intermediate state. It is possible very large companies will stay there longer than others, but for many of them will discover the advantages of having global connected environment.

    Thanks for your comment! great discussion!
    Best, Oleg