Onshape + PTC = What Happened?

Onshape + PTC = What Happened?

Earlier this week, PTC announced about the acquisition of Onshape, the company started by a group of CAD industry veterans including former Solidworks founders and employees in 2012. I attended a special briefing organized PTC where I was able to hear Jim Hepplemann, CEO of PTC and Jon Hirschtick, co-founder and CEO of Onshape sharing their perspective of why PTC acquired Onshape and what they plan to do next.

Before getting into details, I’d like to give you an industry background as I can see it. Cloud is the biggest technological shift we can see happening around. The shift comes as a combination of both technologies, products and business models. As 2019 is going to the end, we can speak about the 2010s as a decade in which CAD and PLM industry was influenced by cloud development. From the beginning, we’ve seen a lot of concerns and skepticism. Solidworks was early speaking about browser CAD in 2010. Autodesk made a bold shift to the cloud in 2011-2012. Onshape was founded about the same time by Jon Hirschtick who left Dassault Systems to lead the foundation of a new CAD system in a browser, which became Onshape (original name of the company – Belmont Technology). PLM development at the same time also started to change. in 2010, most of PLM systems were already web-based, which allowed to most of PLM companies to host these systems using IaaS architecture (mostly AWS or private hosting systems). All CAD / PLM companies marketing successfully reported about transitions to the cloud.

Here is the thing… the “cloud” became one big buzzword. At the same time, the details are important. As Jim Hepplemann stated during the briefing, PTC researched the transition to the cloud and made a conclusion that no company in the history was able to port existing system with traditional server-based and web architecture to the cloud. All leaders in the SaaS industry built these systems from scratch and not ported existing systems. The architecture principles are different. The systems were developed for a “company”. And to run 100 systems for 100 companies in the cloud is a big problem. You need to run one system, which has a multi-tenant architecture to share multiple companies. Old architecture cannot scale and also will lead to low margins (or high cost – whatever you like to call it).

In a CAD world, Onshape became that system – built from scratch using modern data management technologies, running on Amazon Web Services platforms and multi-tenant allowing unique capabilities for collaboration between users and companies. The technology Onshape built allowed to eliminate files and simplify one of the most painful CAD file data management processes by building technology to manage changes and revisions of design (including branches and merges).

According to Jon Hirschtick, Onshape technology is great for distributed teams, real-time collaboration, suppliers, sharing data in a real-time, which gives huge speed advantage. Everyone works on the same system, with no problem with versions and updates. Onshape can work and develop faster because of the usage of one system upgraded at the same time. It allows fast communication between teams – email is just to slow in the 21st century.

Onshape built a great technology and PTC seems to be having a great opportunity to boost Onshape business model. The majority of heavy PTC CAD and PLM customers are large corporations. For small and medium-sized companies, PTC products are either too complex and too expensive. New CAD systems and business opportunities are coming from mid-market. And according to the data shared by PTC, 70% of the new market in recent years went to Autodesk and Solidworks. This is an opportunity PTC is coming after. Once, PTC was disrupted by Solidworks (which was founded by Jon Hirschtick) and PTC doesn’t want to be disrupted twice (now by Onshape). And disruption starts from the bottom from smaller customers using disruptive technologies.

What is my conclusion? PTC is looking at how to expand in the market which grows slow on the top but has huge potential in the small-medium segment of the market. To disrupt in SMB market you need to have new technology and market scale. And this is what PTC is planning to do using Onshape technology target Autodesk Inventor and Solidworks both using desktop CAD systems with traditional PDM systems. A separate topic in this strategy is PLM, which is the end game for PTC looking at how to develop a new PLM stack using multi-tenant technologies and a new collaboration platform. Just my thoughts…

Best, Oleg

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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  • Sven Müller

    Hello Oleg,

    thank you for the article.

    There is one sentence which says nearly all about “what is cloud-ready”.

    “…All leaders in the SaaS industry built these systems from scratch and not ported existing systems….”
    I don’t know in how many discussion time after time i said this to others, that it is not enough to put something into the “cloud” and everything is fine. You can’t imagine how often discussions going only for features, features and … you get it … features. If you start talking about technology and architecture, many times the answer is “it is in the cloud, it must be good…” or “it’s just a technical issue, go for it” as the IT-Department could change anything in our vendor products.

    The change from monolitic systems and from single instances for a single company or department to multi-tenant systems, global collaborating companies and the cloud is a very disruptive approach. It is in my opinion to disruptive to just talk about features and shiny GUIs. We have to talk about architecture and technologie first. A feature can be delivered every time, a new architecture just once.

    I know it is a hard way to go for us technical people, the engineers and architects but the reward will be so much higher, if we succeed here in a collaborative way with the buisness people.

  • beyondplm

    @disqus_6a8VUhtjD3:disqus thank you for your comment! You picked up my favorite thing from the article. I was blogging about cloud and PLM from 2010 and I’ve seen the dynamic of the discussions and application trajectories. Cloud was something nobody believed in. I remember people were saying – manufacturing companies will never store their data in the cloud. And it started to happen. Then, I’ve heard that cloud is simple – just to take existing servers and move them from my office and place them on Amazon. It was the major theme in cloud PLM achievements for the last 3-5 years. And it doesn’t work. Also from the system standpoint and also from the margin standpoint. That was the reason for me to start openbom.com because SaaS PLM requires new architecture and new business models.

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