PLM business is a complex discipline and often relies on resellers to grow and scale. PLM industry has many examples of successful partnership channels in the past. And some companies are open to speaking about the value of resellers to make their business stronger. Engineering.com article Why VARs can be the difference between PLM success and fiasco brings you examples of the role of PLM partners in PTC business.
Read the article and draw your conclusion.
Clearly, the VARs are of great importance. In fact, this support network within the ecosystem of these major companies may at its best make the difference between a success and a fiasco when betting on PLM. “Absolutely, they play a significant role,” says PTC’s Jim Heppelmann in today’s TV report. “Resellers like PDSVISION and the other partners in our ecosystem supply a number of added values. What values do they add? Geographic coverage is one example. They are found in many places where we do not have direct coverage. Besides this, they develop and provide important services, integration solutions, education and often also engineering expertise.”
According to PTC numbers, 30% of PLM business is brought by VARs and in CAD business, the number goes up even to 70% of the use cases.
My special attention was caught by the following passage in the article related to the SaaS business.
It’s still unknown how this will develop on the CAD side in the future. About a month ago, PTC bought the cloud-CAD company Onshape, a browser-based solution with no need for software to be downloaded to your computer. Instead, everything happens in the cloud through an Onshape browser. Everything done is saved in the cloud and you even get PDM as an integrated part of the ‘rent’ you pay for this Software-as-a-Service (SaaS).
Heppelmann has previously focused heavily on this type of SaaS business model, instead of the former perpetual licensing and maintenance fee model. In today’s TV interview Heppelmann was unclear on what role the channel resellers will play in conjunction with Onshape, but said, “We are working to find good solutions around this collaboration, solutions that mean that our channel
The passage made me think that what can be SaaS PLM channel and how it can be different from today’s PLM resellers and services providers.
What is the SaaS PLM / VAR gap?
Traditionally VAR makes money from installation, training, integration, customization, support and client control. These areas have been eliminated or severely reduced by SaaS vendors. Earlier SaaS product was considered as enemies of VARs. I can see how potentially VARs can present a negative attitude to the SaaS PLM business. Therefore, PLM vendors with an extensive VAR network should make careful assessments of the relationships between VARs and SaaS products and not to build channel enemies. While SaaS products are often attracting customers by the absence of service revenues, eliminating the need in IT and simplifying product deliveries, such aspects as training, trusted advisory and knowing customers first hand cannot be eliminated.
What are SaaS product strengths?
1- Simple, no installation, infrastructure, configuration
2- Simple access (available via browsers)
3- Ease of maintenance (no upgrades, product is always up to date)
4- No IT infrastructure needed.
However, all these SaaS product strengths might be eating the core foundation of VAR. Because the following things for many years were fundamentally important for VARs:
1- Ability to generate service revenue on top of the product. Easy SaaS products eliminated such opportunity by not providing enough tools for VARs to generate the revenue
2- Establishing of continuous revenue stream. As reach is usually limited for VARs, the need to keep the revenue stream is essential. VARs are usually maintained direct communication with the customer and always looking for revenue stream (consulting, education, upgrade, migration )
3- Customer control. Usually, VARs are trusted by customers and serve as a bridge between a vendor and customer. The bridge goes in two ways. It is not rare when VARs maintained control with the customer moving them from one vendor to another vendor.
I thought what important aspects of SaaS PLM can become an attractive foundation for future SaaS VARs?
- It is absolutely important to have a customizable and flexible foundation for the product. PLM custom data models, the flexibility of process and integrations with other products such as finance, ERP, legacy data. Without such things, it is very hard to attract PLM SaaS VARs.
- Build a foundation for downstream revenues on top of the product that can be used by VARs. It is still not very developed, but providing a continuous stream of revenues, making VAR responsible for renewal – important element of SaaS business. Before SaaS PLMs were sold with expensive licenses that basically locked customers with a vendor. It is not the same for SaaS tools.
- To provide training tools and materials that can be used for VAR for training. Every single B2B SaaS product (even the most successful) requires some training and this is a space where VARs can be extremely useful.
- Emphasis on consulting services. Even a simple process requires sometimes consulting and advisory. SaaS PLM with the focus on mid-sized businesses can find a unique opportunity to sell consulting different and be created by working online and with different consulting delivery models.
What is my conclusion? SaaS PLM is a new business model. PLM vendors made significant progress in the understanding of cloud technologies, product development and advantages of business models. As the PLM industry will be moving into SaaS PLM models, the importance of VARs for the success of SaaS PLM can become critical. But assuming the PLM VARs model will remain the same would be a mistake. A deep understanding of the market, manufacturing companies, advantages of SaaS and creating a successful VAR model will be essential as PLM vendors will be moving towards the future development of SaaS business. Just my thoughts…
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.