A long time ago, I was working for Autodesk business selling AutoCAD licenses and developing applications. Back in those days, we had hardware dongles we installed on a printer port of the computer to provide a license of the software. It was possible to install a local dongle, but also a network dongle that was installed on one of the computers in the company network. Once, the software was initiated on one of the machines, it decremented the active license number and allowed users to run AutoCAD or other software.
I was reading about the NX token-based licensing option article and found it amazingly similar to what was done with network hardware dongles 20+ years ago.
Check out this video from Siemens Industry explaining the licensing mechanism. The story is much fancy, it called “value-based licenses”, customers don’t need to use hardware dongles and we can use cloud service to provide available license information in a granular form.
Which brings me back to the question about business models for CAD and PLM. Is there a space for innovation or everything that was already invented a long time ago and we just replicating the same business ideas with new technologies?
Everyone is coming to subscriptions these days. For the last decade, we have seen how companies in the CAD and PLM segment moved from perpetual licenses to subscriptions. The move is not done yet. The subscription model was a big deal to change the PLM sales trajectory by removing upfront costs and reducing the entry barrier. Also, subscription combined with the SaaS PLM allowed focusing on phased solution implementations.
Check my earlier articles about Business Models in CAD and PLM here. There are still a lot of opportunities to innovate and questions like – will customers pay for PLM per hour? and then PLM implementation as a service, the future role of CAD attachment business model in PLM sales and others.
One of the most fascinating and promising is to talk about the data. Why data? Because the data is a future of business. Some people call data is a new oil. And the elephant in the room is that in the PLM business model, the game is still about data locking. Check out this article about what will happen if PLM vendors agree on data standards. But guess what? There are not many incentives to work on standards unless customers or business models will transform the status quo.
Here is the idea about reversed data tokes. I know it might be a bit cryptic message. But stay with me, please. Manufacturing is moving online. Slowly, but surely, manufacturing companies are discovering how online business can change their business, give them competitive advantages, optimize the process, support, maintenance and other aspects of their business. If you think about manufacturing networks, the companies are involved in the trade from different sides. Many of them are buying and selling at the same time. About 70% of every product is outsourced as parts or services. Supply chains are hungry for optimizations.
There are companies selling components and services. They need to “advertise” their work. Why in quotes, because it is a new way of advertising. A company can share information online and allow it to use it. Once it is done, the company can eventually generate business of selling physical components or services. They charge by providing digital tokens to buy or share data. Companies that will facilitate such trade will stay in business. Systems that facilitate such trade will create a new model of manufacturing business relations.
Network platforms can change the landscape of the manufacturing business because their data foundation is not holding databases with data, but allowing data sharing, analytics and eventually will come to business models. Check some of my articles as a background for the story – Digital Transformation and Networks in Manufacturing and OpenBOM and Network Platforms.
One of the experiments we’re building at OpenBOM (disclaimer- I’m co-founder and CEO) is to allow to manufacturing companies to share data that can be consumed by other companies (eg. catalogs of parts and services). We also have a mechanism to charge a fee for sharing the data. Once the data can be consumed, the services or parts can be purchased and it will create a new type of business relationship based on data sharing. Stay tuned, unless you’re involved in online business in manufacturing. Let me know if you’re interested to discuss (oleg at openbom dot com).
What is my conclusion? For the last 25 years, we’ve seen tons of business transformation. Many online business practices today sound obvious, but going back in the 1990s and beginning of the 2000s, it was presented as a revolution. So, you can be skeptical today about manufacturing business turning into online commerce. Well… stay skeptical and let’s talk in 10 years if you will be still in business. No offense. 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.