How PLM will move to SaaS in the 2020s? It is not what you think…

How PLM will move to SaaS in the 2020s? It is not what you think…

SaaS is a topic of many debates in the PLM industry these days. Back in the 2010s, the question was if the “cloud” technologies work for manufacturing companies and CAD/PLM vendors will adopt it beyond testing and evaluation. Few articles back to that time. For example, Siemens IT was analyzing SaaS in their publications already in 2010 – What are the demands for PLM on demand? PLM Cloud – differentiation and anti-cloud rant, PLM Supply Chain, and cloud adoption, PLM and virtualization tech a few more.  So, what is the end of this decade-long discussion about cloud adoption in PLM? In fact, it is very simple. All PLM vendors today provide some sort of “cloud story”. In a nutshell, it means that PLM vendors learned how to host their servers on the IaaS infrastructure and provide a decent level of management to such a type of environment.

Fast forward to 2020. The new debates are now about PLM and SaaS. For the last few years, SaaS came in as a major differentiator and the next step in cloud PLM development. Here are a few articles I wrote about it (you can Google the rest) – SaaS PLM: What do you need to know about cloud architecture and data management in 2020? PLM cloud washing and true SaaS differentiation; Basic elements of SaaS PLM; 3 Things only SaaS PLM can do to enable digital business in manufacturing.

My attention was caught by a LinkedIn article written by Frédéric Zeller – PLM and SaaS. Why not start by asking us a few questions (and I hope some good ones)? There are no bad questions in my view. But this article was excellent because it put a spotlight on the most painful questions and misconceptions about PLM and SaaS. It made me think about SaaS adoption, why is it good for manufacturing, what are gaps and misunderstandings in PLM SaaS questions.

1- SaaS mean out-of-the-box with no customization

This is one of the biggest confusion in SaaS PLM. It is mostly driven by a combined effort of existing large PLM vendors to provide continuity between existing software and new SaaS/Cloud models. So, the way it is done actually is by cutting customization of the existing systems and mass-hosting them for customers. The limits are technical and if you, actually developing a new SaaS PLM, there is no problem with customization. There is a possibility to create unlimited customization capabilities in SaaS PLM, but these capabilities must be planned in the system architecture from the beginning.

2- SaaS means to put existing servers in the cloud

A long time ago, I’ve heard one of the PLM architects telling me – the cloud is simple, it is just to take your server and put it somewhere else (on the cloud). Although there is such a possibility, it would be the wrong approach because existing PLM (and CAD) applications were designed for local networks and most probably not optimized for cloud infrastructure and SaaS applications. So, like in the story of customization, if the application is designed for SaaS, it will be tuned to work in low latency conditions, it will be designed and configured for spikes using horizontal scaling and automatic mechanisms to increase the number of servers to sustain the load.

3- PLM Vendors Will Overcharge Because They Have Full Control

This is an interesting one because it is not technical. There is an opinion that  PLM vendors will overcharge customers eventually because they will have full control over the environment. The issue of control is interesting because of the ugly truth of data locking in CAD and PLM business. From the early beginning of the CAD industry, specific file formats were an ideal mechanism to lock customer data. The invention of 3D parametric CAD systems added even more and allowed to create of incompatible 3D modeling features. PLM databases, data models, etc. are also added to the ability to control customer data. While SaaS provides additional control to PLM vendors, the SaaS business model creates a foundation for a service agreement. IT department of the companies will be able to negotiate a business agreement and service terms, because now it is transparent – the vendor is not selling software, which you can use, but providing ongoing services.

4- SaaS PLM cannot be integrated with other applications

SaaS means new system architecture, new technologies, and not placing existing PLM servers on the cloud computers. Existing systems were designed to run on local computers with local SQL databases accessible to IT. It was a foundation for integration techniques that allowed direct access to servers and applications operating in local networks. SaaS applications are using different technologies that often are more efficient and powerful to integrate, but they are different.  The level of standards in SaaS applications (eg. REST API) is much higher and there is a gigantic amount of web development experience collected by the industry for the last 20 years. But, again, as it was in the case of customization and performance, these systems must be designed for SaaS and not turned from local servers to cloud servers.

5- PLM is a magic switch

Are customers mature enough to accept PLM systems as they do today? Ask two companies about PLM and they might come back with three or sometimes even more answers. PLM is not only technology and applications. PLM is a business transformation process, which involves companies changing their processes. This is a tricky part because it has nothing to do with technologies. It is about people’s habits and organizational change management. It is hard and it is not related to SaaS.

So, how PLM vendors and industrial companies will move to SaaS?

The PLM industry as is today won’t be moving to SaaS by taking everything they do now and pulling the “switch to SaaS” trigger. Companies will have to re-imagine the entire process. It starts from the system architecture, requirements, implementation methods, people skills, and business practices. The new systems will also impact business relationships. Existing PLM systems are mostly operating in the local network environments. New multi-tenant SaaS PLMs provide a new way for users and administrators. It provides a new approach to streamline the business process but, at the same time, will trigger many additional questions (business and technical) that will need to be answered.

What is my conclusion?

SaaS PLM is a transformation of PLM software business practices combined with the introduction of new technologies and new functions. SaaS is fundamentally impacted communication and mobility allowing people to access systems and communicate with business partners and customers differently. All together requirements thinking beyond just taking existing servers and hosting them in the cloud. Just my thoughts…

Best, Oleg

Disclaimer: I’m co-founder and CEO of OpenBOM developing a digital network platform that manages product data and connects manufacturers and their supply chain networks. My opinion can be unintentionally biased.


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