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COFES 2015: PLM and the cloud briefing

by Oleg on April 20, 2015 · 4 comments

plm-cloud-adoption

Last week at COFES 2015, I shared my thoughts and opinion about what happens between PLM and the cloud for the last few years. That was a teaser of my COFES session in the agenda:

As recently as three years ago, the cloud was viewed as a differentiator for some PLM vendors. The PLM world was divided between those who viewed the cloud as “the future” and those who viewed it as a fad. Today, most PLM vendors touch the cloud or engage with it in some way. But… what has really changed? Where do we stand with the big questions/challenges with PLM? Can the cloud still be the source of a competitive differentiator for PLM vendors?

Cloud is an outcome of web technological revolution of 2000s. Consumer web applications and social networks provided great user experience, open source technology and taste of new business models. In many situations, we experienced better performance, usability and robustness of consumer applications compared to our business solutions. Which basically set all enterprise CIOs on fire from 2010 to deliver new enterprise solutions.

But cloud is not only about technologies. It is also about transformation in business models. We can see a shift towards SaaS applications with subscription models and variety of innovation in different business models – pay for storage, pay for use, references, etc.

Manufacturing companies are looking for new PLM business models, which can allow them to have sustainable licensing mechanism to grow, remove upfront cost and deliver “less expensive PLM” to existing and new users.

Enterprise software discovered SaaS applications and cloud too. Salesforce.com was pioneering so called “no software” paradigm from early 2000s. In manufacturing and enterprise, Netsuite is another example of software vendor using cloud as a strategy. Bom.com (later transformed into Arena Solutions) was a first on-demand application providing PLM related functionality. Windchill and Agile PLM software are also examples of PLM products experimenting with hosting and on-demand delivery.

plm-cloud-history-2015

The revolutionary step was done by Autodesk PLM360 in 2012. Autodesk was not engaged with PLM activity until that time. It was even famous for anti-PLM rants. However, in 2012, Autodesk introduced PLM 360 (built on top of Datastay acquisition), which became a game changing trigger for PLM industry. Since 2012, we can see an increased trend among PLM vendors to adopt cloud strategy.

Below is a slide deck summarizing my PLM and the cloud briefing. It provides few more details, so take a look.

What is my conclusion? Few things are clear today about PLM and the cloud. It is obvious that cloud is not fad and it removes significant IT headache to install, configure and maintain PLM. With cloud option, you can start PLM development almost instantaneously. However, PLM implementations are still hard. What is not clear is the future cloud PLM adoption trajectory. Manufacturing companies made significant investments in existing PLM installations and implementations. What ROI can trigger their decision to move into cloud PLM? There is an opportunity for companies that never engaged in PLM, to start with cloud PLM as a more efficient and easy way to adopt PLM. However, the implementation phase is still painful for many customers. Therefore the main question for me is what can bend future a curve of cloud PLM adoption. Just my thought…

Best, Oleg

Image courtesy of Pixomar at FreeDigitalPhotos.net

 

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complexity-product-data-supply-chain

I had a chance to share my thoughts about complexity of product lifecycle in supply chain at COFES 2015 Design and Sustainability symposium. Manufacturing companies and software vendors are facing new enterprise reality these days – distributed environment, connected work and cloud software. On the other side we have skyrocketing complexity of products. Each product is a system these days. Think about simple activity tracking device. It is a combination of hardware, mobile application, cloud data services, big data analytics and API to work with partners. The complexity of modern luxury car is 100M line of software code. Think about product information changes in the system which is combined from engineering, customer, field support and connected devices working together.

Product data complexity is introducing new level of challenge in front of software vendors. I think it is a time for software vendors to think how to break limits of existing PLM architecture to support a level of complexity demanded by manufacturing environment and complexity of products.

So, what to do if a single database approach is dead? Federated architecture was one of the approaches PLM vendors used in the past (Actually, I think, this is probably the only one that works in production for very large enterprises). But this approach is expensive in implementation and requires too much “data pumping” between silos. Opposite to that, an experience of some companies with network based data architectures shows some promising results.

What is my conclusion? The growing complexity of manufacturing environment and products creates the demand for new product lifecycle architectures. These architectures will be able to support management of multidisciplinary product data (mechanical, electronic, software) and will operate as a global distributed data network. Just my thoughts…

Best, Oleg

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3d-unicorn

I’m on my way to COFES 2015 - annual gathering of people discussing a future of engineering software in Scottsdale, Arizona. It made me think about an intersection of startup and engineering software world. Last year I shared my thoughts about a potential surge of CAD / PLM startups driven by new cloud technologies, web, open source and multiplied by large amount of unsolved problems in engineering software such as globalization, slow ROI, complexity and cost. So I want to continue a startup theme today.

My attention was caught by article by Dave McClure – Bubble, My Ass: Some Unicorns Might Be Overvalued, But All Dinosaurs Gonna Die. Article speaks about Unicorns - an unofficial term used to call a startup with valuation greater than $1B. According to recent WSJ article, there are 82 startup companies in the world with such valuation. You can see companies from consumer and enterprise space there. The following picture (from 2013 TechCrunch article) can show you the split:

2013-unicorns

My favorite part in Dave McClure’s article is actually related to a great summary of reasons why Dinosaurs companies are going to die – 1/ Dinosaur companies don’t innovate; 2/ Dinosaur Companies have a tough time recruiting & retaining top technical talent; 3/ Dinosaur Companies don’t get how critical internet marketing is becoming. The following passage is my favorite:

Fundamental to all of the above is the following observation: most public companies have not taken to heart how absolutely mission-critical software technology & internet marketing have become to business competitiveness. Thus, almost every Dinosaur Company is extremely vulnerable to a Startup Unicorn eating their lunch (stated so eloquently this past week by none other than JP Morgan Chase CEO Jamie Dimon).

You cannot spot engineering and manufacturing software companies in these lists. However, we can see few companies that can be associated with enterprise software business and used by manufacturing companies – Dropbox, Box, Tableu, Workday, Palantir. The largest valuation of CAD / PLM startup that was mentioned recently was $295M for Onshape – here is the Fortune article mentioning that:

Onshape, a Cambridge computer-aided design (CAD) software startup, has raised a total of $64 million in funding from New Enterprise Associates, North Bridge Venture Partners, and Commonwealth Capital. The funding values the company, which has operated stealthily for the past three years, at $295 million, including the funding.

Here is a question to think about. Can engineering and manufacturing software industry create a unicorn startup in the next decade? As a reference you can take a look on available information about market capitalization of some CAD / PLM companies – Dassault Systemes ($16.1B), Autodesk ($14B), PTC ($4.26B). But these are public companies with 20+ years of lifetime. At the same time, I’m not aware about any startup company in engineering software domain that has revenue close to $100M. According to latest CIMdata analytical researches, PLM market (which includes CAD business too) grew up 6.8% to $37.2B in 2014. Onshape is probably the only company on a horizon that (based on funding and buzz it created) can think to be a unicorn in the future. However, Onshape is still very early in the lifecycle and it is hard to predict its future trajectory.

What is my conclusion? From traditional engineering software viewpoint, it is hard to see how CAD / PLM industry can bring a new company that will be valued with $1B in coming 5-10 years. However, here is the thing…. Look on companies in the list of unicorns. Many of them made a transformation in the traditional industry landscape (transportation, hospitality, communication). That was the main reason for their premium ($B) valuation. Until now, CAD companies made CAD and PLM companies made PLM in the way we knew that for the last 15-20 years. The future might be different. Just my thoughts…

Best, Oleg

Image credit GrabCAD

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PLM PaaS may not happen after all

April 13, 2015

Platform is such a lovely word. Software vendors like platforms because it gives them an additional capability to partner with a community of developers. In cloud era, platform is often associated with PaaS (platform as a service). For the last few years, PaaS was mentioned as a next step in developing of cloud platforms. PaaS […]

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Why 2015 will be the year for PLM to rethink cloud?

April 10, 2015

I’m coming to COFES 2015 next week, which will take place in Scottsdale, Arizona. PLM and the cloud is one of the topic I’m planing to discuss during the analyst and user briefing sessions. I’ve been thinking to beat a schedule and share some of my thoughts on blog before to spark a conversation. The […]

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Where to host my cloud CAD and PLM?

April 8, 2015

Cloud adoption is growing. There is almost a synergy about cloud and PLM. All PLM vendors are signaling about leveraging various pieces of cloud technologies in their business. Now, the time is coming for CAD. Last few months were sparked by multiple debates around future of cloud CAD technologies. Onshape was a resonating factor of […]

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What cloud CAD data management is right for me?

April 6, 2015

The amount of data created in the cloud and transferred to the cloud is growing. You probably noticed few of my last blog posts about cloud CAD – The stage for cloud CAD competition and How CAD vendors “murdered” PDM business. CAD vendors are moving to the cloud, but the truth the competition between other cloud […]

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Cloud CAD can solve hardest PDM problem

April 3, 2015

  Document management is hard if you do it manually. To manage versions of documents requires you to follow some rules or naming conventions. I remember one of my first lessons in configuration management many years ago. It was about how to use file names in versions. Simple rule for starters – never ever use […]

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Cloud is not the way to rethink PLM. Then what?

April 1, 2015

CIMdata PLM forum yesterday was a good place to discuss ideas that from a first look can sound a bit crazy. One of them – how to rethink PLM. Wait… you can say. We just came to some sort of understanding about what is PLM and how to sell PLM values to management. There are […]

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CIMdata PLM forum: platformization and obsolescence

March 31, 2015

I’m returning  home from CIMdata PLM market forum in Ann Arbor. For those of you who are not familiar with CIMdata and this event, take a moment of time and look here. Today’s event is the first in a row of  ”CIMdata world tour” to review 2014 PLM market analysis. You can see agenda and list […]

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