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Open Source

PLM-for-SME

PLM is in the focus on many companies these days. Questions how to improve processes, optimize cost and improve quality are important and PLM vendors are laser focus on that. But… with one small clarification . It works for large manufacturing companies. To transform business processes is the way PLM succeeded to deliver ROI and demonstrate clear value. It is hard to find large manufacturing company these days that is not implementing  kind of PLM. You can see multiple options – complete home made PLM system developed by IT department (usually based on some of available PLM toolkits), combination of older PDM/PLM system with some additional development and complete solutions from leading PLM companies.

However, when it comes to small manufacturing companies, the situation is very different. It is not rare to face the question “what is PLM and why do we need it?” as well as to see customers confused about the difference between PDM and PLM. The last one is a big misleading factor in PLM marketing. Few weeks ago I posted Why PLM stuck in PDM? The article raised lots of comments and opinions. The question I want to ask today is about why PLM software and strategies failed to deliver value to small manufacturing companies or so called SME (small and medium enterprises).

Speak to software vendors about PLM and SME and you will learn about top three PLM inhibitors – (1) limited financial resources, (2) lack of IT support and (3) diverse set of requirements. While PLM competition for large OEMs is getting stronger, SME becomes a very attractive opportunity for PLM to growth. It is an attractive and turbulent market with lots of innovative companies. Together with growing number of smaller suppliers. To win this market is a very interesting opportunity with significant growth potential.

SME remains a very challenging place for PLM vendors. The question about how to serve SME with PLM solutions is open for a long time. Large PLM vendors tried to serve these customers by scaling down their large PLM product suites and developing special packaged solutions. Newcomers tried to provide special applications for SME. Open source, SaaS, Out-of-the-box (OOTB) applications… After all, SME PLM marketshare remains very fragmented with lot of opportunities and no mainstream solution.

It made me think about some problems in existing PLM strategies for SME. I can see some similarity with mass customization trend in manufacturing. The time when car supposed to be “Ford” and “black” is over. Automotive and other manufacturers explored new opportunities to customize their solution to satisfy turbulent market with diverse set of requirements. So, focus on the niche markets and individual customer is important. In the past, it was a strategy Japanese firms captured marketshare in U.S. PLM vendors are trying to win PLM SME market by focusing on flexibility of their solution and OOTB applications.  The problematic part of this strategy is cost. This is where flexible PLM failed. The cost of PLM implementation is still very high. Marketing, sales, business development and implementation services are not allowing to PLM vendors to scale their PLM operations for SME.

What is my conclusion? Low cost and efficiency. When it comes to customization and fulfillment of diverse customer requirements, low cost and efficiency are “must have” components of your strategy. Flexible platforms and OOTB Apps are not enough. Cloud solved some problems related to cost and IT support but left implementation services cost open. PLM vendors need to think how to deliver PLM services at low cost or think about alternative strategies. So far, PLM vendors failed to deliver to SME. Cost of the delivery is too high. After more than a decade of “focus on flexibility”, I think it is a time for PLM vendors to find an alternative. Just my thoughts…

Best, Oleg

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PLM Open Source Future – Cloud Services?

by Oleg on February 17, 2014 · 4 comments

plm-open-source-cloud

For the last few years, open source was one of the major disruptive factor in tech. Open source powers world’s leading tech companies. Tech giants like Google, Facebook, Amazon and many others would not exist without open source. The success of RedHat put a very optimistic business projection on the future disruption of industry by open source. Since then, we’ve seen many companies that started their business trajectory as “Red Hat of XYZ” with the objective to disrupt a particular industry segment. Many of them became very successful in what they do. However, what happened with their “open source” messages?

My attention was caught by two articles speaking about current trajectories of companies building their business model around Open Source software. Peter Levine, partner at Andreessen Horowitz started this conversation in his – Why There Will Never Be Another RedHat: The Economics Of Open Source and ReadWrite article was following TechCrunch article – Why Open Source Is Disappearing From Open Source Companies? Have a read – good articles with lots of interesting examples and data points. According to the Peter Levine, the main reasons why open source companies cannot compete successfully with their proprietary rivals are simple – money and inability to keep stabilized roadmap development. Here are two notable passages from TechCrunch:

There are many reasons why the Red Hat model doesn’t work, but its key point of failure is that the business model simply does not enable adequate funding of ongoing investments. The consequence of the model is minimal product differentiation resulting in limited pricing power and corresponding lack of revenue. As shown below, the open source support model generates a fraction of the revenue of other licensing models. For that reason it’s nearly impossible to properly invest in product development, support, or sales the way that companies like Microsoft or Oracle or Amazon can.

2013-revenues-open-source-vs-others

And if that weren’t tough enough, pure open source companies have other factors stacked against them. Product roadmaps and requirements are often left to a distributed group of developers. Unless a company employs a majority of the inventors of a particular open source project, there is a high likelihood that the project never gains traction or another company decides to create a fork of the technology. The complexities of defining and controlling a stable roadmap versus innovating quickly enough to prevent a fork is vicious and complex for small organizations.

ReadWrite article brings list of companies started as “open source” and moving now towards different messages.

In 2010, SugarCRM’s main landing page prominently advertised itself as open source. Today? Not a single mention. In February 2009, Alfresco declared itself “the open source alternative for Enterprise Content Management.” No mention of open source on the home page today. The same goes for Acquia, the Drupal company (see 2009 vs. today), and most every other significant company that sells support or software around an open-source project.

PLM industry has their list of open source companies. You can count several product today branded themselves as “PLM open source”. The most notable, Aras created innovative model called “Enterprise Open Source”. To core part of Aras was never open sourced. However, Aras developed significant community network of supporters implementing Aras Innovator software and building applications on top of Aras core platform. Aras keeps fairly large reference customer base supporting and advocating for Aras enterprise open source strategy. According to them, it brings predictable license cost model combined with open software platform, which differentiate Aras from other PLM companies.

TechCrunch article made me think what will be the future turn in development of PLM open source? Would “cloud services” become a future strategic exit for Aras and other open source PLM companies? According to Mr. Levine, SaaS and appliance business model can be a good match to Open Source projects. Here is a formula:

This recipe – combining open source with a service or appliance model – is producing staggering results across the software landscape. Cloud and SaaS adoption is accelerating at an order of magnitude faster than on-premise deployments, and open source has been the enabler of this transformation.Beyond SaaS, I would expect there to be future models for Open Source monetization, which is great for the industry.

What is my conclusion? There is no clear conclusion today. In my view, PLM industry is still waiting for big “disruption moment”. Will it come from cloud PLM alternatives, open source PLM provided as cloud services or just service projects using open source software? Time will show. It seems to me “value” and “maturity” are two main differentiations PLM companies need to focus these days. Just my thoughts…

Best, Oleg

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PLM Software and Open Source Contribution

by Oleg on February 11, 2014 · 0 comments

plm-future-open-source-contribution

Open source is a topic that raised many controversy in the last decade. Especially if you speak about enterprise software. The trajectory of open source software moved from absolute prohibition to high level of popularization. In my view, the situation is interesting in the context of PLM software. The specific characteristic of PLM is related to a very long life span of the software. PLM system developed and deployed 10-15 years ago are continue to be in active production mode by many customers. However, the question of how PLM software can leverage the value of open source software remains open.

Readwrite article Open Source Should Thank These Five Companies put an interesting perspective of the value of open source software for enterprise community. In my view, the article brings  examples of software components that can be re-used by enterprise vendors. However, technology is not everything. People and culture is another important element of open source contribution. Here is my favorite passage from the article:

“To encourage excellence, you need to do things out in the open,” Kreps [Jay Kreps of LinkedIn] said. “Engineers are like everyone else—if everybody’s watching, they want to look good. Otherwise we’re building a crappy internal tool that’s just good enough to meet our immediate needs.”

I have to admit, open source initiatives didn’t start in web companies only. During the past decade we’ve seen significant contribution to open source made by major software vendors like IBM and some others specifically if you speak about massive investment in Linux projects. Another Readwrite article is trying to establish balance in open source contribution debates. However, the main conclusion remains the same – web companies these days leads the way for open and innovative technological development. I found conclusion interesting:

“…old school” companies like IBM don’t get the credit they deserve. But it is the Web companies that are building data superstructure on the Internet”.

I found the comment about data superstructure  important in the context of our PLM software discussion. The replacement of Windows servers and other backend infrastructure by Linux and other open source software is just a matter of time. Also, I believe this is an active process for many enterprise IT organizations these days. However, the question of data management foundation for future PLM software remains hugely open.

What is my conclusion? Open source can re-shape the landscape and future technological trajectories of PLM software. Technologies polished and contributed by web giants to open source community can provide a solid foundation to existing PLM vendors and startup companies to develop future foundation of scalable enterprise product data management solutions. Open culture combined with public quality acceptance can be another major shift that to differentiate future enterprise software developers. Just my thoughts…

Best, Oleg

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Will Open Source Databases Make PLM Affordable?

November 7, 2013

Budget and cost. These are important elements of every IT solution. PLM is not an exclusion from this list. There are lots of debates about PLM systems cost lately. Few days ago, I was discussing one element of PLM system total cost of ownership related to “up-front cost” – The Future battle of PLM upfront […]

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GrabCAD and Open Engineering Source: Dream or Reality?

September 8, 2013

Everybody knows about open source software (OSS). The model of OSS skyrocketed for the last decade and made lots projects on the web very successful. The evolution of open source wasn’t simple. It evolved from just making software source code available to quite complicated system of open software licensing. Open source inspired lots of new initiatives. One […]

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Will New Jazz Product Development Model work for PLM?

April 13, 2013

The world around us is changing much faster these days. It happens in many places. Business environment are much more dynamic. New technologies are disrupting existing industries and eco-systems. PLM systems were developed to help companies to manage and follow product development processes in the companies and extended eco-system. As businesses are going through the changes, […]

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PLM Cloud and Open Source Coopetition

March 25, 2013

I want to continue the theme of disruption started in my post last week. I can see two major forces that will disrupt traditional PLM approach nowadays - cloud and open source. Both have some strong position points and some weaknesses. I put some of my thoughts about cloud and open source disruption last year – PLM […]

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PLM and DIY Applications

March 10, 2013

I’m sure you are familiar with the term DIY (do it yourself). While the term is not PLM specific, I’m often using it when explaining the way many manufacturing companies are approaching PLM implementations. Because of high cost and complexity of large integrated PLM suites, companies are deciding to make “homegrown” development by using variety […]

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PLM Open Source is Better Without Open Source

January 2, 2013

Open source is one of the PLM trends I covered in the past in my blog. I wanted to come back to this topic again. The title of my blog post was half stolen from the article on opensource.com – Open source software policy is better without open source. Read the article and made your own […]

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PLM and Open Source Checking Tips

October 18, 2012

Open Source Software (OSS) is a wonderful thing. For the last decade, open source changed the world of software development. PLM industry has their own open source rock stars. While I can see less hype around ‘open source’, I keep watching open source initiatives in PLM space. One of the things that very often debated […]

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