‘Alte Zachen’ PLM and New Business Models

‘Alte Zachen’ PLM and New Business Models

‘Alte Zachen’ means ‘old stuff’ in Yiddish. ‘Alte’ (old) and ‘Zachen’ (thing). When I was a child, I remember a person walking along the street and yelling ‘alte zachen’. It was a signal to take out old stuff and bring it down. The person was taking the stuff (sometimes paying money) and taking it to “flea market”.

You may ask me how it is related to PLM? Here is the story. Navigate to the following article – UsedSoft Vs Oracle Ruling Opens Up Monopolistic Practices By Software Vendors by R “Ray” Wang. In a nutshell, the story is about ownership of “second hand” software. Here is a short passage with the link to legal materials:

The surprise July 3rd, 2012 judgment by the Court of Justice of the European Union for UsedSoft GmbH v Oracle International Corp rules that “An author of software cannot oppose the resale of his ‘used’ licenses allowing the use of his programs downloaded from the internet”…

The Bottom Line For Buyers: In the EU You Own Your Software Free And Clear of Vendor Encumbrances. Prior to this ruling, customers could resell hardware to a secondary market but not their software. This inefficiency and inconsistency in the law has led to billions dollars of wasted expense by organizations around the world, perplexing buyers for decades. Pioneering efforts by SusenSoft and UsedSoft should be applauded by customers for fighting the legal battles to reinforce their rights.

Even if this is still EU only decision, it represents an interesting change for software owners. You can re-sell software legacy. It made me think about what possible impact this change can make in the market of PLM software.

What is the value of PLM “second hand”

Engineering software has a very long lifecycle. Manufacturing companies are using and owning lots of PDM/PLM software companies sold them for during past two decades. As a result of M&A activities and company transformation this software becomes not in use or, alternatively, manufacturing companies are moving to new packages from outdated and / or discontinued products.

Is there a value in having the ability to buy / sell / trade-in existing PLM packages? On the surface – not much. Most of PLM implementations are complex, requires service, outside consulting and significant amount of the internal resources. Software license cost is insignificant. However, deeper analyzes of licenses is required, in my view. The packaging schema used by PLM vendors is comprehensive and include multiple products and configurations. They can certainly contain some of licenses that customers can benefit from.

Cloud and SaaS PLM influence

Since the first thing cloud eliminates is perpetual license, cloud is clearly an exit door for software vendors from a potential danger of re-selling licenses. You don’t know cloud software and, as a result, you have nothing to sell. Here is the relevant passage from Forbes article.

One major concern for users – the cloud presents the next big lock-in. Why? Users do not own their licenses. This ruling may lead to all software publishers to deliver software via access in the cloud. In effect, no on-premises software would ever be sold again and users could only rent their software. This unforeseen ramification could prove even more costly as vendor lock-in will increase unless cloud users are granted protections in the market.

What is my conclusion? In my previous life, ‘Alte Zachen’ person was taking old stuff away. I never knew what happens to this stuff after. The same about “second hand” PLM software. What will be the value of re-selling and buying existing licenses? I can some interesting work for lawyers to be done in this space. The main personage of “Pretty Woman” movie was buying companies having financial troubles and sell them apart for a significant profit. Will future PLM innovators buy existing PLM alte zachen for their future profit? A good question to ask… Just my thoughts.

Best, Oleg


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