You cannot stop innovation. Global manufacturing environment and changing technological landscape is a good foundation to think about how to develop new technologies or product to improve what industry uses today. The demand for quality, low cost combined with mass customization is creating significant challenges for manufacturing companies. It inspires people to find a better way. I’m often receiving emails from people and companies thinking how to develop new technologies or improve business in engineering and manufacturing. Some of questions are repeating. The most popular one is how to disrupt dominant vendors in engineering and manufacturing eco-system.
Today, I want to share some of my thoughts about possible ways to attack CAD-PLM behemoths. It comes together with retrospective analysis about how companies did it in the past. I’m not pretending to create a comprehensive research about it- maybe I will do it in the future.
1- Core geometry modeling, design and viewing technologies
Geometry is a core function for 2D/3D design. Parametric feature based modeling became a de-facto mainstream standard. Nevertheless, new companies attempted to compete with CAD/PLM vendors by developing new modeling paradigms (direct modeling) or simplifying the design interaction by new user interface and experience. A specific niche of competition in 3D design is related to technological platforms – computing and operational systems. CAD systems moved from expensive Unix workstations to PC, later to Windows and Web/Cloud. The last one is actually one of the most active trends in CAD industry these days. Few examples of products and companies in this segment of competition – AutoCAD, SolidWorks, SpaceClaim, Onshape.
Viewing technology and products is an essential element for non-CAD users to access data. In the past, the number of “viewers” was large. Most of them were acquired by different CAD and non-CAD vendors. I can see very few independent companies today providing 2D/3D viewing technologies.Few examples of companies here – Cimmetry and Right Hemisphere. The last spark of innovation in this segment is to focus on viewing technologies for web and mobile devices.
2- Data, process management, search and data analytic
Data domain was always a stranger space for CAD vendors with core technological roots in geometry and design. Therefore many companies tried to attack or complement CAD business by developing products and technologies to manage or process data. These companies traditionally positioned as PDM or PLM. Lately with web expansion, companies created products and technologies to crunch data, search, process management, data analytic, reporting, etc.
Data and process management is providing clear value proposition. For most of CAD vendors, data management was unknown field. Vendors didn’t know how to handle or didn’t pay attention to the problem. At the same time, PDM and PLM business didn’t outgrew CAD business (with some exception of PDM systems selling systems to very large companies). Some PDM companies got very vulnerable because of selling to the same customers and dependent on core CAD technologies and APIs. Acquisitions closed the doors for PDM competition for CAD-independent PDM vendors. Most of PDM vendors got acquired by larger CAD vendors or merged with CAD businesses.
Few examples of products and companies in this segment – mostly PDM/PLM companies (trueEVault, SmarTeam, MatrixOne, Conisio, Windchill, etc.), search and big data (Exalead, Inforbix)
3- Vertical and under-served markets
You cannot boil the ocean. The same can be said about CAD and PLM vendors. Large vendors followed low hanging fruits, profit, experience and as a result served diverse markets. It developed some specialty in vertical domains – MCAD, ECAD, AEC. Some of market segments became under served and attracted new companies and technologies. Some companies expanded by focusing on specific verticals. Few others got acquired by larger CAD vendors. Few examples of companies here – Cadence, Bentley Systems, Revit.
In PLM market, companies focused on how to provide specific solution for vertical industry (discrete, process, food, fashion). Typically it was a result of specialty in data and process knowledge. Sometimes, it was a result of developing technologies for specific data management needs. One of the examples – bill of material for process industry. Few examples of products and companies – Prodika, Accelrys. I can see future development of this segment driven by high diversity of solutions for manufacturing industry.
Another opportunity in this segment of competition is to provide solution for SME/SMB market. Historically CAD and PLM companies were focused on on the large high-end businesses. It left smaller companies under served. It is still very attractive segment of the market today to spot for new technologies and product initiatives.
4- Disrupt business models
To change business model is another way to disrupt and compete with existing businesses. This strategy is partially overlapping with improvements of core technologies (especially in 2D/3D design segment). It led to development of cheaper systems that can run on less expensive platforms. AutoCAD and SolidWorks are probably two best examples, but I’m sure there are few more.
In PLM, business model disruption was focusing on introduction of new licenses mechanisms, subscriptions, open source and free software. The opportunity to disrupt vendors by providing lower cost is very attractive. The demand of customers for lower cost is clear. At the same time, the complexity is not always technological. The cost of sales (especially in PLM business) is high, which creates many challenges to lower price of the solution. Cloud technologies has a potential to disrupt PLM industry by providing subscriptions and potentially lowering cost of solutions by shared multi-tenant software models. A company to mention in this segment is Aras Corp (you probably had a chance to read recent news about Aras and Airbus, which is a great example of business model disruption).
What is my conclusion? To learn from previous successes and failures is an essential part of innovation. Manufacturing and industrial businesses are very conservative. For many of them, the decision process is way too long for startups. Inertia is still a major problem for competition to solve. Take a look on my earlier article here. The threshold to provide solutions for large companies is very high. Back in 2013, I posted – 3 ways to disrupt PLM today – eliminate complexity, break technological barrier, alternative business models. It still sounds to me as a very compelling guidance to win for startups. And, this is a reminding note for strategists and technology leaders at large CAD/PLM companies. Just my thoughts…
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