Disruption is a lovey topic to speculate just before the weekend. Aras-Airbus story gave a context to PLM industry analysts and bloggers to speak about PLM disruption this week. Few articles to mention here – Airbus adopts Aras PLM platform by Engineering.com, Airbus flies with Aras Innovator by Develop3D; Airbus to acquire 30,000 Aras PLM seats. The last one by Graphic Speak was my favorite. The following passage is interesting:
Aras does not have a sales department because its basic software product is free to download. Aras waits for a potential partner to request support before it becomes a “customer.” As Romare at Airbus said, “The unique SaaS subscription business model of Aras which eliminates up-front license costs and includes system upgrades with customizations is also quite compelling.”
Does it mean Aras nailed down the right combination of features and business model to compete with large PLM vendors? Well, not so fast…
Insight by Standford Business blog – In Technology, Small Fish (Almost Always) Eat Big Fish by Mark Leslie can give a good portion of food to think about how industry disruption usually happens. It brings examples from hardware and software industry – how IBM computer business was disrupted by PDP, how Oracle CRM business was disrupted by Salesforce.com and even put some hints on how Android and iOS is disrupting Unix.
Oracle and Salesforce example is probably the most relevant comparison point for PLM. Here is the passage explaining historical case:
One sterling example is in the CRM (customer relationship management) space. For as long as anyone could remember, the market was owned by Siebel. It was big, offering an incredibly complex solution that had to be installed for customers on their servers, licensed in bulk, with tons of training and customer service attached. Sounds unwieldy, but it was the norm, and everyone needed it.
Then along came a company called Salesforce.com, offering just one capability of the many Siebel already provided. Only they offered it differently — instead of having to buy hundreds of licenses, customer companies could pay per employee using Salesforce.com, and use it in their web browsers hassle free. They became the automatic choice for the many young companies that couldn’t afford to do anything but start small with SaaS.
Let’s get back to CAD / PLM space. Do you think Leslie law of small fishes can be applied here. PTC might be an example of company that came out as startup and grew up to become a big fish. We can try to apply it to SolidWorks, but the last one became big only after acquisition by Dassault Systemes. In PDM/PLM domain, all “small fishes” were eaten by large vendors – Windchill, SmarTeam, Agile PLM, MatrixOne… Not many of them left. Is it an exception for the law claimed by Mark Leslie? The following passage can give you a hint how to disrupt large players.
Your rallying objective should be to build something truly great for the low end of the marketplace, solving an important problem with a simple, low-friction product in a segment of the market that’s underserved by the incumbents. Once you’ve achieved excellent market traction in this arena, you can nibble your way upward until you’re competitive with the heavyweights of your industry.
What is my conclusion? It is hard or almost impossible to disrupt CAD / PLM market from the top. Large industrial companies are moving slow and it takes them years to make decision about changing CAD / PLM software. SolidWorks disrupted small shops and becomes defacto standard. Aras created disruption by providing free version of Aras Innovator to smaller companies and now pushing to disrupt big companies.The question about competitiveness of Aras vs large players is the one industry will have to answer. Does Aras provide a better technology for lower price? The jury is out. Just my thoughts…
Best, Oleg
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