A blog by Oleg Shilovitsky
Information & Comments about Engineering and Manufacturing Software

Cloud PLM and Sales Gravitation

Cloud PLM and Sales Gravitation
Oleg
Oleg
21 January, 2016 | 5 min for reading

plm-sales-gravity-cloud

PLM was born as a solution for large companies. The complexity of enterprise product development, engineering, manufacturing and supply chain is huge. Hence systems like ENOVIA, Teamcenter and Windchill are armed to solve very complex data and process management tasks. But the question about small to medium companies was always one of the most painful for PLM vendors. Jos Voskuil blog is one of my favorite sources of information about challenges of PLM for small and medium companies.

Let’s face the truth. The complexity of small manufacturing company can be still significant. At the same time, absence of IT and resources is not allowing to dedicate budget to expensive enterprise PLM deployment. Historically, vendors tried to solve it using so called OOTB (out-of-the-box) implementation approach. It helped to market PLM solutions and capabilities, but in many cases still required significant implementation effort.

The majority of PLM solution is sold using direct sales effort. And the natural behavior of direct sales is to gravitate towards larger deals. This is something we cannot change. Between two possible prospects sales rep will always select the one with larger potential, which will be typically larger customer.

The appearance of cloud PLM supposed to change that. Engineering.com article by Verdi Ogewell – Is PLM and Option for SME from the last year, brings an interesting perspective how cloud PLM can change a trajectory of PLM deployment. According to the article, things are going slow and adoption of cloud systems is still taking time and resources. Although PLM analysts are confident and optimistic. Here are few quotes from Gartner and CIMdata:

Gartner’s analyst, Marc Halpern says “I made a prediction back in 2012 that the major breakthrough would happen in 2017. So far, I believe I am on track. The vendors are moving in that direction and I am seeing more interest in this area. There is some adoption of cloud PLM, but I think we still have 18 to 24 months before it really accelerates.”

CIMdata analyst Stanley Przybylinski agrees, adding that,  “For the small and medium sized enterprises (SME) targeted by Autodesk with PLM 360, the Cloud is an easy, low cost way to get started on PLM. There are really no services required, which is a stark contrast with the legacy on-premises leaders.”

So, does it mean cloud PLM is on the path to solve problems of small manufacturing companies? The hope is there. For the last few years, almost all PLM vendors introduced cloud solutions as part their portfolios. But for some of them, cloud (or SaaS) is the only option. Some people called it “born in the cloud”. In my view, the two best examples are Arena Solutions PLM and Autodesk PLM360.

My attention was caught by Arena Solutions press release – Arena Posts Another Record Quarter For Bookings & Average Deal Size In Q4 2015. Press release language is usually confusing, but the following passage is interesting:

Arena recorded the highest bookings and the largest average deal size in the company’s 16-year history. Q4 2015 bookings increased by nearly 30 percent over Q4 2014 (a record high at that time), while average deal size grew 22 percent over the same period. These strong results were driven primarily by closing larger enterprise deals, an accomplishment driven in large part by the release of Arena Analytics in September, which was the latest new module in a series of enterprise-focused releases.

Press release quoting CIMdata Stan Przybylinski confirming that Arena is clear market share leader.

According to Stan Przybylinski, Vice President of Research at CIMdata, the leading independent global research firm focused exclusively on the PLM market, “Arena is the clear market share leader in the cloud PLM market, with well more than twice the market share of its closest competitor.”

Arena Solutions is an interesting company. Originally founded as bom.com, Arena is clearly pioneer of cloud solutions in PLM industry. Another Engineering.com article – Arena, The Cloud and the ”dirty little secret of PLM” can give you more information about the history and strategy of Arena. One of the data points is confirming – Arena was started around smaller companies and gravitated towards larger enterprise solutions.

Arena’s focus on early adopter and startup-heavy industries has resulted in a brisk growth pace the last 3-4 years, according to Chalgren. A big reason for this was the shift that the company went through during the years after the 2009 recession. As competitors tightened their operations and reduced the number of employees, Arena did the opposite and strengthened its PLM competence. Back then Arena targeted mainly smaller companies but step-by-step they’ve been moving into the medium and large medium enterprise sphere.

Another interesting passage outlines challenges PLM vendors are facing with smaller companies:

According to Steve Chalgren this is the biggest challenge for PLM software providers today. ”There are still many small and medium sized organizations out there who don’t understand the value of PLM and how this concept can help them”.

What is my conclusion? Changes are hard. I’m taking about changes related to PLM vendors, PLM concepts and paradigms. If you need to educate customer, be prepared to pay a lot of money for marketing and sales. Direct sales model naturally gravitating towards larger enterprise deals. To change that is impossible. It is like to change earth gravity. Cloud helped to eliminate the need for costly IT, so there is a good chance new PLM implementations will be more cost effective and bring faster ROI. But it left PLM vendors face to face with existing implementation concepts and sales gravitation towards larger companies. Just my thoughts…

Best, Oleg

Recent Posts

Also on BeyondPLM

4 6
17 December, 2008

I’d like to get back to my ideas related to structured data. I touched it in my previous posts related...

20 September, 2019

The weekend is coming and this is a time for some PLM dramas. Engineering.com and Verdi Ogewell is usually not...

30 August, 2024

The shift to SaaS PLM is rapidly gaining traction in the manufacturing and engineering sectors. As companies move away from...

31 May, 2018

Unless you live under the rock for the last few weeks, you probably noticed a massive amount of emails telling...

26 November, 2014

I’ve be sharing many of my thoughts about how different cloud technologies can be used to implement PLM. Nevertheless, once in...

28 February, 2011

Few days ago, I attended webinar One the Edge with Cadalyst – MCAD Smackdown: Direct vs .Parametric CAD. Navigate to...

8 May, 2017

It takes two to tango. PLM vs. ERP discussions are often reminds me this idiom. Autodesk PLM blog article –...

23 May, 2020

Peter Thiel is famous for his recommendations about how to build a monopoly. I recommend his book Zero to One....

30 December, 2010

I was reading Salesforce.com announcement made earlier this month during Dreamforce 2010 conference about introduction of a new database.com platform....

Blogroll

To the top