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

Cloud battles and future PLM competition

Cloud battles and future PLM competition
Oleg
Oleg
30 August, 2016 | 3 min for reading

amazon-cloud-new-plm-competition

Cloud is one of the most transformative trends these days. The word has shrunk and the Internet changed business models, technologies and products. The Economist article Cloud Chronicles can give you an interesting perspective on how open-source software and cloud computing have setup up the IT industry for a once-in-a-generation battle.  Read the article and draw your opinion.

The article speaks about how Amazon took advantage of network effect and establish dominance of AWS against other products. It also gives an interesting perspective on how open source and cloud damaged the business of existing IT vendors.

Both open-source software and cloud computing have been disastrous for the old giants of IT. New firms almost always opt for an open-source database in the cloud rather than a pricey proprietary version from Oracle, the biggest vendor of such software. The more firms use the cloud, the less they buy equipment from Dell, Hewlett-Packard and other hardware makers. Cloud-computing providers, for their part, have little time for traditional vendors of computing gear and instead buy from contract manufacturers in China. The incumbents have seen sales in their core business stagnate or drop in recent years. IBM’s revenues, for instance, have fallen for 17 consecutive quarters.

However, my favorite passage is about potential of AWS to dominant IT industry and the data as a one of the battleground for cloud technologies:

Get off of my cloud. The “cloud-computing wars”, as some call them, are not yet over. The prize is too great. Gartner estimates that about $205 billion, or 6% of the world’s IT budget of $3.4 trillion, will be spent on cloud computing in 2016—a number it expects to grow to $240 billion next year. The latest battleground is data. Cloud providers are hoovering up digital information left and right so they can mine it and use the insights to offer new services or improve existing ones.

AWS could end up dominating the IT industry just as IBM’s System/360, a family of mainframe computers, did until the 1980s. If that happens, the antitrust authorities may eventually have to step in, as they did with IBM.

It made me think about CAD / PLM competition and how it can be influenced by cloud platforms.

For many years, CAD software was a powerful competitive weapon serving software vendors. Engineers are almost religious about CAD tools. Once locked in a specific system, company will continue to use it for many years Existing CAD data locked in specific file formats, features, integrated tools – this is only a short list of reasons for manufacturing company to keep a status quo. From that standpoint, you can think about CAD, PDM and PLM competition as a marathon with very few milestones.

Cloud CAD and PLM products with advanced data management components can provide an interesting turning point in the development of engineering software. Cloud data storage can become a key component to provide a way for manufacturing companies to focus on product-centric strategies with important elements of data scale, intelligence and analytics.

What is my conclusion? Old model of CAD and PLM competition focused on CAD file formats and data locking in highly specialized PLM systems. Amazon cloud platform can provide an abundance of computing services and data storage to build new mechanisms helping manufacturing companies to become more competitive in the Internet era. Just my thoughts…

Best, Oleg

Want to learn more about PLM? Check out my new PLM Book website.

Disclaimer: I’m co-founder and CEO of openBoM developing cloud based bill of materials and inventory management tool for manufacturing companies, hardware startups and supply chain. My opinion can be unintentionally biased.

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