What PLM strategists can learn from PLM and ERP “true cloud” debates

Have you heard about “true cloud” debates? Things are heating up in ERP universe… I wrote about Oracle acquiring Netsuite earlier. If you missed my blog, read it here. The deal created some turbulence among ERP competitors. My attention was caught by Rootstock ERP article – The Oracle-NetSuite Acquisition – Good for Cloud ERP, Not So Good for Manufacturers creating some concern around Netsuite-Oracle deal. Read the article and draw your own conclusion.

According to the article, Oracle’s cloud is a bundle of existing technologies.

Oracle calls its Oracle Cloud Platform a Platform-as-a-Service (PaaS) offering. If we take a closer look, it becomes apparent that Oracle has simply bundled technology together and called it PaaS. Their platform does not drive innovation in an agile and streamlined manner, which is what a true cloud platform is supposed to do.

In my earlier article about Oracle PaaS – A piece of cloud in data center – SaaS PLM path for large manufacturer, I covered the same news. The article includes a short video of Larry Ellison introducing Oracle PaaS solution. It gives slight different flavor or the same solution calling it “a replica of the cloud”. So, bundle, replica, platform, cloud… I can see how customers are raising eyebrows trying to figure out what does it mean.

However, my favorite passage from the Rootstock article is about “True cloud”. Here is the quote:

Markets and supply chains are spread all over the world and consumers’ demands change rapidly, are creating daily challenges for manufacturers of all sizes. These companies now realize that they need an ERP solution that can accommodate any workflow, implement social collaboration, add new capabilities and quickly address changing requirements. Forward-thinking firms are looking beyond the slick promises of two-tier hybrid systems for comprehensive end-to-end enterprise management solutions that support the flow of people, processes and information.

We call this ideal enterprise-wide system an end-to-end true cloud ERP solution. It connects ERP with customer relationship management (CRM), human resources management (HRM), financial management, document/knowledge management, and workflow management systems.

With Rootstock Software on the Salesforce platform, manufacturers can build an entire ecosystem of products that provide end-to-end coverage of the entire enterprise. Rootstock cloud ERP seamlessly integrates with Salesforce CRM (Sales Cloud) and Salesforce Service Cloud and other partner solutions to extend the ERP system to support many business processes – much more than the legacy ERP systems of the past and the hosted and hybrid ERP cloud solutions of the present.

This passage reminded me some of “true cloud PLM debates” I captured last year when working on comparison of different PLM cloud solutions. Here are few examples that can show you different perspective on what is “true cloud” for PLM vendors and analysts.

Navigate to the article by Tech-Clarify – SaaS-o-Matic spoof and interview on true cloud. The spoof made by Jim Brown is brilliant.  Article brings the same point of true cloud vs. hosted solution debates. My short conclusion from the interview – existing hosted solutions are evil, but new cloud PLM technology is good. (Note – the article is sponsored by Autodesk PLM).

A different message is coming from PTC article – PTC PLM Cloud offers Instant, Production Ready PLM. According to the article Windchill creates “true cloud” solution because it is proven product with millions of users under the belt. The article made a point that Windchill was designed from the beginning as a web-based solution (just as a reference, Windchill was designed back in 1990s and I believe web-based approach was different 20 years ago).

The PTC PLM Cloud is based on Windchill, a proven technology with over 1.5 million seats deployed and a platform that was designed from the beginning as a web-based approach to PLM. The result is a true cloud PLM solution, specifically designed to enable team collaboration and product data sharing. This accelerates product development and helps design teams that are stretched across different locations, working with varying CAD applications or coordinating with partners and suppliers.

My third reference is Arena Solution article – All PLM clouds are not created equal. According to the article, multi-tenancy is a core differentiation of true cloud solution. Article leaves no doubt by the following statement  – “Don’t get fooled by a fake cloud PLM solution”. Here is the passage:

In CIMdata’s newest analyst report, “All PLM Clouds Are Not Created Equal,” you’ll learn the important difference between a real and a fake PLM cloud solution. You’ll discover the value of a true cloud multi-tenant PLM solution and its ability to provide all customers with continuous and instantaneous access to solution upgrades.

You’ll be privy to the telltale signs that reveal anything less than a world-class cloud solution. For example, when a so-called cloud PLM vendor has a third party host on-premise solutions, you’re guaranteed the high cost of on-premise exacerbated by the drawback of access delays.

So, what can we learn from these debates about “true cloud”? The competition is heating up between existing enterprise software vendors and newcomers. Enterprise software is a complex world, with zero chance for an overnight transformation. In my earlier article – Cloud PLM: from servers to multi-tenant applications, I provided my take on the evolution of cloud PLM and enterprise software (in my view, it applies to ERP software too with some exceptions). Here is the picture from my article:

We are moving into a 3rd phase of transformation – SaaS applications. It is characterized by IT as a service, commoditized hardware and sharing of computing resources and storage. Virtualization technologies are making it possible and it transforms business models, software architecture and platforms.

What is my conclusion? Internet and cloud software created an opportunity for once-in-a-generation shift from corporate data centers and enterprise IT to multi-tenant cloud applications and elastic computing paradigms. The transformation is not simple and it creates potential collisions between enterprise software vendors, IT departments and new software providers. Inertia and existing business relationships are creating advantages to established enterprise software providers. Internet, agility and low cost are creating an opportunity for new vendors. All together it set up a once-in-a-generation battle. Grab a popcorn and watch the enterprise software transformation movie. It is going to be very interesting in the next 5-10 years. Just my thoughts…

Best, Oleg

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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.