Future business models – Pay per second PLM?

Manufacturing software is changing. New technologies are coming to engineering and manufacturing. Cloud and online services is one of them. Cloud transformation is a real thing and it happened for the last 5 years. The dream to converting enterprise PLM system into cloud service is finally happening. All PLM companies today are delivering some form of cloud services. However, we just arrived to the 2nd step of cloud PLM development. Majority of cloud PLM is existing PLM systems hosted using of of IaaS services. While it created significant IT advantages, it is still not done.

It made me think about what can be the next change in cloud development in engineering and manufacturing. As I was thinking about modern cloud business transformation, the following change that happened back in August 2017, caught my special attention. Amazon and later Google changed their business models to support “per-second” transactions.

Check the following few articles for more info- Amazon just made a huge change to its $12 billion cloud computing juggernaut; Following AWS, Google Compute Engine also moves to per-second billing. Here is an interesting passage:

A few months ago, Amazon introduced per-second-billing for a few key services of its AWS division. This meant that users of this cloud computing service could access specific tools for a cheaper price. This created waves in the cloud computing industry. Google quickly followed suit, introducing the same model for even more of its cloud services. More recently, more specialized companies like startup Snowflake Computing — which provides data warehousing in the cloud — have done the same. This set the precedent for a wider trend: cloud computing companies attempting to make their products accessible to those who couldn’t pay for as much, like small companies and self-employed entrepreneurs. Why is this important? One way to understand cloud computing is as computing capacity, or data storage, or processes that can stretch and contract depending on the needs of an organization (to accommodate a sudden spike in users, for example). Per-second-billing is just the latest manifestation of a world moving toward democratized and hyper-fractionalized access to our most powerful tools. Imagine accessing powerful deep learning models or massive data sets or quantum computing capacity — a kind of supercomputer that uses quantum physics to vastly outperform conventional supercomputers — billed by the second. For small companies, harnessing even a few minutes of time with these tools opens up a whole new world of possibilities. Expect to see broader, flexible access to cutting-edge tools in computing through the cloud in 2018.

Here is why such changes can be significant for engineering, manufacturing software and specially for PLM systems. One of the key factors is growing development of connected information systems and services. Think about stateless information system that can be used by multiple companies working together and providing information access to computing, catalog systems, and product data. The access to information is valuable. At the same time, the transaction time can be minimum (e.g. price quotation). Charging per-second can be an interesting monetizing option for such systems.

One the other side sharing of resources and granular usage of IaaS technologies can provide another option to engineering software as a service providers to lower cost and expenses of systems, which today mostly under-utilized because of old system architecture. The result is promising – to optimize cost and profit.

What is my conclusion? New technologies can create new business models. Future PLM system will be organized as a set of online services. Combined with the idea of er-second monetizing, it will create a new type of system and infrastructure available for manufacturing companies in a very granular form. New geometrical modelers, online cost quotes, providing information for service organization are only few examples how future PLM systems can be reorganized into set of distributed scaled services. 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.