How to win PLM SaaS race

Once upon a time companies didn’t use SaaS (cloud) software. I remember first time I said “cloud” world more than a decade ago during one of the meetings. It sounded completely crazy and nobody really understood what does it mean. And then changes started to happen. Gradually and then suddenly, companies realized the power of cloud computing, elasticity and new ways of delivery software. Actually, the best way to call it was to call it “No software”. This is how Salesforce.com called it back in 1999.

PLM vendors were late to discover cloud technologies and to bring cloud to manufacturing companies. Even pioneers such BOM.COM introduced it almost at the same time as Salesforce, the adoption was very limited. PLM products were available for hosting and in many situation, cloud was considered as an option to have PLM server in a different place. The first large PLM company to try hosted (cloud) PLM was actually PTC via IBM PLM OnDemand project (2006). You can hear various opinions about that project, but it was a failure, in my view. It was no market to sell hosted PLM and I think project was sold to a very small number of customers. The next big move was done by Autodesk PLM360. Carl Bass, Autodesk CEO was huge believer in elastic computing and delivery of PLM in a different way.

I’ve been buzzing, blogging and sharing my thoughts about PLM cloud for the last few years. The following diagram is the best way to summarize evolution of PLM from local servers, to cloud hosting and into multi-tenant PLM SaaS applications.

In my view, Autodesk PLM360 initiative became an industry trigger. Timing for Autodesk cloud PLM intervention was chosen in the right way. The jury is still out to see if Autodesk actually realized the opportunity of first mover in cloud PLM. However, just few years later, “cloud PLM” became available from all PLM vendors. But here is the thing… It didn’t change much. And in my view, there 2 main reasons for that – manufacturing status quo and existing PLM paradigm.

Manufacturing programs are long. Manufacturing companies made significant investment into existing CAD and PLM software. Changes are hard and ROI are questionable. We’ve heard all these things many time. But the change will be made. And to make the change “cloud” technology won’t be enough. Here are few things, I believe, can serve as a guidance for coming PLM SaaS race:

1- Where is the shift?

Unless you’re looking for a “hole” in a market, which is almost not the case for PLM, you must watch where shift is happening. You can say “cloud” was a shift, but I think, it was not enough to compete with existing CAD and PLM dominant positions. You should be looking for what is shifting the world of manufacturing. And if you think about it, you can see that globalization and specialization are two main factors leading changes for large and small manufacturing companies. Better, faster, cheaper are still the name of the game, but the landscape is global and much more complex.

2- How user behavior is changing

User behavior change is another important element of entering crowded market. And one of the key trends these days is shift in communication. No phone calls. No fax machines. Speed, speed, speed. An ability to communicate differently is one of the most fundamental changes in use behavior. Messaging, online apps, bots, etc. All these elements to be considered to win future PLM paradigm race.

3- Business and economical models

The last, but not least is shift in economics and business models. Subscription is the most obvious thing that changed in business models. However, the biggest shift is actually digital unbundling of tools that before were presented as suites and packages. We are going to see more granular consumption of services and potentially new business relationships enabled by online digital economies.

What is my conclusion? It is thrilling time to be in engineering and manufacturing software these days. Digital transformation is happening, but most of manufacturing companies are still dinosaurs from the standpoint of tools they are using. Timing is one of the most important element of success and it looks like companies innovating today got the right time. Next few years will be very interesting to watch in PLM business. 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.