Who will benefit from multi-tenant PLM backbone?

Earlier this week, I shared my perspective on cloud adoption in 2018, challenges of single tenant PLM architectures and differences between single-tenant and multi-tenant models. It is becomes clear that businesses are changing and IT must innovate to allow to companies to be competitive. Can multi-tenant architecture of PLM backbones provide new set of differentiations compared to existing PLM systems.

If you read about multi-tenancy, you can easy be convinced that multi-tenant architecture is practically inevitable. Examples from enterprise systems such as Salesforce.com, Netsuite and Plex as well as all global web applications such as Facebook, Twitter, Google are suggesting that benefits of multi-tenancy is obvious. But… the question of timing and customer pain is the one that can help us to answer on the question why most of PLM systems are indeed single tenant today. Is there a sense of urgency? Who will benefit from multi-tenant PLM backbones?

Here are three use cases where I think multi-tenancy can provide unique value proposition for urgent problems PLM industry is experiencing today.

1. Cost. The demand for affordable PLM systems is huge. The entry level into PLM club is seven figures and many companies cannot afford it. It leads to Excelization of manufacturing because Excel is affordable and easy available.

2. Solution delivery and upgrades. Manufacturing companies, especially small and medium size are lack of resources and skills to support complex PLM systems. To setup complex PLM system, to configure and sometimes even customize it is beyond what manufacturing companies can organize and support. History remembers all attempts to deliver “scaled down” versions of PLMs, but it mostly failed. Upgrades is another challenge. Services are expensive as well.

3. Data sharing. Global collaboration and data communication, company mergers and business transformation, contract manufacturing, supply chain, IoT and connected products, services. This is only a short list of use cases demanding data transparency and granular access. Each company runs database and bunch of Excels. Data exchange is painful and making digital transformation literally impossible.

Multi-tenant PLM architecture can provide answers on many problems I mentioned above. But I want to make a disclaimer before everyone will scream – we can do it using current PLM systems! Yes, you can do it, but cost and complexity of these solutions will be different from what multi-tenant architectures can deliver.

I outlined several aspect of multi-tenant systems that can uniquely differentiate value proposition and functionality. In other words – why customers should care about their PLM vendor shifting to multi-tenant architectures?

Behavior analysis.

Development cycles of multi-tenant solution is much faster and run in a tight iterative feedback look with customers. On premise or even hosted solution tend to deploy new versions on annual basis. Multi-tenant SaaS can easy go between days to weeks. Deployed solution can be measured in a real time and you can use collective impact of all customers to improve how apps are performing. New features can be streamed continuously.

Economy of scale

Cost matters. For large and for small companies. Multi-tenant architecture allows to vendors to enjoy the benefits of averages. Solution can allocate to every customer more resources than any individual customer would need while amortizing the cost over all of them. Some customers are using less than their subscription capacity, while others are using more. Through the years of experience, vendor can learn how to manage capacity and satisfy spike requirements.

The power of data networks 

Multi tenant system can offer functionality that are out of reach for single tenant solutions. One of the most important is related to data management and it comes in two aspects: data sharing and intelligence. The first one is a result of data structure optimization and polyglot persistence. Sharing of data and access rights between organizations and individuals on a very granular basis is the most visible one. Intelligence is the ability of software to anonymize data from multiple customers to improve user experience and provide unique functional capabilities – think machine learning, data analytics and more.

What is my conclusion? The shift from single-tenant to multi-tenant architecture has started already. I can see companies are trying to get into different technologies, solutions and functional niches. Manufacturing industry is very segmented – vertical industries, geographies, companies of different sizes. Some of these segments are low hanging fruits for multi-tenant PLM systems. Some of these niches are screaming – help!  However, some others will stay with traditional architectures for longer. Overall, multi-tenancy will change trends of competition in PLM and spotlight new products and vendors with differentiate technological stacks. Just my thoughts…

Best, Oleg

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