The article about how different is Aras TCO compared to other “big-boxes PLM” triggered many questions online and offline. If you want to catch up, you can do it via blog article and also on LinkedIn. The discussion on LinkedIn is more active, so check this link as well.
I want to jump to the final comment (and conclusion) provided by Marc Lind, Chief Strategy Officer for Aras (Hint – get prepared to pay more for Aras):
Marc Lind (SVP Strategy at Aras): Oleg Shilovitsky think I’d put it a bit differently: speed & agility are key value prop… and ‘oh yea’ that can give an economic benefit as well.
Here is an interesting passage about in fact TCO can be very depended on requirements and use cases, so it is hard to get “apples to apples” comparison with systems that aren’t exactly doing what Aras PLM does.
Oleg Shilovitsky, CEO/co-founder @OpenBOM | Blogger about engineering & manufacturing @BeyondPLM
Interesting question comes from comments to the last article about @Aras Corporation. What Aras is selling? Low TCO or Time to Value?
Mark Halbish Global PLM Director at TI Automotive
This is a fascinating question and one which I have struggled to understand and frankly still don’t see an answer to in the comments here, notwithstanding the perspective from Aras marketing. Our own bench mark of Aras versus big box PLM (as you phrased it) certainly didn’t surface Low TCO but I know that is influenced heavily by requirements and use cases. I tend to believe Time to Value is the actual compelling business case.
Check another comment from Mike Reisig (now Aras, but in the past from GE where he had lot of experience in the past with multiple PLM products at GE). Even general statement about lower TCO is there, the key focus is on value and speed to value.
Mark Reisig, Product Marketing Manager at Aras Corporation
Hi Oleg, Aras typically sees TCOs multiple times higher, but I agree TCO is not everything. As you’re aware, the ability to solve a company’s most pressing problems, and provide them with the agility they need to quickly employ new capabilities and react to changes in their market is the real key. That said, Aras takes far less time and resources to deploy and maintain. Customers are free to customize, knowing they can sustainably upgrade, and we do all the upgrades. This allows them to take advantage of enhancements and new applications (no extra cost) sooner and for less cost. Speed and agility matter. Our time to value is dramatically better. A Fortune 100 company with a small staff can roll out new capabilities every 8 weeks, and we can perform their major upgrades yearly, supporting tens of thousands of users. We don’t see the traditional vendors upgrading their customers and we don’t see those systems being upgraded any where near the rate as ours. This is never an apples to apples comparison, but ours are fresher, flexible, open and upgradable.
The discussion reminded me Blue ocean competition strategy. If you’re not familiar with Blue ocean, check this book which basically means Aras is creating a new PLM category (new agile PLM) and by doing so, trying to make their competitors irrelevant. Does it mean Aras will be able to charge customers more than ‘big box PLM sellers” do? Before jumping to this conclusion, I decide to check more about agile approach in development. I thought it can give us an idea if agile differentiation can lay a foundation for premium value from Aras.
I found the following article – Myths of agile: Agile means fast and cheap. The discussion belongs to software development space but in my view can be very much applied to what Aras does. Here is the passage:
The myth goes like this. “I’m a project manager. And the ‘business’ has given me a big project to deliver. I could do it in the Waterfall way, as per normal. But all the cool kids are doing Agile these days. And Agile means faster and cheaper, instead of the slow expensive Waterfall way. And the stakeholders want faster and cheaper. So I’m going to take my big project and do it in an Agile way instead!”
The key difference is that agile rejects big and clunky projects while focusing on small deliveries:
There is a problem in the very premise here. “I’ll take my existing big project and do my big project in this agile way. Instead of the waterfall way”. Agile software development rejects doing big clunky projects in the first place. Agile development doesn’t like projects. And Agile development doesn’t like big. In contrast to all that: Agile encourages moving from a project to a product mindset. It encourages moving from large to small batch size. It encourages incremental and iterative development.
Does it make things cheaper? Not really. Agile methods turns upside down a traditional project management triangle. Read more about it here and here.
Notable passage:
So the entire set of project “constraints” is just one of three factors you can trade against. And often in Agile, conformance to constraints is often not as important as value or quality. If you think that sounds crazy, think about this. If you discovered a new feature while building your product that your customers were frantically demanding, and would pay you vast sums of money for, would you build it? Even if it put your project over its original budget?
Any sane person would. Any sensible business would. Then you are trading off your Constraints for Value. Or if you discovered a defect in your product that would potentially harm or kill customers, would you put effort into fixing it? Even if it meant you shipped late or had to drop a feature? Of course, you would. Then you are trading Constraints for Quality.
So the Agile focus on value and quality over constraints isn’t just defensible, it’s the most honest and reasonable position. Waterfall project management proudly emphasises cost and time control because they are telling a story to the project stakeholders, not the software customers.
What is my conclusion? Focusing on a value and speed is great. If Aras has a way to deliver value that nobody else can deliver in PLM space, they will charge premium and we will see Aras revenue going through the roof. In engineering software domain until now, it was only done by companies charging customer for high-end CAD software while making data interoperability questionable. Lock data and absence of alternatives is a great foundation for a premium price. For how long Aras will stay in a privileged position with no alternatives after finding its way? Not for a long time these days. Everything that is successful will be copied sooner than later and improved. But this is a topic for a different blog article. 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
