PLM space is active these days. The activities are also for large companies and small ones. Just few months ago, we’ve been learning about Rockwell Automation investing almost 1billion dollars in PTC. Check my earlier blog from LiveWorx 2018 event here. Just before that, Aras Corp announced a strategic investment of $40M done by SilverLake and GE. In the segment of smaller PLM companies, Arena Solutions was acquired by PE fund JMI Equity.
The last one in this series of acquisitions and investment was a deal between Arena and Omnify PLM. I already wrote about this event in my earlier blog here. In my conclusion, I drove an attention towards a question how actually cloud-based PLM companies can manage their non-organic growth and at the same time, maintain reasonable technology platforms and technology consolidation. The situation with on premise platforms is a bit different. I asked the question about Aras acquisition strategy here. It became obvious that Aras is planning to rewrite acquired software on top of their own platform. Cloud platforms are different.
Engineering.com came with the article stating – No Surprise That Arena Acquired Competitor Omnify. Besides small factual inconsistencies such as presenting JMI Equity as VC firm, the article caught my special attention and made think about the nature of cloud integration. The article suggests that Arena is getting access to a larger customer base as well as to a better technologies. Read these passages:
Creates a Significantly Larger Customer Base. That being said, it’s likely that Arena PLM, which is larger than Omnify, aims to consolidate and expand its customer base with the recently announced purchase. Competing in the same or tangential markets means that customers have so far chosen either one supplier or the other. As a result, there is little overlap on the customer side, and the company will increase in size within the framework of Arena’s goals: powerful growth due to the expansion of the development and manufacturing of high-tech electronic products, a market in which they offer support.
The Protocol from TEC’s Comparison Between Arena and Omnify. There is an interesting evaluation of each respective company’s capabilities made by the site Technology Evaluation Centers (TEC). This study indicates that Omnify’s solutions may actually be more effective than Arena PLM’s for some applications. This in turn points to Arena not only gaining access to a larger customer base, but also the potential for a more feature-rich software—provided that the company succeeds in its integration efforts.
Both can only happen if Arena will be able to consolidate technologies under the same roof, which is by itself a big question. Or at least challenge. Both technologies are mature and passed long lifecycle of development (15-20 years). This is long enough to make technology unique and inflexible for integration. A worst case scenario, Arena will have to migrate Omnify customers to Arena platform or to keep running both services in the cloud (and on premise), which can only drive complexity in the future.
The question was also asked by Engineering.com article:
It will also be particularly interesting to see feedback about how the integration works between two Cloud players. The purchase also introduces the question of whether Omnify PLM will be combined with Arena PLM, thereby becoming a single product to be marketed—and if so, when will that occur?
What is my conclusion? Cloud integrations are tricky, especially when you acquire a company with subscription base and history of customer development. If Arena was afraid of the competition from Omnify (based on TEC article conclusion of Omnify outperforming some of Arena functions), then the goal is achieved. Now Arena has a full control of Omnify product. It also gave non-organic growth to Arena PLM revenues. As far as platform consolidation is concerned, I doubt we are going to see a consolidated Arena+Omnify product. As it happened with few other PLM companies in the past, Omnify on premise customers can be rev-locked and no future path to migrate. A highly possible scenario is that Arena will have to figure out how to develop and enhance its own platform to migrate Omnify customers, to consolidate product offering and cut cost of running both cloud-based platforms. Time will show and jury is out. I don’t have enough data points, but I guess Arena Solutions engineers will be soon busy to compare both Arena and Omnify tech stacks nuts and bolts. 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
