The weekend is coming and this is a time for some PLM dramas. Engineering.com and Verdi Ogewell is usually not disappointing. The article published earlier this week Siemens’ New Low-Code Platform Mendix an “Aras PLM Killer?” is a great PLM thriller with the complex scenario, but unfortunately, stalemate conclusion. Read the article and draw your opinion.
Thrillers are defined by the moods they elicit, giving viewers (readers) feelings of suspense, excitement, surprise, anticipation, and anxiety. A typical thriller will keep readers on “the edge” as the plot builds towards a climax. Engineering.com does more or less the same by building a story intertwining the positions and creating tensions.
In the nutshell, the story is simple. Siemens made an announcement to change from Siemens PLM to Siemens Industry Software and building a story of a new Xcelerator portfolio. For the company such as big as Siemens, this is a very predictable step. Siemens is building a gigantic portfolio of products combing MCAD, PLM, ECAD and few other products. The glue – Mendix low-code platform is the one that will be responsible to glue everything together.
Aras PLM is coming from so-called enterprise open-source position- a business model combining free application download and monetization via support and maintenance subscriptions. For the last decade, Aras increased their market share and, as article states, started to hurt Siemens’ position. Here is the passage, which describes it:
It is no surprise that Siemens felt a little uncomfortable when large customers in automotive, aerospace, and other industry segments began investing in large volumes of seats belonging to cPDm solutions other than Siemens’ Teamcenter—of which Aras Innovator saw perhaps the most success. In combination with Aras developing its portfolio of solutions to cover increasingly large sections of PLM, this has created a situation that in the short term may not have been too worrisome for Siemens and other major PLM players, but which in the long run could become precarious.
So, where is the real drama? Aras is competing with Teamcenter, which has probably one of the largest install based on cPDM (PLM) seats in the enterprise companies. Teamcenter is a software platform with decades of transformations, and acquisitions. Large install base using different versions of software, some of them heavily customized with a complex path forward to upgrade and transform. Aras is not new software, but it is more agile, developed as a single code-base platform and presenting itself as a novel architecture compared to Teamcenter.
Aras is likely coming to Teamcenter customers and offering them a path to transform and solve their business problems using Aras platform with a faster ROI and migration path to all next versions for free as long as the customer stays on Aras subscription. By doing it Aras is killing three birds with a single shot- 1/ It provides a unique value for large industrial companies; 2/ decrease support and maintenance cost by eliminating old Aras versions from customer servers; 3/ Collecting customer testing environments. I can bet that upgrading customers might be cheaper than maintaining all old versions of Aras PLM software running on premise for customers.
With largest customer install base, Siemens Teamcenter is in defense position. It is like a big ship that requires defense from multiple enemies. Like every large company in the PLM domain, it grows by acquisitions increasing their portfolio and customer base. But, at the same time, Teamcenter core remains unchanged for a long period of time and this is a sensitive place that probably requires a better defense strategy to compete with Aras agile platform. Teamcenter is in the process of replacing its front-end by developing ActiveWorkspaces technologies since 2012. Siemens is throwing Mendix to provide a solution to a growing need for solution development, data robust web development.
Since Siemens bought Mendix, they have worked intensively to create the broad integration they envision when it comes to app development, asserted Tony Hemmelgarn during the Siemens analyst conference. “With the ability to build apps that consume and expose data from a wide range of IT systems and applications, Xcelerator enables companies of all sizes and at any point in the supply chain to digitally transform their businesses through personalized, customizable software solutions and support new ways of working. Whether organizations require local solutions, are looking for a mix of cloud-connected solutions or want to work exclusively on the cloud, Xcelerator helps realize the digital future at the pace and configuration that best suits them.”
What is the core problem and objections in PLM? I wrote about the problem of PLM complexity many times. Check the latest. Nevertheless, the following passage from Engineering.com is a great summary:
The complexity is too great, and the solutions too difficult to implement, use, operate and administer.
The killer PLM application is the one that can overcome these problems, to provide rich functions to satisfy enterprise PLM needs, be conservative enough to pass enterprise IT checklist and to win enterprise sales “sausage grinder”. And this is a place where you can see Aras is clashing with Teamcenter.
What is my conclusion? PLM applications are enormously sticky. This huge benefit of PLM business. After a large company implemented PLM, the business is guaranteed for the next decade. Enterprise PLM space is full of these examples. But, aged technological platforms, a growing number of problems and external factors such as digital transformation are pushing industrial companies towards changes. And this is an opportunity for Aras. There are probably a few hundreds large enterprise companies Aras needs to win to displace Teamcenter business. Does Aras has enough money to win – it was a question I asked last year. I think the jury is still out. 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.
