Why Do Big PLM Vendors Speak About Cloud Adoption?

For the last 5-7 years, we can see an increased presence of cloud technologies in enterprise and business software. For a long time, engineering and manufacturing software took a very conservative approach in everything related to cloud tech.  Autodesk shook PLM space by announcing cloud PLM. Large vendors made a move by adopting IaaS infrastructure to host their existing PLM products to the cloud, but how much adoption they got wasn’t clear.

CIMdata made a cloud PLM study and published results last year concluding that cloud adoption is slow.

According to Mr. Stan Przybylinski, CIMdata’s Vice President, “Cloud-based enterprise applications are dominating other application domains, like customer relationship management (CRM), but have barely scratched the surface in supporting PLM. 80% of our respondents are using one or more cloud-based enterprise solutions, with 33% using Salesforce.com for CRM. Their PLM strategies are underpinned, for the most part, by legacy on-premise solutions, with 35% having implementations that are 5 to 10 years old, and another 22% over 10 years old. Only about 16% of our respondents were currently using cloud-based PLM solutions, but just about all of the cloud-based PLM solutions have some trial use within the respondents, which bodes well for future adoption and implementation.”

According to the same story, integration and hosting of old PLM technologies in the cloud was one of the major concerns of industrial companies in the adoption of cloud PLM solutions.

I can certainly see the problem. By bringing existing PLM products to AWS, you don’t solve the problem. These systems are remaining isolated in the cloud and besides IT benefits don’t bring much. Certainly, SMB PLM customers are not getting any benefits and the cost of PLM products remain very high. The information about cloud PLM subscription pricing are hardly available online.

Interesting enough Jim Brown of Tech-Clarity brings a story that is different from CIMdata cloud PLM research. My attention was caught by Jim’s video interview with Bob Jones, Executive Vice President of Global Sales & Customer Success at Siemens.

Interesting conclusion – Siemens customers are looking for cloud technologies in the following scenarios: (1) customers are upgrading technological stack; (2) customers are looking at how to improve collaboration between distributed locations and (3) accelerating business processes and value.

My favorite passage is the following:

The last thing I would comment is, especially when you think about the enterprise customers, they can’t just flip to the Cloud. So, what we see a lot is, they may have a new business initiative that they want to extend the leverage of our technology to solve. And so now we get into this hybrid situation. They’ve an existing on-premise infrastructure that’s driving a lot of their business, and they have a new initiative that they want to deploy, and they look to us to help them deploy that in the Cloud while it still has connectivity to their on-premise infrastructure.

Combining it all together, I can see how manufacturing companies are coming to the understanding of the inevitable change that cloud technologies will bring. Here is the logic – if a company is looking at how to renew tech and product stack, they would look into cloud option (maybe we are missing something, says IT). Next globalization gives a significant advantage to cloud options and finally, as enterprises are moving forward, the cloud gives them more speed, agility and cost benefits.

What is my conclusion? Manufacturing companies are turning into cloud PLM options. Slowly, but surely the benefits are becoming clear to small companies and to large enterprise IT. Big PLM vendors are bringing the awareness up by telling to their customers – we are going to the cloud. By doing so, they create a wave of changes. Every manufacturing company these days will have to evaluate what is available in the cloud PLM segment, otherwise, they can miss. This is a good time to bring a change to the market for both large companies as well as for startups. 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.