It’s that time of the PLM development again – vendors have started to pay attention to small and medium-sized manufacturing companies. PLM interest to SMB market and small manufacturing businesses was going up and down for the last two decades. It has its own successes and failures but never delivered a steady growth as it was with some 3D CAD mechanical packages fro, Autodesk and Solidworks that dominant in specific manufacturing company size. The recent growth of electronic and PCB development increases interest in affordable electronic design tools. Some of them (eg. Eagle and solutions from Mentor Graphics) were acquired and Altium is an independent company.
When it comes to data management (PDM) and PLM tool, the business is somewhat strange. PDM (Product Data Management), which is mostly focused on CAD file data management is mainstream and dominant by PDM products acquired and attached to CAD products. Solidworks PDM (different flavors), Autodesk Vault and few others. These products are two decades old, mature, deliver what is promised for high prices tag. The value proposition is simple – don’t lose your data, control revisions and don’t mess up with multiple changes. Manufacturing companies aren’t happy to buy them, but do it out of necessity. The percentage of CAD seats covered by PDM licenses is growing, but even today less than 35-45% (depends on how you count – companies or seats). Beyond basic CAD data management, you can see a sea of Excel hell and attempts of PLM vendors to sell their PLM solutions with mixed results.
Companies are publishing horror stories presenting the value of PDM solutions. Check the recent video from Solidworks below.
My attention was caught by Jim Brown’s article Finding PLM fit midsize manufacturing. The article gives you some interesting data points of PLM role’s perceptions
and a framework to grow PLM business value
The conclusion in the article to evaluate if an existing vendor has a cloud strategy even if they’re not ready, which made me think about possible strategies CAD and PLM companies are planning to attack SMB problems.
1- Full cloud platforms
New platforms and SaaS tools can provide great value and unique capabilities of CAD and PDM tools. It might be no brainier decision for new projects and companies but can face some headwinds when attempting to replace existing desktop and old-fashion client-server tools. These solutions might not immediately quality as “most capable” and must be growing fast to match the needs of customers.
2- Immersive cloud integrations
Combine existing tools with cloud solutions can be another way to provide compelling reasons for companies to move. No need to migrate existing design workflows and use of familiar tools can ease the way to adopt new tools and get a quick ROI. Functionality and capability are here. The challenge of integrations and complexity existing and new cloud tools can create resistance from customers.
3- Hosted solutions
Taking existing tools and hosting them using cloud infrastructure is an easy way to ease companies’ hurdle to manage and administer PDM solutions. It is mostly IT simplification and potentially changes in the business model. However, the cost of hosting can be a significant factor to scale it up and expand the market share.
What is my conclusion? I can see how PTC, Dassault Systemes, Autodesk and Siemens Software taking one of the plans I outlined above. Mid-size manufacturing companies is a significant market. Nobody was really unlocking the full potential of this market for PLM until now. From my experience, specific functions and ROI are two major factors impacting the decision of small manufacturing companies, engineering teams, and individual contractors. Manufacturing companies are facing real difficulties. Here is a question – will existing PLM value proposition mantra – such as share, control, collaborate yada, yada… are those that will make small manufacturing companies moving from existing Excelware to PLM solutions? The opportunity for cloud tools is here. SaaS tools provide some unique ability to integrate. PLM business is behind in cloud and SaaS adoption. Outside of PLM business, I’ve seen many tools and services combined together to provide a compelling value proposition. Openness will play a significant role in the ability of PLM vendors to grow in this market. In the past, Autodesk and Solidworks played openness successfully to win the midsize market. Will CAD vendors be able to repeat this success again with PLM tools. Just my thoughts…
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.