Enterprise companies of all sizes are adopting cloud technologies. This is not a secret and all numbers are speaking about significant growth in SaaS application adoption. Check my article from the last year – Need for Speed and cloud PLM adoption.
Manufacturing companies are coming to an 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.
Manufacturing companies are turning into cloud PLM. 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.
However, the speed of adoption is still a big concern. So, what slows manufacturing companies? Earlier this year I published an article – What will drive cloud PLM adoption in manufacturing. My simple conclusion there was that technology that can drive the cost of cloud PLM system down is one of the key elements. I know, it might conflict with everything I usually hear from PLM pundits about value vs cost. But, back in 1995, engineers were switching to Solidworks with fewer functions just because of that. It is hard to compete with free or low cost. That was the same reason why people were switching to Google Docs from Microsoft Office. Here is an interesting chart I captured from Jim Brown’s of Tech-Clarity.
As you can see cost and IT resources are two prohibitive factors for companies to enter PLM. Both can be solved by SaaS PLM. However, one important thing – multi-tenant SaaS PLM. Because hosting of existing PLM systems on the cloud won’t give you that level of advantage. Check my PLM Circa 2020s article for more information.
Here is another interesting chart from Tech-Clarity. How many companies are ready to trade functions for cloud advantages. It is amazing to see that 45% of companies are ready to trade.
In the past history of successful engineering systems, the cost was the key factor to win. It happened with AutoCAD, which won by bringing drafting packages to PC. And it was the same with Solidworks that because of huge success on Windows against expensive PTC Pro-E system back in 1995.
How PLM vendors can apply the same principles to drive cloud PLM adoption? Maybe vendors should double down and make a PLM subscription more affordable? Or maybe it requires some critical functions that are missed today? The jury is still out and market is open for vendors looking at how to bring cloud PLM to the market. In my view, multi-tenant SaaS PLM is needed and it is a key element to build new business models for cloud PLM.
What is my conclusion? A business model is key to drive cloud PLM adoption. Companies are ready to trade functions for cloud advantages. It is very interesting timing for all vendors that have multi-tenant PLM technologies. Because this is the right time to come to companies that looking for PLM, but afraid of high cost for both licenses and operational cost. In my view, we are going to see how SaaS PLM will drive the adoption of PLM in the next few years. 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.
