SaaS PLM and Building “Faster Horses”

SaaS PLM and Building “Faster Horses”

Yesterday’s SaaS PLM comparison article triggered great sparring with my long-time PLM industry colleague, Marc Lind, SVP of Strategy at Aras Corp. In normal circumstances, Marc and I would be grabbing a cup of coffee in a nearby Brookline or Newton coffee shop, but the reality of the pandemic moved the conversation online.

If you missed my article yesterday, check this out here – How to Compare SaaS PLMs. Marc’s made a point about comparison SaaS PLM and PLM features. Here is the passage.

Good post! Probably need to add “Functionality scope” offered as SaaS? This is key determining factor for most PLM deployments….you article is about evaluation of SaaS PLM… just suggesting Functional scope is a criteria… if you need BOM/Part/Chg, there are lots of options… if you also need Variants & Options, your list of potential SaaS is much shorter… if you need Requirements Mgt as well, you’re down to 1-2… if EBOM/MBOM is necessary as well all as SaaS (not multiple hosted legacies), think there’s only 1 option right now (Aras)… if others like MBSE and/or Simulation Mgt all together, think same is true… what am I missing?

I love Marc’s confidence in the Aras leadership and I think Aras demonstrated substantial progress since the invention of their business model of Enterprise Open Source (a combination of free download and subscriptions). While I have no doubt that features and functions are important in general, it made me think about how to use them as criteria in such a specific topic as SaaS PLM. But before going into the PLM debates, I want to bring few examples and related observations.

“If I had asked people what they wanted, they would have said faster horses.” The phrase is attributed to Henry Ford. Even there are many debates if Henry Ford actually said the famous phrase, there is no doubt that Henry Ford was very much ignorant about customer requirements, which allowed him to innovate. His innovation was not about the car – he didn’t invent the car. Henry Ford’s genius was not in inventing assembly lines and interchangeable components. The advantage of Henry Ford method came from the vision of a durable mass-market automobile. He adopted the moving assembly, which allowed him to manufacture, market, and sell the car with completely different unit economics. The result – mass market for cars he created.

Let’s talk about another example – Google Docs. Back in the early days, Google released the online word processor with a much smaller number of features compared to MS Word. While feature advantage was obviously stronger for Word, people used Google Doc because for different reasons – free, simple, easy, online, collaborative. The war between Google Docs and MS Word is still ongoing, but Google Docs open a new market of online application that was later mimicked and developed by many companies.

Now, let’s go back to SaaS PLM. The demand for features from enterprise OEMs is well-known by PLM vendors. Enterprise customers represent a very lucrative segment of the PLM market. The competition there is tough and Aras is fighting Teamcenter (mostly), but can potentially face Windchill and sometimes 3DX. Major PLM vendors are pushing towards the most comprehensive features and use case and this is absolutely normal behavior.

At the same time, PLM adoption in small to medium-size manufacturing companies and supply chain is very low. There is no good product-market fit from major PLM providers to support the medium-size manufacturing segment. It is very hard to sell the same enterprise PLM systems in that segment of the market. Excel is the “PLM king” for all these companies. You can also find a lot of Excel managing BOMs in enterprise companies, especially in small innovative teams focusing on new product development. The modern SaaS PLM tools have an opportunity to provide applications with different unit economics and features that no one from the enterprise PLM segment has – collaboration, data sharing, simplicity, and global access. This is a real opportunity these days as many manufacturing companies are looking for alternatives to Excel madness. Mass market PLM is a huge opportunity if one of the companies finds a formula to success. Pretty much similar to what Solidworks did in the past.

The story of Henry Ford will not be full if not to speak about what happened in the 1920s. The second half of Henry Ford’s story is how Ford started to lose to GM, which came with the concept of the configurable car for every need. Ford was losing the market share sharply from 1922.

This is the right moment to talk about flexibility and Data Opportunity in PLM. Check my old article and also my recent publication about Data and Future PLM Opportunities.

The most interesting thing was done by Google in the past. By crawling data, Google became a Digital Predator turning data into a revenue stream. Data and intelligence became the first and the most strong competitive advantage of the Google platform. Data was the card that played by many vendors for the last two decades, but PLM didn’t discover it yet. Data “play” has a lot of potentials and can be very powerful. I believe data cards will be played by new SaaS PLM vendors. You ask how? Think about new SaaS Platforms that will become a foundation for future manufacturing intelligence and will get an idea.

So, what about Enterprise SaaS vendors? The companies (including Aras) are applying design thinking, following large company needs, and operating under the pressure to keep systems compatible with their existing loyal customer base and not to make sharp moves. No one wants to compete for a price- these are old-school enterprise deals where you need to satisfy multiple stakeholders in the large enterprise companies. Nothing wrong with that, but it is probably very different from the future SaaS PLM business.

What is my conclusion?

Data opportunity and unit economics is a foundation of the future SaaS PLM. Like Henry Ford that built mass-production automobile 100 years ago, like Solidworks that provided 80% of the features engineer needed for 20% of Pro-E price, like Google Docs that provided 20% of MS Word features, but was free and collaborative, the story will repeat in SaaS PLM when the system capable to handle mass-market needs for engineers, contractors and suppliers will become available. Features will be a longer strategy game, but before it will happen, the simplicity will always win. The real problem is even not the need to have a feature. For most companies, advanced functionality is another barrier they need to jump and they have not enough time, skills, and wiliness to do so. After all, even simple things are hard for companies using Excels and file-based systems today. Just my thoughts…

Best, Oleg

Disclaimer: I’m co-founder and CEO of OpenBOM developing a digital network-based platform that manages product data and connects manufacturers, construction companies, and their supply chain networksMy opinion can be unintentionally biased.


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