Modern cloud technologies are a foundation of SaaS business, which in a nutshell means turn software products into digital services. Have you heard the new term – SaaSification? The first time I’ve heard about it was about five years ago- check Forbes’ – How Saasification is taking the Tech by storm. My favorite passage is this one. On-demand services, efficiency, and new economic model are the foundation of SaaS.
An important component of SaaSification is the dramatically changing economic models within which companies are no longer hindered by hardware and software procurement, but enabled by on-demand services. Further—and leading-edge companies know this—they’re buying an outcome and looking well beyond their hardware and software to achieve it. In this value-based, outcome-driven model, companies pay for what they use, upending the entire technology ecosystem.
Among other CAD/PLM vendors, PTC is “all in” for SaaS transformation. The massive acquisitions (both Onshape and Arena) leave no doubt, PTC is committed to turning an entire portfolio into SaaS services. The recent Earnings Call Presentation (NASDAQ: PTC) | published by Seeking Alpha can give you some initial ideas about what PTC is planning to do. Check out the presentation. You can do it too by navigating to the following link. A very interesting slide in this presentation is called PTC SaaS vision. Check it out below.
The slide gives you an idea that all PTC products will be turned into SaaS services by 2025. The vision made me think about different aspects of the transformation and triggered tons of questions about how actually the migration (if you will call it this way) is going to happen. Before sharing my questions and thoughts, I’d like to bring a passage from Jim Heppelmann’s speech. Here is an interesting passage
There’s a lot you can read into this slide. But if you notice that the logos, other than Onshape [Web-based CAD] and Atlas [Web-based platform], start a darker greener color and as they move to the right become more or less the same color as Atlas. That’s because we call this strategy “an insidious SaaSification strategy,” which means it happens step-by-step.
So what we’re going to do is begin to offer incremental or, in some cases, replacement modules on SaaS. And then over time, the whole suite of each product line will become available on SaaS. A customer could begin adopting a part of it, get comfortable with the idea, start to generate some incremental revenue for us. And then in year 2 or 3 or 4, [the customer could] even flip the switch and go 100% to SaaS.
So that’s what that diagram intends to show you: that these products are all climbing on board, but it’s not all-or-nothing. It’s step-by-step moving toward that all-state where they’re fully based on Atlas, and we have really a dream, a unified SaaS portfolio.
So what can we learn? Some of the modules/ products / serviced will be included. But some others will be replaced and/or rewritten. My hunch is that PTC is planning to re-write some of their software stack – Creo, Windchill, and maybe even Arena, and turn it into Atlas-based services.
The strategy of step-by-step replacement seems to be fine. But it made me think about some technical aspects of the transformation. And the key element is the “data” management in my view. Let’s talk about it more in detail.
What will happen with the data collected by customers in all existing storage and databases? The lifecycle of the data is extremely interesting because it will mean a lot to customers. I can think about how Creo files can be hosted on the Atlas platform. This is something that even today you can do by uploading some files to Onshape. What is less obvious is what will happen with the PDM system running outside of Atlas. I can guess some re-write and changes from on-prem-PDMs to Onshape-based PDMs. What is completely unclear is the future of services such as Windchill and Arena. The data management platforms used by both products are fundamentally different from Onshape/Atlas. What will be the transformation, in this case, is not clear.
What is my conclusion?
PTC is transforming into a service (SaaS) machine. There are some examples of how companies do it. Probably the closest example to bring up is 10 years Autodesk transformation started by Carl Bass back in 2011. PTC is promising is to have a unified SaaS offering by 2025. It is a bit more than 4 years. Does it mean to transform all dark green colors to light green by the end of 2025? I doubt… Until now, we only saw how new services are coming to the PTC / Atlas platform. How it will work with existing products such as Creo is not clear. How Arena and Windchill databases will be converted to Atas. How many additional SaaS products and tech stuff PTC will have to buy to make it happen? This is a good question to ask PTC architects and business execs. 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 networks. My opinion can be unintentionally biased.
