Who Can Break PLM Department Stores?

Engineering.com article by Verdi Ogewell – New Leaders in Forrester’s PLM Wave: Why Siemens Will be a Tough Nut to Crack for Dassault and PTC was my Friday portion of PLM strategic reading. Verdi is well known for his visionary article presenting collections of PLM strategies. The current article was another interesting collection of opinions, quotes, and predictions. The foundation of the discussion was The new Q1/2021 The Forrester Wave for PLM in discrete manufacturing, which shuffle the positions of top 3 PLM vendors – Siemens, PTC, and Dassault Systemes re-ranking them now different than in previous years.

I captured a few interesting passages.

Siemens’ Tony Hemmelgarn:

It is rewarding to have Forrester recognize Teamcenter as the leading PLM solution. As you’ve noted repeatedly, companies of all sizes are increasingly choosing Teamcenter over competitive solutions, despite what some of these companies tell financial analysts,” says Tony Hemmelgarn.

“We have reached the top of the wave because of industry-leading capabilities in requirements management, design, BOM, digital twin, simulation, IoT, user interface, integration and configurability – all of which were cited in the Forrester report as our strengths.  We also received the highest score for strategy.  Sometimes when a strategy is defined it takes a little while for all to see the vision – but our customers see it and Forrester has recognized we are executing on this strategy, ” he added.

Dassault Systemes Stéphane Declee

“We are happy to be recognized as a ‘leader’ once again in the Forrester PLM Wave for Discrete Manufacturers. It’s also interesting to note that this space is quite competitive, and our customers have validated the business transformation and innovations we have brought to their business with the 3DEXPRERIENCE as a catalyst and its unique ability to create virtual twins from engineering to manufacturing and operation. This is the primary reason for our continued market leadership position.  We would encourage customers to examine the weightings and findings of the report and assess the parameters that is most relevant to them when engaging in a transformation initiative,” Declée asserts.

PTC’ Jim Heppelmann

“Each industry analyst uses a different lens to evaluate vendors, and a certain amount of each evaluation is qualitative and subjective rather than quantitative and formulaic. So, it is hard to debate why this particular analyst ‘upgraded’ their view of Siemens. In general, across a collection of different reports on average PTC remains #1, Dassault is #2 and Siemens is #3,” Heppelmann says.

“Most importantly, the results from real customers are more interesting to compare, because analysts aren’t buying or using the software! Here the comparison is stark. PTC’s PLM business accelerated to 15 percent growth in FY20, building on the strong trend of 12 percent growth in FY18 and 13 percent growth in FY19,” he adds.

I think Hepplemann just nailed the main point. Whatever analysts say, these three vendors are remaining on the top for the last 20+ years, technically buying everything that they need to grow their brands bigger. Their platforms grew up from a pure CAD foundation into more comprehensive and mature suites of products allowing them to cover a wide range of solutions. The competitive fight between them is complex and simple at the same time. The biggest complexity of the developed PLM Market is slow development. It is a marathon, not a sprint. And marathons require a lot of resources and persistence. Large manufacturing companies are rarely making big changes and each such change is a very calculated long planted strategy.

The article made me think about what can potentially break the tie in the competition of these three vendors. Will it be a new platform (eg. Mendix), technology (multi-tenant SaaS), partnership strategy (Teamcenter+SAP). Or maybe it will be another unexpected acquisition that will change the balance of the competitors.

The last round of competitive fighting took all three vendors outside of their core competencies such as CAD and PDM. We’ve seen platform moves by all three vendors – Siemens came with Xeleraator and Medix, PTC was buying the biggest available names called whatever SaaS. Dassault was probably the most modest compared to the other two slowly but surely executing their 3DX strategy.

I’d like to bet that the step that can change the status quo in this market can be only the step that will allow PLM vendors to rethink that data paradigm and to turn data from the “data control” to “data as a business asset”. I know it is a very generic phrase, so I will explain. The data today is “created and managed” by multiple platforms, applications, and tools. Most of the efforts, these top three vendors are spending on how to make all these assets (self-developed and acquired) perform together in a coherent way. While it is a big goal, it doesn’t move their solution on a different level. They are managing more data, covering more processes, and exposed to more departments in organizations. However, fundamentally they do the same thing as they did 20+ years ago.

To break the tie will be possible when one of these vendors or any other vendor will create a model that will put data in the middle and will turn it into a business asset. In other words, the company that will start monetizing the data will become a winner. Exactly how it happened to Google, Facebook, and some other vendors. The remaining question is who can do it and what is needed to make it happen.

What is my conclusion?

Data is a super-powerful business asset that is used by many companies in the world these days. For the last two decades, many companies created mechanisms (including business models) to monetize the data. Manufacturing and PLM vendors are not there yet. The first company that will figure out the digital data monetization formula, can break the current status quo of three PLM empires – Siemens, Dassault, and PTC. 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.