My attention was caught by Yoann Maingon’s article The Limits of All SaaS published in French in his blog – Open PLM. The article brings an interesting perspective of comparison between SaaS and Low-code PLM strategies by quoting Siemens Mendix CEO. Check this out and make your conclusion. Here are few passages from Yoann’s article that stood out (translated by Google from French original)
In our opinion, fixed and prescriptive SaaS applications are a thing of the past, said Derek Roos, CEO of Mendix, in his opening speech on the first day of the conference. The switch to “digital first” requires highly personalized and adaptive applications.
This challenged me because it challenges the idea that all of a company’s IT can be built by paying for SaaS services and interconnecting them with platforms that interface APIs with each other. We must also look at the Mendix platform and understand that it is normal to hear such a speech from them. They make a low-code platform for the creation of customized applications
While many CAD and PLM players are chasing the perfect SaaS PLM , Siemens and Mendix are taking the opposite side of this strategy by focusing on the adaptation of tailor-made systems. And I admit I love pragmatism, which I think is at the origin of this strategy.
I found the article interesting because, in my view, it brings a new line of defense to legacy PLM vendors with mature PLM platforms built against newcomers of the PLM world. Just to remind you – in the last decade, the main point of concern against SaaS/cloud was security. Now, security problems are going down, cloud infrastructure vendors have proven that the cloud can be even more secure than on-premise. Also, newcomers to the SaaS PLM world succeeded to prove that their systems are capable of solving even bigger problems. But the devil is in the details and in my view, we are going to see the arguments about low-code vs SaaS more often for the next few years.
But, let’s take a step back and check what is low-code. Unless you lived under a rock for the last few years, you’ve heard about a new term called low-code. Some companies take low-code strategy to the extreme and announce even more – no-code strategy. The idea is pretty simple – to deliver the ability to develop and customize the software using predefined customizable software development elements and flexible configuration capabilities. I found the HBR article when Low-Code / No-Code Works and when it doesn’t article as quite a good explanation of what is LC/NC and its pros and cons. Here is my favorite passage
Low code/no code (LC/NC) applications can provide a close fit to business requirements, can be implemented quickly, and typically cost much less than systems developed in-house. These applications don’t accomplish these benefits by magic, they turn over development to users instead of professional system developers. With point-and-click or pull-down menu interfaces, users can usually design and implement their individual or departmental systems in a few hours. The software may also have a conversational or search interface. Few, if any, programming skills are required.
The article gives some great examples of low-code tools such as RPA and workflows. A very interesting case of workflow is described as a no-code tool allowing to configure workflows for business applications. Some other examples of low code apps describe the creation of a variety of digital applications for communication, collaboration, and function-specific tools.
While LC/NC brings a lot of advantages, they are not immune from the problems that are typically attributed to shadow-IT solutions. Here is a good passage that explains that LC/NC tools can be good for prototyping and initial development, but require future polishing by professional developers.
There are great benefits from LC/NC software development, but management challenges as well. Broad use of these tools institutionalizes the “shadow IT” phenomenon, which has bedeviled IT organizations for decades — and could make the problem much worse, if not governed properly. Citizen developers tend to create applications that don’t work or scale well, and then they try to turn them over to IT. Or the person may leave the company, and no one knows how to change or support the system they developed.
LC/NC oversight can control this issue, however, and make common the handoff of applications from citizen developers to professional ones when appropriate. IT organizations need to maintain some control over system development, including the selection of which LC/NC tools the organization will support. The best situation may often be a hybrid citizen/professional development model, in which the user develops 80% of the model, and hands it off to the developer for polishing. Or the user may develop the initial application using a graphic interface tool, and then give it to a developer to program it in Python or some other more scalable language
So, how does it all connect to PLM?
Flexibility is one of the biggest challenges of all PLM implementations. PLM vendors had this challenge for a long time and used to address it in multiple ways. Flexible platforms, APIs, configurations and customizations were part of the solution. The challenges of PLM customizations and the reality of many PLM platforms to be customized. Which brings tons of challenges during upgrades and future releases. The recent trend to support full upgradability of the PLM platforms is growing.
SaaS and cloud platforms take the problem of upgrades to the next level by offering SaaS platforms fully supported by vendors. These platforms eliminate IT complexity and upgradeability. However, not all cloud/ SaaS platforms are the same. PLM vendors are facing challenges in hosting existing tools using IaaS platforms – limitations of flexibility and administrations are built-in in the platforms that were developed 20-25 years ago. New coming SaaS tools are growing and starting to challenge existing PLM vendors, but these tools are not yet as mature as old PLM suites.
While almost nobody doubts that SaaS and cloud is a future, for existing legacy PLM products the time makes a big difference. Big three PLM vendors Siemens, Dassault Systems, and PTC are keeping most of the enterprise PLM market share and using different strategies to prolong the lifetime of their existing platforms. According to CIMdata research, about 65% of manufacturing companies are looking to replace their legacy PLM systems. The timing is perfect to check new SaaS platforms and architectures.
For the last decade, most large PLM providers were heavily ignoring SaaS PLM. The red herring stock answer – the cloud is not secured enough was good almost during an entire decade of the 2010s. But closer to the end of the 2010s, the security defense line started to break. Some PLM vendors announced their strategy to move to full SaaS in the future (eg. PTC) and others (eg. Dassault Systemes) positioned their platforms to be available on all platforms. Oracle, SAP, and other vendors offering mixed PLM and ERP functions are also gravitating towards SaaS. Amazon, Microsoft, and Google put substantial efforts to explain how secure their platforms are.
So, why low-code is quickly becoming a big deal for PLM vendors? In my view, low-code/no-code is a popular trend and it is widely supported by many vendors, consulting, and service brands. This is where big enterprise money is and many vendors are potentially unhappy and disturbed when new SaaS platforms are positioned to challenge their multi-decade dominance. To defend against SaaS, large and legacy PLM vendors bring LC/NC as a future big deal in building flexible and customizable PLM applications.
What is my conclusion?
Flexibility is a big deal for enterprise PLM. For many enterprise industrial companies, it is the only way they can see PLM programs can be implemented. These programs involve a large number of service providers, advisors, and consulting companies. Altogether, it is a solid front to preserve an existing PLM Junge status quo with current systems and to give some time to major PLM providers either to acquire or to develop new SaaS technologies or platforms. The time is money and in the case of enterprise PLM, it is BIG money. There is a lot at stake and I can see future competition between new SaaS PLM vendors and existing legacy PLM providers to intensify. The new SaaS PLM platforms are getting more mature and I’m sure will come with LC/NC capabilities very soon. Just my thoughts…
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.