Have you heard about SaaSification? For the last few years, the process of turning applications delivery models into a software-as-a-service (SaaS) model is trending. Here is the thing, I found a big gap in how companies and customers understand SaaSification, its advantages, strategies, marketing, and technologies behind that.
A very common definition of SaaS-ification is to turn the licensing and business model from perpetual licenses into subscriptions. By itself, it is enough to call the business SaaS and provide services instead of selling software. For the last decade, CAD and PLM vendors started to move their business model from selling licenses to subscriptions. Autodesk was pioneering this process followed by PTC and others.
SaaS vs Cloud: Two Sides of The Same Coin?
While these things are not the same, they created a lot of confusion. Cloud technology and related marketing monopolized the messages about cloud and created a myth that cloud and SaaS is the same. At the same time, you can be a SaaS vendor without an actual technological foundation just by selling a traditional CAD desktop software as a subscription contract. CAD and PLM vendors contributed a lot to this confusion by pushing technological, product, and business ideas.
PLM Differentiation and SaaS Marketing
For many years, differentiation was a big problem in the PLM business. Customers demanded clear answers on “What” vendors do and, at the same time, vendors were looking at how to differentiate themselves from competitors. Therefore, cloud and later SaaS became a legit way to differentiate. However, a mix of technology and marketing was a very common problem. Cloud technology was intersecting with PLM cloud and later SaaS marketing was contributing even more to creating a misunderstanding about what vendors are selling under the label “cloud” and later “SaaS”.
PLM Technolgy- Hosting vs SaaS Platforms
Technological differentiation between hosted and SaaS is often misunderstood and used widely by vendors in order to convince customers that their platforms are “cloud-enabled” or SaaS. At the same time, they often misguided customers by selling SaaS business models and hosting existing platforms.
In my article – SaaS vs Hosted PLM – What is the practical difference for manufacturing companies I explained why manufacturing companies need to look carefully before they buy any specific vendor SaaS strategy.
PLM-SaaSification: Mindshare PLMs
All PLM products are divided into cloud-native (SaaS) PLM products and on-prem PLM platforms that found their way to be hosted and called “SaaS”. I will speak about the first group in a separate article. Today, I want to talk about mindshare PLM vendors and their plans to SaaS-ify their products.
Aras Enterprise SaaS
Aras Innovator is a 20-years old platform with a flexible data model that became popular and made its way to the group of top-four PLM providers recently. Aras was extremely successful in creating its “enterprise open source” model and marketing.
Recently, Aras stepped into the SaaS business by introducing its Aras Enterprise SaaS. In a nutshell, Aras introduced a way to host Aras Innovator using Azure PaaS (correction made May 10th, 2022) for their customers. It is a dedicated hosted model in which customers are getting fully hosted Aras with automated deployment, upgrade, and maintenance models.
Two years ago, Siemens made available their flagship PLM product Teamcenter hosted. It was part of their SaaS strategy. The product was called Teamcenter X and it provided a fully hosted Teamcenter with some restrictions related to data modeling, flexibility, and customization. Read more in my article – Teamcenter X: How to sit on two chairs?.
Siemens is placing Teamcenter in the dual delivery mode envelope. You can get it on-premise and you can host it in the cloud and deliver it as SaaS. But, it is the same Teamcenter with some restrictions.
Last week, PTC made an announcement about Windchill+. Read the announcement – PTC Accelerates Customers’ journey to SaaS with new Windchill+ Offering.
Viewed by many as the next generation of the company’s market-leading Windchill® software, the new solution is delivered via a modern software-as-a-service (SaaS) architecture and leverages the benefits of SaaS to facilitate greater collaboration around product data to help product development organizations bring their products to market faster. “For more than two decades, many of the world’s most sophisticated manufacturing companies have used Windchill to design, develop, and manufacture their products,” said Jim Heppelmann, President and CEO of PTC. “Windchill+ unleashes an exciting new future for our Windchill product line, delivering the full digital transformation power of PLM while simplifying deployment, usage, and upgrades through the use of a modern SaaS architecture.”
What is interesting about the PTC Windchill+ strategy is what it means and how it relates to the PTC Atlas Platform and future SaaS-ification of all PTC products promised to happen until 2025. Also, remember that PTC acquired Arena Solutions (PLM SaaS) for $750M last year.
What is my conclusion?
Each PLM vendor is pushing its SaaS-ification agendas. All mindshare PLM vendors have chosen Hosted PLM strategy as their mainstream path toward SaaS. It is clearly the most conservative approach. However, these 3 vendors (Aras, Siemens, and PTC), have completely different positions in the market. Teamcenter is mostly defending its market share. Aras is expanding and PTC is betting a lot of $$$ on investing and developing a new cloud-native SaaS PLM platform. However, it is not clear how Windchill+ fits there.
For large mindshare PLM vendors, it is critical to stay in their leadership positions by keeping their platforms to SaaS and cloud space. Will they be able to do so? Although a hosted system is a legit strategy and used by many vendors, they only provide an intermediate solution to customers. Hosted PLM has its benefits of simplifying system delivery, upgrade, and management. At the same time, hosted PLM is not capable of maximizing the value of SaaS and has limited capabilities to take full leverage of future cloud-native platforms. Just my thoughts…
Note: I changed Azure IaaS to Azure PaaS based on the feedback provided by Aras Corp. According to Marc Lind, Aras is using multiple Azure services such as (SQL Azure, Kubernetes Svc, and others) and therefore it is appropriate to call it PaaS and not IaaS.
Disclaimer: I’m co-founder and CEO of OpenBOM developing a digital cloud-native PLM platform that manages product data and connects manufacturers, construction companies, and their supply chain networks. My opinion can be unintentionally biased.