Enterprise Cloud PLM – Why, When, How?

Enterprise Cloud PLM – Why, When, How?

Is cloud PLM becoming mainstream for enterprise applications? The year 2022 was an interesting year in the cloud and SaaS PLM development. All key enterprise PLM vendors finally introduced and presented their cloud strategy and solutions. Siemens was the first one back in 2020 to introduce Teamcenter X. Both PTC and Aras introduced SaaS offerings – Windchill+ and Aras Enterprise SaaS. Also, cloud/SaaS products are available from Dassault Systemes, Oracle Cloud, and others.

Companies are flocking to the cloud and SaaS PLM is ramping up

Until very recently, PLM vendors positioned the cloud/SaaS model as a solution for SMB/SME organizations with well-defined functionality and product offering. Autodesk was the first large CAD vendor who embarked on to cloud journey by introducing PLM 360 and acquiring a few cloud-based solutions. The next event was related to the first PLM on-demand software Arena Solutions (Arena Solution investment by JMI). Arena Solutions was part of the “smaller vendors” that provided PLM solutions. But, the overall financial impact of these vendors in the PLM industry was insignificant in the overall cPDM business totaling around $100-150M in annual revenues.

What made leading PLM vendors move in their decision to ramp up PLM enterprise solutions? According to the opinion of research and analysis, industrial companies are ramping up their cloud strategies by switching their IT to the cloud – Why companies are flocking to the cloud more than ever?

One of the first benefits that brought attention to the cloud, according to Canalys research analyst Blake Murray, was scalability, meaning the ability to increase or decrease resources to satisfy evolving demands. That remains a draw: For example, the NFL was able to lean on Amazon Web Services to live-stream its virtual draft last year, when it needed to use far more cloud capacity than typical.  

Case studies like that highlight why firms are anxious to make the leap to the cloud: A whopping 85% of enterprises will adopt a cloud-first principle by 2025, according to Gartner research VP Sid Nag, meaning that they’ll be focusing on how to free up IT resources and deliver the most business value using the cloud. 

The COVID-19 pandemic has also increased cloud adoption: Almost 70% of organizations using cloud services plan to increase their cloud spending in the wake of the pandemic according to a Gartner survey published in November.

As cloud computing and ever-increasing trends in the development of enterprise software make their way into the manufacturing sector, there has been an undeniable shift toward SaaS PLM (Product Lifecycle Management). With this new momentum for extendable SaaS PLM solutions come real potential to revolutionize the way we manage product lifecycles throughout the entire value chain – from conception to life extension. Let’s discuss what can be the trajectory of enterprise PLM solutions in the next few years.

Enterprise PLM Cloud Market

My attention was caught by Aras’ community article – 3 Predictions Impacting the 2023 Enterprise PLM Cloud Market. Aras’ opinion in a nutshell – (1) cloud will become the first choice; (2) cloud hosting is not enough, DevOps is needed; (3) the competition for cloud PLM will increase. Here is my favorite passage from the article

For years companies have heavily marketed their PLM solution as part of a platform. What it means to be a platform can suggest very different things to different organizations and is often the source of confusion for customers when comparing solutions. Jim McKinney’s blog “Do You Suffer from PLM Legacy Syndrome?” does an excellent job discussing the value of an integrated platform of connected solutions that support the digital thread.  He also describes the potential negative impact of a platform that is nothing more than “a bunch of disconnected solutions neatly wrapped in a fuzzy blanket of marketing jargon.”

By 2022, most Enterprise PLM providers have introduced a cloud platform strategy. These strategies have often been assembled by acquiring multiple independent, existing cloud products, and using them as the basis of a platform to provide capabilities or functionality.  While the success of these strategies will be critical in the fight for market share, most enterprise PLM providers have struggled to tie their platform solutions together effectively for the cloud. This often leaves multiple data models or complex integrations in place for the platform to operate. This is evidenced by several providers quietly changing their platform strategies over the past few years.

In 2023, I predict that PLM providers’ strategic cloud platforms (not just each application’s business functionality) will become customers’ focal points when selecting their future PLM solutions as they migrate to the cloud. PLM platforms with loosely connected applications or that lack the capability to support customizations for organizations’ specific requirements will struggle to maintain their customer base as companies migrate to the cloud.

While I share some of Aras’ opinions about increased competition in PLM deployment and shifting enterprise companies from their existing on-premise legacy PLM solutions to new cloud platforms, I want to discuss more in detail what will be happening with enterprise cloud PLM in the next few years. Let me focus on why, when, and how?

Why, When, and How?

I think, “why” is the easiest question to answer when it comes to enterprise cloud PLM. The trend toward cloud computing is clear. Industrial companies are increasingly interested in cloud and digital transformation and PLM products will follow the trend. I believe 2023 will be just the beginning of the move. For most enterprises, the triggers are coming from the following 3 motivation factors.

  1. IT modernization, cost, and efficiency
  2. Obsolecense of existing PLM soltuions and architecture
  3. Digital transformation of company business processes

I think most enterprise companies are pretty aligned about the reason why to move to the cloud, which is finally great news for the PLM industry.

Let’s move to the next question “when” things will start happening. I don’t think that someone will be arguing with me if I will say that all enterprises are slow to make any decisions related to IT transformation. PLM won’t be an exception. I think the move will be triggered by PLM vendors that will start moving their offerings to the SaaS business model and will start forcing their customers to subscriptions. Aras was subscription-based for a long time. Autodesk did it 5-7 years ago, PTC moved to SaaS in 2019-20, and now is the time for everyone to adopt and align with the model. So, the business model will become a trigger, and upgrading to new versions of the software will be the motivational factor. But it won’t be enough, in my view

The question “how” is the most interesting one. The simplest answer is just to take existing PLM packages and move them “as is” to the new SaaS offering (technically taking the same software and hosting them using AWS, Azure, or GCP). While re-hosting would be a simple step for many companies to take advantage of new software and get rid of legacy, the conceptual architecture and modern architecture of the solution and especially integration with other systems will become a factor to slow down the migration. Old PLM systems were good for engineering data management and heavily focused on CAD data management. Nowadays, business processes are becoming more complex, and companies are looking at how to manage increasingly complex product information, customer data, complex product data management, connected environments, and integrated processes including supply chain management and the entire product value chain. Altogether, it is much more than “to host existing PLM system to manage CAD files”.

What is my conclusion?

Enterprise Cloud PLM is getting into high gear. Industrial companies are building their digital transformation strategies and will be looking at how to build solutions for more efficient decision-making support, implement digital twin and digital thread strategies and answer questions about how to manage an increased complexity of data and processes. Will enterprises keep favoriting existing mature and well-established PLM vendors or will be open to discovering how to deploy modern SaaS applications? What SaaS providers be able to manage the needs of global manufacturers and real-time data access? What product lifecycle management platform will be able to replace existing legacy on-premises software? The answer is not clear. Just my thoughts…

Best, Oleg

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


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