Cloud is trending. This is not a first time I’m touching the topic of cloud. During the past days, I had lots of healthy debates about different topics around PLM, Technologies and Innovation. Surprisingly, the topic of SaaS and Cloud didn’t come much into this discussion. Israel wasn’t cloudy during the day of COFES Israel event. Maybe it was a reason. Who knows? Autodesk R&D Israel and Dassault Solidworks presentations mentioned the influence of cloud, but only from the standpoint of mobility and device diversification. Originally, I wanted to spend some time speaking with PLM+ in Israel – a startup company working on a new on-demand solution for PLM. Unfortunately, a startup business and events are not always going together. I decided to spend some time and out my thoughts about PLM, Cloud, On-Demand and market demands.
PLM and Enterprise Software
What happens with enterprise software these days. Think about 2000s. The corporate life in 2010 is not much different from how it was in 2000. Multiple applications, interoperability problem, tons of Excel files and people who need to get a job done. Back in 2001, companies accepted long roadmaps. It is a different story now. Two factors become the most critical in Enterprise Software – the cost of implementation and cost of change. Another thing is a demand for simplicity. Simple is always winning. The last ten years of consumer software revolution created a huge demand for a change in enterprise software. PLM is strongly associated with two words – complex and expensive. Mindshare PLM leaders as well as smaller PLM vendors are reacting. You can see PTC Creo, Aras Open Source and some other initiatives are trying to break a perception of complex and expensive PLM software. It is also interesting to see how Autodesk is making an effort to solve PLM problems without calling themselves PLM.
PLM and Cloud Promise
People have different understanding of what cloud means. I can probably break it into three main category. 1- Software available from the cloud (i.e. Salesforce). 2- Access to data anywhere (i.e. Dropbox). 3- Elastic computational power (i.e. AWS). I can see companies are trying to embrace cloud technologies. They do it differently. Software access for the cloud is a place where companies are hold the promise (i.e. Dassault cloud offering planned in 2011) or experimenting with tools (i.e. Autodesk Lab projects, including acquisition of Israeli Visual Tao and creating AutoCAD WS). The security conversation is dominant when you are talking about data on the cloud. The advantages of data access are obvious. However, regulation and company concerns, even if it looks like a red-herring, are still dominant in these discussions.
Cloud and Cost
Will cloud solution be cheaper? This is an answer press, analysts and users are trying to get from vendors. However, there is no straightforward answer on the side of vendors. I think, one of the main reasons is a very unclear situation related to the marginal cost of cloud services. Big cloud players, such as IBM, Amazon, HP, Google and IBM are playing with buzzwords- cloud servers, private cloud, data centers. Software vendors are experimenting with all of them. I don’t see much clarity in this space.
PLM and SaaS
If you think, about PLM and SaaS (or OnDemand), you need to put your hands on the experience of Arena Solution. Re-branded bom.com, started during the late 1990s, Arena is providing PLM on demand solution for the last decade. One of their struggles was to provide an appropriate connection to design systems. As a result they focus on industries less dependent on heavy CAD experience. PTC and IBM also made some experiments in this space. I found interesting to learn about Autodesk BuzzSaw experience (even if this not presented as PLM solution, the SaaS experience is interesting). To analyze the advantages of PLM on Demand, I’d suggest to think about the potential benefits of SaaS and try to apply it into PLM space.
Anywhere access - this is an obvious benefit. Gmail is a good analogy. Is it possible to have an access to a corporate application using VPN tunnels and other channels? I think, yes. So, it will not play as a significant differentiation factor, especially for big companies.
No capital investment and cost - this is a big thing. The usage of a subscription model is a significant financial benefit. However, only if it comes to a comparable cost to a solution to be implemented on a premise. Companies will be easy to make their own calculations and decision about buy vs. rent.
Monthly payment obligation – this benefit is only true if you make a monthly contract. Many SaaS/OnDemand solutions, in fact, are signing yearly contracts. In this case, the benefit of payment is diminished within the time. In addition, data is another element that can decrease an effect of “pay-as-you-go” solution. If you decide to move, you need to keep an existing system at least until you transfer all your data between systems. SaaS/OnDeman model is also a potential data locker with a more complicated way to access the data for export/import purposes.
Faster implementation – most of SaaS solutions are very simple. Therefore, fast implementation speed is obvious. However, it is complicated in PLM. Nobody is running their manufacturing shop in the same way. The ability to provide a match to customer needs is a key. The balance of flexibility and OOTB solution is an easy, but a very complicated answer. OOTB decreases a potential list of customers. Flexibility can also increase an overal solution cost.
Scale-Up and Efficiency - this is an obvious benefit for companies that have no abilities to invest in data centers and hosted servers. The ability to raise a number of users can be a nice feature. However, the question of cost will be probably a key one to decide if it is worthwhile.
What is my conclusion? Cloud is an interesting these days. It provides a multi-dimensional opportunity for customers and business to optimize the solution. Can it solve main problems of manufacturing companies looking how to get the job done? Probably yes. However, not in a straightforward way. I can see a cloud as a very dynamic place. To be able to provide a solution fast, react on customer feedback is probably one of the key factors to success in this space. Just my thoughts…