PLM cost and future of public cloud

plm-public-cloud-cost

PLM and cost. The topic is important and heavily debated among vendors, customers and industry pundits. Major established PLM vendors are keeping bar high, cloud vendors and open source innovators are trying to find alternatives to existing licensing mechanisms and upfront PLM payments. For most of the people, cloud and/or web is usually associated with free and inexpensive. In my view, this is a feeling developed by most of web giants.

However, for manufacturing companies and maybe even for the enterprise the situation might be different. I’ve been reading Joe Barkai writeup stating that according EMC research, large enterprises are reducing their investment into public cloud. Joe quoting EMC Forum 2013 event held in David Intercontinental hotel Tel Aviv. The source of the article in Hebrew is here. You can translate using Google for free and have decent quality translation. Here is the passage I specially liked:

"Over the years, the public cloud was a major trend, since it bore promise of downloadable dramatic costs, increasing accessibility and ease of use. Meanwhile, research firms show the public cloud is not suitable organizations enterprise," said Adrian McDonald, president of EMC EMEA… According to McDonald, many of whom he met CIOs report public cloud is more expensive than the alternatives, taking into account the needs of security, compliance and business continuity. Said that a recent study by EMC found surprising data regarding the use of large enterprises public cloud. "We expected that half workloads will be on public cloud and a half on the company. However, the data show that the accumulated experience of the decision makers in these organizations were reduced percentages using public cloud. According to the study, by 2016, only 12% of the work load will be on the public cloud. Additional 12% will be virtual cloud – private, and 76% will be managed inside the organization. "

It made me think about PLM and Cloud PLM specifically. Does it mean public cloud can make PLM more expensive and to instal servers and engage IT is actually more cost effective? Looking on PLM companies announcing their support for cloud deployment, it sounds like a contradiction.

Here is my take. I believe, PLM system that used to manage product development processes has low utilization. It is actually opposite to what you can potentially see with CAD, PDM and other engineering systems. EMC examples are probably focused on storages and other devices that have high utilization. In cloud and server business, utilization matters.

What is my conclusion? PLM cloud services is too broad definition to decide about what will be cost effective model to support it. Utilization matters. Therefore depends on the type of services, amount of data, availability, usage intensiveness and many other parameters, you can come to the point where to keep hosted service can be more efficient. In the past, PLM vendors didn’t differentiate between resources used to store data and managing entire process lifecycle. It made everything equally expensive. To enable downstream PLM usage, the license model and PLM cost should be different. Public cloud is here to help. Just my thoughts….

Best, Oleg

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