Engineers and Contextual Search Experience

February 28, 2014

engineers-context-search-plm

Web search became part of our life. We don’t search anymore, we "google" everything . The visible simplicity of Google created a feeling that magic of search can transform and simplify any software product behavior. CAD, PLM and other enterprise software companies liked the idea as well. Search is certainly getting into mainstream. Open source search libraries such as Lucene and Solr created environment for easy implementation and distribution of search products across multiple software solutions.

At the same time, not every search solution can lead to simplicity. So called "laundry list" of results can be very disappointing for customers and lead to many questions about results relevance. Data matters and data can be nasty. Especially when it comes to complex engineering design, and enterprise data management solutions. To index data located in enterprise software packages can be a tricky problem.

Even web is not a search paradise these days. Google is still web search king. Even so, the relevance of some Google results is questionable. The complexity of Web search multiplied by social networks, mobile, combined with commercial interests of web giants created complexity that can be compared to the complexity of enterprise software. In parallel, there is a clear trend is enterprise software to adopt successful ideas of social software and social collaboration.

Recent Mashable article Yahoo’s New Long Game: Contextual Search puts some lights on the innovation and possible ways to solve problem of relevance in web search results. This is my favorite passage:

When I look at things like contextual search, I get really excited," Mayer said at the conference. Contextual search seeks to take in a variety of factors aside from a simple input to generate results that are tailored to a person’s time, place and patterns. For instance, a normal search for sushi might turn up a Wikipedia page or various websites about sushi. If one were to look up sushi from a phone through a contextualized mobile search, it could conceivably return nearby sushi restaurants with review, advertisements and coupons. The reason for Mayer to get excited is twofold: Nobody has yet mastered contextual search and it has the possibility of generating a ton of revenue.

Yahoo contextual search made me think about potential of such type of advanced search option for engineers. The specifics of engineering environment characterized by number of data dependencies, connected information and complexity to calculate the relevance search results. Engineering data can generate large volume of matches that hardly can be filtered based on simple filtering mechanisms. Think about document numbers, material names, design element names. Search for "shaft", "tube" and "aluminum" can generate thousands of results that hardly can be distinguished, sorted and ordered.

This is a place where I think "contextual search" does fit in a perfect way. What can be used a context for search (query) mechanism? Actually, quite many elements of easy available data can be re-used – date, time, organization, project name, team, location, previously used assemblies, etc. Some of these elements can be captured from the environment (computer, browser, application) and some of them can be captured from directly from users via specific user interface (capturing semantic). Result – significant decrease in the number of search results and better relevance.

What is my conclusion? Search is not simple. Even Google simplicity is questionable when it comes to the reality of engineering and enterprise data. New algorithms and additional data analysis must be applied in order to improve the relevance of results. Contextual search is not completely new idea, but it can become the next big deal in improving of search and overall user experience. Just my thoughts…

Best, Oleg


Why hard to sell PLM over the phone

February 27, 2014

plm-telesales

Life is transforming around us. Technology and communication are coming to our personal and business life. So, it comes to enterprise sales and PLM. The debates between new sales models and enterprise sales old schoolers are heating up. I posted about it last year and enjoyed many lovely conversations with sales people. My conclusion after that was – sales requires good organization and belief. Few weeks ago, I came with the idea of PLM sales cheat sheet outlining some important principles of how successful sell PLM to organizations.

Do you think you can successfully sell PLM over the phone? Personally, I haven’t heard about such examples. However, maybe new type of communication can help us. I was looking for some good examples of enterprise telesales to identify the pattern for success.

Mark Benioff is coming with some examples of CRM telesales in his book – Behind the cloud. The book is an easy read and fun – I recommend it to everybody if you have some free time. Play #41 from this book – telesales works (even though everyone thinks it doesn’t) was repeat in the following salesforce.com blog post. Mark brings top 5 points for a winning conversation in a successful sales call: Leverage the experience the prospect has had with other solutions; Introduce the value your product offers; Provide success stories from customers; Verify success stories by offering customer testimony; Provide a customer for the prospect to contact.

These points seems logical and simple. I was trying to apply it to my experience and compare to my notes from conversations with sales people to see and analyze how it can be applied in PLM sales. Why PLM sales conversation over the phone is hard? I put some of my thoughts below:

1. Leverage the experience the prospect has had with other solutions.

PLM competition (as well as previous customer experience) can be separated into two large groups – existing PDM/PLM solutions and homegrown systems. The first group is usually a result of heavy investment company made for the last 5-10 years. Second group is a solution developed by internal people (often with heavy inclusion of Microsoft Excel, Microsoft Office and other non-PLM specific tools). From my experience, it is very hard for customer to summarize main pain points. Companies are looking for more functions and lower TCO. Very often customer is not transparent about the existing PLM system situation, especially when it comes to the need to retire existing system (PLM vendor shifts to another solution/version) and existing solution is draining into problem. In a generic way, experience can be summarized as high cost, complexity and absence of specific functions. If you succeed to come to the last points, it will be clearly the success in your call, since you will be able to build your sales strategy based on these missing functions.

2. Introduce the value your product offers.

As I speak in my blog about PLM differentiation, many of them are very complicated to explain. Marketing story looks great – low cost, easy implementation, streamline your company processes, etc. However, devil is in details and the story about them is long and complicated to be told to a single phone call.

3. Provide success stories from customers.

PLM companies have large set of successful implementation stories. The problem with these stories – they all look the same on the high level – "we (company) had a problem in engineering and manufacturing process, complexity of competition, bad collaboration. With XYZ PLM solution we succeeded to solve these problems and our life is good". It is very rare (but possible) to see PLM specific examples of what process and how company improved their work environment with PLM, rather than say it is good now.

4. Verify success stories by offering customer testimony.

PLM implementation testimonial are too generic and raising too many questions from too many people in the company. It goes way beyond what is possible to answered via phone and/or WebEx session.

5. Provide a customer for the prospect to contact.

In my professional life, I never had a problem to provide reference customer to call. However, I’ve heard that on a broad scope engineering and manufacturing organizations tendency is less speak about how their working processes are organized. The diversity of manufacturing organizations plays another role and making "apples to apples" comparison very hard.

What is my conclusion? The uniqueness of existing PLM solutions and sales is high level of engineering and technical complexity. So, to maintain a successful PLM sales conversation you probably need to bring in some specific technical / functional use cases and pain points the solution you are selling can solve in a unique way. It will help you to win over the customer mind and build a foundation to continue sales process. Just my thoughts…

Best, Oleg


What metadata means in modern PDM/PLM systems

February 26, 2014

meta-data

Metadata is "data about data". If you stay long with PDM industry, you probably remember how earlier EDM/PDM software defined their role by managing of "data about CAD files" (metadata). However, it was long time ago. Wikipedia article defines two types of metadata – structural and descriptive. Here is a quote from the article:

The term is ambiguous, as it is used for two fundamentally different concepts (types). Structural metadata is about the design and specification of data structures and is more properly called "data about the containers of data"; descriptive metadata, on the other hand, is about individual instances of application data, the data content.

In my view, CAD/PDM/PLM is using both types. Since design is very structured and contains lots of rich semantic relations, metadata about CAD files stored in PDM system is structured. At the same time, descriptive metadata such as file attributes, information about people, project, organization can be applied to individual instance of CAD data (files) as well.

Since early EDM/PDM days, lots of changes happened in the definition and usage of a word metadata. Some of them are very confusing. The traditional use and definition of files (for example, in context of CAD files) is changing. Sometimes, we want to to keep "file" as a well-known abstraction, but underlining meaning is completely different and point more on "data" or "design" rather than actual files. Also, introduction of web based systems are changing physical use of files. The usage of file accessed via mobile application located in Dropbox is completely different. In many scenarios you will never get access to these physical files.

DBMS2 article Confusion about Metadata speaks about some additional aspects of metadata management that getting more relevant these days. It includes data about mobile devices usage (telephone metadata) and document data. Document data is getting more structured these days and often cannot be distinguished from structured RDBMS data. Here is interesting passage that describes the transformation of database and document based data.

[data about data structure] has a counter-intuitive consequence — all common terminology notwithstanding, relational data is less structured than document data. Reasons include: Relational databases usually just hold strings — or maybe numbers — with structural information being held elsewhere. Some document databases store structural metadata right with the document data itself. Some document databases store data in the form of (name, value) pairs. In some cases additional structure is imposed by naming conventions. Actual text documents carry the structure imposed by grammar and syntax.

Modern data management systems and especially noSQL data bases such as document and key-value databases can introduce new types of metadata or data. IoT (Internet of things) brings another level of complexity to data management. I can see many others to come.

What is my conclusion? I think, the term meta-data is getting outdated at least in the scope of design and engineering. Originally used a lot in EDM/PDM systems managing metadata about CAD files is not relevant anymore. Design data originally stored in CAD files becomes more transparent and connected to external to design world. The whole data paradigm is changing. Just my thoughts…

Best, Oleg


Why WhatsApp is Red Flag for PLM Collaboration

February 25, 2014

plm-whatsapp-collaboration

I think Facebook buying WhatsApp for $19B was a refreshing experience for everybody. For the last week, I’ve got tsunami of blog posts, tweets and other messages talking about Facebook, WhatsApp, founders, VCs and investments, influence of Soviet Union past on WhatsApp collaboration ideas and many others. Funny enough, I even found my own post – What Social PLM can learn from Facebook decline just few months ago. Did I predict the deal? I don’t think it matters… Two important points from my previous post I want to repeat again – (1) the relevancy of Facebook social stream is questionable and I can hardly rely on this to follow important information; (2) to communication in small group is sometimes much more efficient than broadcasting messages in wide audience of confused listeners.

Another WhatsApp related post on Medium caught my attention yesterday – A Brief Primer on Human Social Networks, or How to Keep $16 Billion In Your Pocket. Have a read – I found it insightful. This post reiterated the same point of small number of friend we actually have in real life opposite the number of "friends" we decide to stalker on Facebook. I liked this passage:

"In buying WhatsApp this week, Facebook is betting that the future of social networking will depend not just on broadcasting to the masses but also the ability to quickly and efficiently communicate with your family and closest confidants — those people you care enough about to have their numbers saved on your smartphone. … Facebook has long defined the digital social network, and the average adult Facebook user has more than 300 friends. But the average adult has far fewer friends — perhaps just a couple in many cases, researchers say — whom they talk to regularly in their real-world social network…"

Facebook bets on co-existence of these two social networks. It made me think about people collaboration, which is a part of every engineering and manufacturing organization. PLM vendors were building application for PLM, design and project collaboration for years. Collaboration was and still is one of the most overused words in PLM and probably in enterprise software too. For the last few years, CAD and PLM vendors are trying to bring new concepts into the world of collaboration. Some of them called "social". However, it is less important how to call them. What is important is that some of them are repeating the same mistake of broadcasting messages in a wide group of people.

I think CAD/PLM vendors must learn a lesson of inefficient collaboration in large broadcasting tools. Having even department group of 50-100 people posting messages in activity stream can be an annoying behavior. I experienced it by myself in some social collaboration experiments. I’d prefer to have a search for more efficient information navigation (actually Facebook Graph Search is a good example of improving efficiency). However, I’d like also to have the ability to collaborate in small groups of people focusing on a specific problem or design issue. Another example of close collaboration is small team working together on a specific project.

What is my conclusion? I think WhatsApp and Facebook story should be red alert for all enterprise vendors mimicking "social collaboration" into enterprise. It finally confirms to me inefficiency of large group message broadcasting and need to find more efficient collaboration principles and user experience. Just my thoughts…

Best, Oleg


What cloud PLM vendors can learn about AWS speed

February 24, 2014

aws-global-performance

Amazon Web Services is one of the most popular cloud platform these days. We can say that Amazon became de-facto standard of public cloud. Amazon cloud keeps growing and remains the leader these days according to Synergy Research Group. A year ago article by Stackdriver published information about popularity of different AWS services. According to the article these are top three popular AWS services – EBS (Elastic Block Store), EC2 (Elastic Compute Cloud) and S3 (Simple Storage Service).

Lots of startup companies and established software vendors discovered the power and elastic capabilities of Amazon. Cloud is not only about consumer web application and social networks. The cloud era is coming to enterprise software companies too. Salesforce.com, Workday, Netsuite is the only short list of companies in the enterprise cloud domain. CAD and PLM companies are also taking advantages of the power and popularity of Amazon public cloud. As PLM vendors cloud strategies are getting more mature, I can see a potential for CAD/PLM companies to switch their focus on platform development and not only focus on applications. While there are still lot of not answered questions about future of PLM PaaS, many software vendors are asking about what is the right cloud platform for them. Recent GigaOm article raised interesting discussion about cost of public cloud.

Over the weekend, my attention was caught by VentureBeat article – Amazon Web Services speeds can vary by up to 200X depending on region. Thanks Startupmoon blog for pointing on this publication. Takipi, company focused on debugging of servers, discovered huge difference in speed of AWS applications in different regions and shared this information. Here is my favorite passage:

What that ultimately means is that developers who don’t pay attention to cloud regions, as server debugging company Takipi discovered, can actually cause their apps to run 10 or even 200 times slower than necessary. And Amazon doesn’t disclose any of that data. “We noticed that in many cases there’s 10X (or even more) difference in the performance of services due to AWS/S3 regions and external APIs,” Takipi co-founder Iris Shoor told me via email. “It’s possible to make amazing optimizations just by changing the region,” says Shoor. “For example, choosing Oregon over CA for a company that serves the European market will cut the upload time by half.” One of the main problems when hunting down the cause of slow services, Takipi says, is API latency. And regionality has a huge impact there, even if you’re as geographically optimized as you can possibly be.

One of the advantages of cloud applications is global availability. It looks like optimization of cloud PLM platforms can become a next focus for software vendors. One of the challenges of previous PDM/PLM platforms was to insure global availability and performance level. Latency was an issue for PDM users trying to access CAD data located in European servers from China. It looks like, the problem is just migrating from one software layer to another and requires new implementation approaches.

What is my conclusion? Cloud is not a silver bullet. Customers are moving from digesting of PLM cloud marketing towards analysis and technical investigation of different PLM cloud platforms. PLM vendors should take a note and focus on technological differentiation of their platforms. In coming PLM cloud competition, cost, performance and efficiency will become the most important factors influence future market dominant positions. Just my thoughts…

Best, Oleg

Picture courtesy of VentureBeat article.


JIT’s impact on PLM and BOM management

February 21, 2014

jit-plm-impact

JIT (Just in Time) is a well-known approach in manufacturing industry. In a nutshell, JIT is a production strategy to reduce inventory and associated cost. The philosophy of JIT is related to processing and transactions of inventories, which adds additional cost. By removal (or reducing) of inventories, you can reduce a total cost of production. You may ask me – where is product lifecycle management in this story? It sounds like completely "manufacturing problem" and something that shopfloor and suppliers network should be able to resolve. However, it is not true. In my view, there is tight connection between PLM implementation and JIT manufacturing planning.

Think about manufacturing planning and control. One of the functions is to get access to engineering bill of materials and use this information to create manufacturing plan – workcenter planning, suppliers orders, assembly instructions, etc. The efficient coordination between engineering environment and manufacturing planning is one of the key elements of successful production planning. Now, this is true for every manufacturing types. In most of PLM implementations it means the ability to send design or engineering BOM to manufacturing planners to work planning BOM. The difference come with specific of planning and manufacturing BOM organization related to JIT manufacturing principles.

So, what is the difference in bill of materials for JIT? The main one is significant reduce of bill of material levels. JIT reduce the number of part numbers planning and number of levels in BOM. Many part numbers that in traditional MRP practice are treated as in/out inventories now can be treated as "phantoms". This is actually one of the main goals in JIT – to reduce complexity of detailed manufacturing planning. However, it brings a need to maintain more synchronized communication between engineering and manufacturing – literally between design/engineering and planning bill of materials.

In my view, the main challenge of PLM tools in JIT manufacturing environment is related to engineering-manufacturing collaboration. PLM implementation should be focusing on better synchronization of both development/engineering and manufacturing/planning. The implication in PLM – additional requirements to BOM tools and ECO management. Inefficient collaboration can raise the number of engineering change transactions – one of the most expensive transactions in every manufacturing company.

What is my conclusion? JIT makes manufacturing processes more connected and synchronized. It is obvious that JIT implementation impacts supply chain network. The operations between suppliers are getting more tight. However, JIT is impacting engineering and design processes too. Therefore, as much as manufacturing is moving towards lean principles, the demand for better engineering-manufacturing collaboration will increase. I can see it as a significant challenge in many PLM implementations. Specially it may impact BOM and ECO management tools. Just my thoughts…

Best, Oleg


How PLM can solve problem of global BOM transparency

February 20, 2014

plm-global-bom-supply-chain

Business is going global. It is not only for large manufacturing companies these days. As a result of cost pressure and searches for new market opportunities, manufacturing companies are looking how to optimize their businesses. Distributed engineering, manufacturing and suppliers environments – reality of manufacturing these days.

However, outsourcing and future development of supply chain also brings additional challenges. Distributed environment and supply chain collaboration bring additional level of complexity. Combined with growing regulatory requirement it resulted in significant pressure on manufacturing companies to provide transparency of product information for regulatory purposes.

CSRWire article Complying with Supply Chain Transparency: Underlying Issues Lead to Regulation Backlash brings an interesting perspective on the need of manufacturing companies to expose bill of material information across supply chain. Here is a passage I captured:

Currently, there is a gap in the product information shared between the two [contract manufacturers]. The nature of that model is such that retailers either pick from a catalog or provide product specifications and tolerances for manufacturing but never see the finished product’s bill of materials. That becomes a challenge for documenting environmental and social compliance requirements, as the data stays solely in the contract manufacturer’s product lifecycle management system.

It made me think about how to make product information available downstream in every manufacturing organization and across supply chain. Majority of PLM systems deployed today are focusing on the needs of engineering departments. It serves product development and implementation of engineering-manufacturing collaboration. Which leaves supply chain and contractor manufacturing out of focus. Below, I outlined some functional and business requirements PLM system and vendors can follow to solve the problem of BOM transparency across supply chain:

1- PLM systems need to be deployed beyond engineering organization and become easy available for suppliers and contractors.

2- Bill of Material tools need to support product information beyond development and engineering. It raises the question of manufacturing bills and sub-contractor bills.

3- PLM business models should be adapted to serve new type of users – suppliers and sub-contractors.

According to CSRWire article, manufacturing companies are ready to pay a lot of money these days to solve regulatory compliance issues. It becomes very sensitive for small and medium size organization that cannot afford additional regulatory expenses and extensive paper work related product transparency. I liked the following quote explaining that:

If large corporations are struggling with compliance and transparency, how can small- and medium-size businesses manage these regulations and pressure? Many simply can’t afford it. It puts small and medium businesses at a competitive disadvantage. It’s a time, cost, effort and resource issue. The corporations will figure out a way to do this cost effectively. The bigger companies can help evolve the tools, systems and practices. I don’t think anyone has a comprehensive solution right now. The small- and medium-size businesses still have to comply but if we keep piling compliance cost on top of compliance cost, it becomes unsustainable.

What is my conclusion? There is an opportunity to solve regulatory problem of manufacturing companies of all sizes (and specifically small manufacturers) by providing cloud PLM system making Bill of Material transparent for everybody in supply chain of contractors and manufacturers. Two main challenges here – robust BOM tools capturing manufacturing and contractor information and easy to deploy tools with affordable licenses. The opportunity is on the table. The note for PLM vendor strategists. Just my thoughts…

Best, Oleg


CAD, Engineers and Online Communities

February 19, 2014

cad-engineers-community

Remember our life before internet? The meaning of community was about social group that shares common values. Actually, the history of communities is longer than history of CAD software :). So called "Community Rules" were mentioned in one of the first scrolls found in Qumran Cave. Community word often explains common geography or environment. However, in human communities it is usually comes down to needs, belief, intent, risks, etc. Internet expanded borders of social groups and made possible to create virtual communities. The result – massive creation of online communities (social networks). Some of them, such as Facebook, started as a virtual continuation of physical social groups (academic organization). Social networks today represent huge segment of online internet activities.

The success of social business and social networking raised multiple questions among developers of business software. Collaboration still remains one of the biggest problem in organization. Geographical distribution is another reason why companies are looking how to improve communication. Software vendors are coming with the ideas of software to collaborate similar to social networking web sites. In addition to that, community creation is related to customer activities. This is where a potential to link collaboration in an organization and customer activities.

So, what is the secret of successful community creation? I was reading The collision of communities few days ago. Article brings some interesting perspectives on community organizations and some driving factors behind community work. Among them, article speaks about Jelly (Q&A search), Wut and Secret (anonymous status apps). These are communities too. Author compares these communities with communities companies are creating these days. Fundamentally, in order to be successful, communities are sharing the same common behavior and interest. Here is my favorite passage from the article:

Every social startup that launches hope to have a large, organic community organize around their product. They hire community managers and product managers spend a lot of time thinking about how to increase engagement. Jelly, Wut and Secret, each different in application, have at it core, the need to build and cultivate a vibrant community to succeed, and in order to do so, they must remember the first community rule: He shall guide them with knowledge and instruct them in the mysteries of wonder and truth in the midst of the members of the community, so that they shall behave decently with one another in all that has been revealed to them.

Engineering software companies are joining the bandwagon community building. Social CAD, Social PLM, Social Collaboration – for the last few years we’ve heard a lot about how community driven (social) software will change the way we do business. We can only speculate about successes and failures of social software. However, I want to bring two examples of communities related to engineering software – SolidWorks Users and GrabCAD.

SolidWorks has large and successful community. Nobody can argue. The common interests and needs among them is to share knowledge and experience of how to use SolidWorks. In my view, it was extremely important to all participants since it allowed to them (engineers) to get CAD system support. Most of SolidWorks users are working for small firms that had no budget and engineering IT to help them.

GrabCAD is an interesting example. Started few years ago as "Facebook for Engineers", it succeeded to gather about 1 million engineers to share CAD files online. Here is my pure speculation how it was done. Re-use is one of the fundamental engineering behavior. You can save a lot of time by re-using existing design even if you will modify it. Back in my university years, to have an old similar project was a huge time saving factor in every project I did. GrabCAD provided to engineers models to reuse CAD models for the best price – free. In addition to that, it helps engineers to self-promote their work.

Think about these two examples. In both cases, focus on identification of "community rule" was a key to success. It should be something that will drive common interests and benefits of all participants. Wikipedia article about organizational communication can be a good source of learning and additional information. Here are few assumptions I captured:

All we really need to understand communication in organizations is (a) observable and replicable behaviors that can be transformed into variables by some form of measurement, and (b) formally replicable syllogisms that can extend theory from observed data to other groups and settings. Organizations are mechanical things, in which the parts (including employees functioning in defined roles) are interchangeable. What works in one organization will work in another similar organization. Individual differences can be minimized or even eliminated with careful management techniques.

What is my conclusion? Ask two engineers about how to do a project – you will get 3 options. To work with engineers is like herding cats. Nevertheless, the focus should be on identification and capturing of behaviors that can help engineers in their everyday life. Be prepared to discover something different from traditional organizational goals like "improve quality" or "decrease cost". By capturing and replicating engineers’ behaviors you can find a recipe to organize a successful engineering community. Just my thoughts…

Best, Oleg


PLM Private Cloud: Yes, No, Maybe?

February 18, 2014

private-public-cloud

While industry is clearly moving to the cloud, the question about choosing right cloud model is getting more important. In my view, this is kind of thing you cannot ignore any more – I expect every manufacturing company is facing a challenging decision about how to improve their collaboration by bringing new innovative cloud tools and, at the same time, answer on privacy concerns, policies and regulations.

CMSWire article Hybrid Clouds for SharePoint: Great, but Not for Everyone published some interesting perspective on the topic of public and private clouds. Article speaks about the rise of Hybrid Cloud. Here is an interesting passage:

A hybrid model allows the enterprise to still keep their private information on premises, but at the same time provide employees with tools that support the new way of working — with “anytime, anywhere access.” So an enterprise might use Office 365 and SkyDrive Pro (now OneDrive for Business) to support collaboration and team projects, but still manage major systems through a private cloud.

I found referencing Microsoft and SharePoint as a good example to serve manufacturing companies – all of them are using SharePoint (to some degree) and almost all of them using SharePoint asked in the past about how to position SharePoint and PDM/PLM tools. Article is referencing pharmaceutical companies as an example of industry that can find difficult moving everything to public cloud. I’m sure, PLM vendors can find many other examples where regulation and policies will welcome hybrid cloud models.

However, as author stated Hybrid cloud can be costly and it won’t be "for everyone". To maintain IT infrastructure for both on-premise and cloud based environment won’t work for small and medium sized companies. So, hybrid cloud can be a bridge model for many of these companies towards full public cloud deployments.

What is my conclusion? For manufacturing companies it will be all about cost vs. privacy. Many small to medium sized companies can find themselves very comfortable with public cloud solutions. However, those are under regulation and security concerns, will follow hybrid, private cloud route. For PLM vendors it is all about growth and market. Look on your market segment, customers and demands. To support Hybrid cloud PLM require resources. However, as a vendor, you can certainly limit your market growth by not supporting your large customers with hybrid cloud solutions. Just my thoughts…

Best, Oleg


PLM Open Source Future – Cloud Services?

February 17, 2014

plm-open-source-cloud

For the last few years, open source was one of the major disruptive factor in tech. Open source powers world’s leading tech companies. Tech giants like Google, Facebook, Amazon and many others would not exist without open source. The success of RedHat put a very optimistic business projection on the future disruption of industry by open source. Since then, we’ve seen many companies that started their business trajectory as “Red Hat of XYZ” with the objective to disrupt a particular industry segment. Many of them became very successful in what they do. However, what happened with their “open source” messages?

My attention was caught by two articles speaking about current trajectories of companies building their business model around Open Source software. Peter Levine, partner at Andreessen Horowitz started this conversation in his – Why There Will Never Be Another RedHat: The Economics Of Open Source and ReadWrite article was following TechCrunch article – Why Open Source Is Disappearing From Open Source Companies? Have a read – good articles with lots of interesting examples and data points. According to the Peter Levine, the main reasons why open source companies cannot compete successfully with their proprietary rivals are simple – money and inability to keep stabilized roadmap development. Here are two notable passages from TechCrunch:

There are many reasons why the Red Hat model doesn’t work, but its key point of failure is that the business model simply does not enable adequate funding of ongoing investments. The consequence of the model is minimal product differentiation resulting in limited pricing power and corresponding lack of revenue. As shown below, the open source support model generates a fraction of the revenue of other licensing models. For that reason it’s nearly impossible to properly invest in product development, support, or sales the way that companies like Microsoft or Oracle or Amazon can.

2013-revenues-open-source-vs-others

And if that weren’t tough enough, pure open source companies have other factors stacked against them. Product roadmaps and requirements are often left to a distributed group of developers. Unless a company employs a majority of the inventors of a particular open source project, there is a high likelihood that the project never gains traction or another company decides to create a fork of the technology. The complexities of defining and controlling a stable roadmap versus innovating quickly enough to prevent a fork is vicious and complex for small organizations.

ReadWrite article brings list of companies started as “open source” and moving now towards different messages.

In 2010, SugarCRM’s main landing page prominently advertised itself as open source. Today? Not a single mention. In February 2009, Alfresco declared itself “the open source alternative for Enterprise Content Management.” No mention of open source on the home page today. The same goes for Acquia, the Drupal company (see 2009 vs. today), and most every other significant company that sells support or software around an open-source project.

PLM industry has their list of open source companies. You can count several product today branded themselves as “PLM open source”. The most notable, Aras created innovative model called “Enterprise Open Source”. To core part of Aras was never open sourced. However, Aras developed significant community network of supporters implementing Aras Innovator software and building applications on top of Aras core platform. Aras keeps fairly large reference customer base supporting and advocating for Aras enterprise open source strategy. According to them, it brings predictable license cost model combined with open software platform, which differentiate Aras from other PLM companies.

TechCrunch article made me think what will be the future turn in development of PLM open source? Would “cloud services” become a future strategic exit for Aras and other open source PLM companies? According to Mr. Levine, SaaS and appliance business model can be a good match to Open Source projects. Here is a formula:

This recipe – combining open source with a service or appliance model – is producing staggering results across the software landscape. Cloud and SaaS adoption is accelerating at an order of magnitude faster than on-premise deployments, and open source has been the enabler of this transformation.Beyond SaaS, I would expect there to be future models for Open Source monetization, which is great for the industry.

What is my conclusion? There is no clear conclusion today. In my view, PLM industry is still waiting for big “disruption moment”. Will it come from cloud PLM alternatives, open source PLM provided as cloud services or just service projects using open source software? Time will show. It seems to me “value” and “maturity” are two main differentiations PLM companies need to focus these days. Just my thoughts…

Best, Oleg


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