Why unbundle 3D is hard for PLM vendors?

August 26, 2014

3d-cad-unbundle-plm-1

Unbundling is an interesting trend in many industries these days. It is relatively new marketing and business activity that helps to create new business offering, packages and product configurations. In many situations "unbundling" is a disruptive factors in many industries. Here is how it explained in Wikipedia article:

Unbundling is a neologism to describe how the ubiquity of mobile devices, Internet connectivity, consumer web technologies, social media and information access[1] in the 21st century are affecting older institutions (education, broadcasting, newspapers, games, shopping, etc.) by "break[ing] up the packages they once offered, providing particular parts of them at ascale and cost unmatchable by the old order."[2] Unbundling has been called "the great disruptor".[3] "Unbundling" most basically means simply the "process of breaking apart something into smaller parts."[4] In the context of mergers and acquisitions, unbundling refers to the "process of taking over a large company with several different lines of business, and then, while retaining the core business, selling off the subsidiaries to help fund the takeover."[5]

Enterprise software is well known by existing large "bundled" application suites. For long period of time, vendors developed large set of packaged applications. On the other side, customers’ demand was to achieve high level of vertical integration between product lines and product families. Last year, I explored some perspective on the future of unbundling in enterprise software and PLM. One of the drivers behind future "unbundling" is related to interests of customers to get better optimized software environment, focus on specific groups of users and driving faster ROI and fast implementations.

My attention caught my Aras blog post – If all you have is Teamcenter Everything Becomes a 3D CAD Problem. The article speaks exactly about the problem of bundles in engineering software. It discusses different needs of users in an organization. The split Aras introduced by Aras goes between people that need to get on 3D CAD software and rest of organization. Here is the passage, which explains that.

The 3D CAD vendors have created very complex file configuration management problems. Independent of how you manage your enterprise product lifecycle, you have to worry about breaking the configuration integrity of these fragile 3D CAD systems. Given the unique complexity of the 3D CAD problem, do you really expect that a single enterprise tool will be able to manage the entire product information data set and processes? Or is it better to manage CAD with the PDM system provided by the CAD vendor, and use a more suitable enterprise system to manage the majority of the product information and processes? Thousands of end users managing the true majority of product information and use cases have been asked to wait decades while exotic 3D CAD centric PLM systems are deployed to the specification and requirements of the few design engineers. But what is the missed opportunity cost to the business?

I can see Aras’ marketing and business message for "unbundling". As non-CAD PLM vendor, Aras is looking how to disrupt integrated suites provided by PLM vendors such as Siemens PLM and maybe others. At the same time, for customers looking how to solve a specific set of problems outside of engineering organization, to deliver such unbundled solution can be an interesting and efficient strategy.

There are lot of questions that customers will raise as soon as vendors like Aras will unbundle specific 3D CAD functionality from broader scope of process management. To achieve both vertical integration and granularity in platform and tools is very hard and this is a weak point in Aras strategy compared to integrated PLM suites. Few weeks ago, I debated that topic with Chad Jackson of Lifecycle Insight. Read about debates here – CAD: Engineering bundles vs. granular apps. More of my ideas and thoughts about the same topic is here – PLM: Tools, Bundles and Platforms.

What is my conclusion? To unbundle complex engineering applications suites as PLM is not easy. Vertical interesting is very important and it will be hard to give up them. Flexibility and agility are on the top priority lists for IT managers when it comes to management of application and resources these days. It looks like an interesting topic to put on the list for PLM vendors and software architects these days. Unbundling was very disruptive in many domains. Will PLM domain can be disrupted by unbundling into platforms and granular apps. Will 3D CAD become the first tool to unbundle from PLM? It is a good question to ask. Just my thoughts…

Best, Oleg


PLM upgrades, release cycles and legacy software

August 20, 2014

legacy-software

Do you know what is legacy software? Earlier today, Marc Lind of Aras Corp. challenged me by his twitter status about companies complaining about legacy PLM systems and upgrading. Here is the original passage from twitter here and here.

"a lot of people complains about legacy PLM and a lot of companies that have legacy PLM are throwing in the towel and switching these days".

marc-lind-legacy-plm-tweet

The part of statement about "legacy software" is really interesting. Last week, I wasn’t able to update a game on my son’s iPad. After few minutes, I discovered that Apple is not supporting the original iPad hardware manufactured 4 years ago. Does it mean iOS software run on that iPad is a legacy? Good question. At the same time, what about properly functioning ERP software that company runs already for the last 10 years without any plans to upgrade? Is that a legacy software?

Wikipedia gives me the following definition of legacy system:

In computing a legacy system is an old method, technology, computer system, or application program,"of, relating to, or being a previous or outdated computer system."[1] A more recent definition says that "a legacy system is any corporate computer system that isn’t Internet-dependent."[2]… The first use of the term legacy to describe computer systems probably occurred in the 1970s. By the 1980s it was commonly used to refer to existing computer systems to distinguish them from the design and implementation of new systems. Legacy was often heard during a conversion process, for example, when moving data from the legacy system to a new database.

Software upgrades is an important topic in engineering and manufacturing. Very often, systems can be in use very long time because of product lifecycle and the need to maintain existing data. It happens a lot in defense, aero and some other "regulated" industries. Also, because of significant investment, the ROI from upgrade can be questionable, which leads companies to keep existing outdated systems in operation. I’ve been posted about problems of PLM customization and upgrades before – How to eliminate PLM customization problems and Cloud PLM and future of upgrades.

PLM vendors are aware about the issue of upgrades and difficulties of software migrations . For long time, industry recognized it as something unavoidable. However, in today’s dynamic business environment, the issue of software upgrades cannot be ignored. Customers demanding flexible and agile software that can be deployed and updated fast. At the same time, changes of business models towards services and subscriptions pushed the problem of upgrades back to vendors.

Earlier this year, my attention was caught by CIMdata publication – Aras Innovator: Redefining Customization & Upgrades. Aras enterprise open source model is predominantly subscription oriented. Which provides lots of incentives for Aras engineers to solve the issue of upgrades and new versions deployment. Here is the passage from the article confirming that:

For several years, the Aras Corporation (Aras) has included no-cost version-to-version upgrades in their enterprise subscriptions, independent of how the solution has been customized and implemented. This is a rather bold guarantee given the historic challenges the industry has experienced with upgrading highly customized PLM deployments. With more than 300 upgrades behind it, CIMdata felt it appropriate to find out how Aras’ guarantee was playing out, and discovered that there was much more to the story than just a contractual guarantee. Fundamentally, Aras Innovator is engineered to be highly configurable—even customizable—without resulting in expensive and complex version-to-version upgrades and re-implementations.

One of PLM software leaders, Siemens PLM is also thinking about What is the best release cycle. The article speaks about SolidEdge release cycle.

A few years ago we moved from an irregular release cycle for Solid Edge, maybe 9 months in one cycle to 15 months in the next, to a regular cycle of annual releases (of course there are also maintenance packs delivered in the interim). I believe our customers much prefer this, they can plan ahead knowing that there will be a significant Solid Edge release available to them in August each year.

At the same time, the article confirms that CAD/PLM vendors are looking how to solve the problem of upgrades. As I mentioned earlier, cloud software model is one of the most promising technical ways to solve the issue of upgrades. It is true, but can be tricky in case both desktop and cloud software are involved. Here is the passage from the same Siemens PLM blog:

Working in the PLM area we try really hard to provide our customers with a good upgrade experience. PLM software is itself dependent on both the operating system and database software, and it has to work with specific releases of CAD software (sometimes with more than one CAD solution for our multi-CAD customers) and with office software as well! Moving PLM software to the cloud could potentially take some of the upgrade issues away from the end user, but PLM software does not work in isolation from your data files, or your other software and systems so I believe there is much work still to be done before the cloud really impacts the upgrade situation for real-world customers.

What is my conclusion? From customer perspective, the best option is to make release cycle completely transparent. In my view, this is really high bar for PLM vendors. Customer data migration, customization and sometimes absence of backward compatibility make release transparency questionable. However, since industry moves towards cloud software and service business model the demand for agile release management and absence of upgrades will be growing. So, my hunch, in the future we will not see "legacy software" anymore. New type of enterprise software will manage upgrades and migrations without customers paying attention. Sound like a dream? I don’t think so. For most of web and consumer software it is a reality already today. Just my thoughts…

Best, Oleg


Aras, Prof. Eigner and People Lifecycle Management

July 2, 2014

plm-key-people

One of the companies I’m following on regular basis is Aras Corp. and its Aras Innovator product. Aras represents an interesting combination of business, marketing and technologies ideas. Back in 2007 Aras came with the strategy of Enterprise Open Source PLM. Since that time, Aras is consistently raising bar of Aras Innovator solutions. In one of my previous posts back into 2011, I predicted Aras lines up against Windchill, Enovia, and TeamCenter. It is hard to me to make an assessment of how close Aras is to that goal. Nevertheless, my attention caught by Aras press release – Professor Martin Eigner Joins Aras Board of Advisors:

Professor Eigner, an internationally recognized expert in PLM and model-based systems engineering, will work with Aras to build on the company’s track record of growth and global expansion, drive innovation in PLM technology, and foster a mutually beneficial, bi-directional relationship between commercial and university research. On joining the Aras Board of Advisors, Professor Eigner said, “Aras is truly unique among PLM technology providers. Their approach, technology and business model provide enterprises with the advanced capabilities they want and the flexibility they need to take full advantage of emerging business opportunities.

My hunch, Aras is following their goal to compete with big three PLM vendors. Interesting enough, Eigner PLM – the product originally acquired by Agile PLM and then by Oracle is still available today and serving customers. You can see the confirmation of that fact in SchnitgerCorp blog:

Aras announced that Dr. Martin Eigner has joined its Board of Advisors. That’s a big deal — you may recognize the name from Eigner and Partner, a PLM company sold to Agile in the early 2000s. Agile was then acquired by Oracle, but the original Eigner products continue to be supported today. At any rate, Dr. Eigner is a big “get” and Aras said he will help Aras “build on the company’s track record of growth and global expansion.

Interesting enough, Eigner PLM was already on the trajectory of competition with big PLM vendors. Another press release from 2003 speaks about 250 of Eigner PLM customers. Here ist he passage:

The addition of Eigners industry expertise in automotive supply chain, industrial machinery, aerospace and defense to Agiles capabilities in life sciences, consumer products, electronics and high technology, clearly makes the combined company a dominant player across all key discrete manufacturing verticals," said Frank Azzolino, Eigners CEO, in a statement. The acquisition of Eigner will help Agile better compete against PLM giants Parametric Technology Corp.s Windchill product and Dassault Systemes S.A.s Delmia offering.

What is my conclusion? Manufacturing companies are very conservative in the way they implement PLM systems. For many of them, the decision and evaluation is taking months and sometimes years. Once put PLM system in place, manufacturing company can run it for decade or even more. Therefore, there is nothing surprising in the fact Eigner PLM is still in use 11 years after Agile acquisition. The majority of large manufacturing companies already implemented PLM system at least one time in the past. In that segment of market, PLM vendors are working on systems replacement. Previous experience is an important element to replace existing systems. I agree with Monica Schnitger – it is a big deal for Aras. In my view, Aras just took another steps towards competing with PLM leaders. Just my thoughts…

Best, Oleg

Disclaimer. Aras didn’t sponsor my publication and didn’t influence in any way the content the blog post.


How to eliminate PLM customization problems?

March 28, 2014

plm-customization

I’m following strategic visions of the major PLM vendors 2014+ publication by Jim Brown – well known analyst and my blogging buddy for last few years. It started as a publication covering Autodesk, Dassault, PTC, Siemens (vendors listed alphabetically). Last week, Jim expanded his PLM vision publications by adding Aras Innovator to the list. Navigate here to read about Aras 2014+ vision. Aras is well known by their Enterprise Open Source strategy. One of the interesting differentiation I captured in Jim’s article is related to Aras’ strategy to break rules of PLM customization. Here is the passage:

Aras has decided to break the rules [of PLM customization]. They aim to become the PLM company that defies the conundrum, allowing manufacturers to customize their software and still upgrade to future releases without major disruption. They can do this because customers can update the data schema, business rules, workflows, and forms without jeopardizing the integrity of the system. How does this work? Aras’ XML-based, model-oriented approach coupled with their willingness to provide customers with the business flexibility and tools to make it feasible. Aras has effectively morphed themselves into a PLM Platform with solid core functionality with a built in ability to be extended by customers and partners. To put this strategy into action, they have told me they are “putting their money where their mouth is.” They now include upgrade services as a part of their subscription service. I haven’t seen that from anyone else anywhere, particularly while encouraging people to enhance and modify the package. This is a clear differentiator and makes Aras unique in the PLM market.

PLM customization is a tricky deal. Honestly, nobody is dreaming to make PLM implementation with zero customization effort. It all starts from flexible data modeling, which imply certain level of data customization. Time ago, I posted – Is PLM customization a data management Titanic? Earlier this year, I’ve been discussing options and reasons on How to de-customize PLM? The story of PLM customization is tightly related to PLM system flexibility data modeling. Typically, every PLM implementation contains some portion of customization that usually done by service organization and/or internal IT department. Lifecycle rules, data import, workflows, integration with other enterprise systems – this is only a very short list of customizations done during PLM deployment. Another huge aspect of customization is related to system upgrades. That one is actually mentioned by Jim Brown in his Aras’ review.

So, is there a way to solve customization problem? In my view, the answer is – it depends. In my view, you cannot eliminate specific implementation activities. Adding of new features and infrastructure technologies (eg. RDBMS) will require certain upgrade activity to happen. However, if you are selling services, the interest will be to optimize this work. Cloud vendors have similar incentive to optimize infrastructure upgrades and maintenance, otherwise operational cost will go up. So, smart technology can optimize cost and customization efforts.

What is my conclusion? Business and technology are going together. To have good business incentive to optimize technologies is always helpful and can put pressure on development organization to optimize cost of infrastructure upgrades. Service based offering (open source and cloud) are two great examples where business interests of vendors and customers are going at the same direction. 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


7 rules for selecting PLM software in 2014

January 17, 2014

plm-software-selection-rules

Enterprise software choice is a complex decision process. The time when you was able to buy a software from trusted XYZ vendor and sleep safe is over. These days IT and other software decision makers are facing challenges related to technological and business options related to new business models, cloud technologies, specific vendors, user experience and many others. You need to swim in a sea of changes in enterprise market in order to decide what software to choose.

Very often you can hear debates about what is Product Lifecycle Management – vision, business strategy or software. Whatever PLM means, companies and people responsible for PLM strategy and software need to make their buying decisions related to PLM software, vendor and implementation.

Last year I posted about how you can select PDM software in 5 simple steps. The last step was open ended and assumed that you need to make strategic PLM decision. Here is a quote from last year article:

"If you company is looking how to manage product development processes beyond controlling and sharing CAD (product) data, you need to evaluate PLM system. Don’t make a PDM choice without making your PLM decision first".

Today, I want to propose few rules that can help you in the decision process related to PLM software and vendor selection. It is not about how to build your overall PLM strategy – I will mostly focus on software and vendor choices.

1. Find real PLM use cases compatible with your requirements. Use trusted advisers that will help you to navigate to examples of PLM software usage. PLM software market place is opaque. There are lot of online information, analyzes, comparison and testimonials about PLM software. To make real financial, technological and product assessment of vendor is tricky. However, you should remember to buy a software that can perform according to your need.

2. Analyze your company engineering software (CAD and PDM) and enterprise environment (ERP). Regardless on grand PLM vision, you have to integrate PLM software with environment, which includes connection to CAD/PDM, interoperability with ERP system(s) as well as many other design, engineering and manufacturing system coming from other vendors including homegrown software developed by IT department and contractors.

3. Don’t buy immediate technological advantages. For most of PLM systems, technologies doesn’t change much for the last 10-15 years. Even if PLM software vendor claims some technological uniqueness today, it will be adjusted in 2-3 years by new development, another new technologies and technological acquisitions PLM vendors are making. If you want to make some tech-driven decision, do it ‘test based’ for a specific use case and/or process in your company.

4. Cloud PLM is first about software eco-system and IT strategy. Cloud can bring lots of advantages. However, if your company is still on premise and IT is conservative, think carefully before pushing into cloud PLM race. You can burn time and resource on convincing your company and solving "general cloud software obstacles" before getting PLM value pay off.

5. PLM usability is relative. Everybody wants (and claims) to be easy to use like Google these days. However, devil is in details and enterprise software is different from consumer web. Also, what looks simple for you will be different for your colleague. Test by yourself, but don’t underestimate software evaluation by people outside of IT ecosystem. There are few books and online resources for UX (user experience) passionate people – try them out. Start from Steve Krug’s book Don’t Make Me Think – it will help you to build a sense of simplicity and own guidance.

6. Don’t buy PLM vendor roadmaps. Most of roadmaps are aspirational. You must look on available software releases and community of users. Community will give you an indication of how careful vendor is following their roadmaps, promises and (mostly important) long term software compatibilities.

7. Open source software isn’t much different from functional and technological standpoint. Open source software is not cheaper and simpler – it is just a different business model. There are variety of open-source flavors and you need to read all legal provisions. Involve your legal advisers to help you to go through language and meaning.

What is my conclusion? In my view, PLM software domain will be turbulent in 2014. New companies, technologies and business models are coming to disrupt and change existing industry landscape. However, your PLM software buying decision will probably stay with you more than 1-2 years. So, my recommendation is to review available software, make trials, experiment and build use cases. These days software vendors are open to convert customers into their trusted advisers. Don’t afraid to be a part of the PLM vendors’ development process and decision making. In most of cases, it is fun and you will love it. Just my thoughts…

Best, Oleg


The future battle for PLM upfront cost

November 5, 2013

PLM-zero-upfront-cost

Transformation of business models is one of the most important trends that happens today in the industry. Take a deep breath… it doesn’t mean companies don’t want to be compensated for the work they do. These days it is just about how to define the right business model that reflecting the relationships between all participants in the business.

The last tsunami related to the software price happened after recent announcement of Apple to make lot of their software including their OSX free. Over the weekend, I’ve been reading Forbes article – The Upfront Software Price is Now Free. Read the article and draw your conclusion. Even if the majority of the focus is related to what happens between major software giants – Microsoft, Apple and Google, in my view, it will have an impact on enterprise software too. The following passage is important.

With software being distributed either as web applications or through models that required a connection to the internet, software gained the ability to be distributed on a subscription basis or subsidized through advertising. Over the past few years, application software has increasingly moved to an initial price point that edges closer to zero on a consistent basis.

It made me think that changes of distribution model can be an additional driver to transform them way PLM (and other enterprise software) will be distributed and licensed.

The discussion about PLM software price, licenses and total cost of ownership is not new. First time I raised the question about coming business model transformation on my blog back in 2009 – Is Free the future of PLM? Since that time, the discussion went in different directions. You probably remember the Future PLM business models panel discussion I moderated during PLM Innovation 2012 in Munich. Another post, which is actually very co-sound with the idea of transformation as a result of changes in distribution model – PLM Cloud and Software licensing transformation.

However, in addition to cloud, SaaS and Web, there is another driving force behind changing PLM software business model. It is open source. Take a look here – PLM: Open Source vs. Free. In my view, open source is another powerful opportunity to change PLM business model status quo. In PLM business, Aras Corp. is driving this change since 2007 by promoting a very unique "Enterprise Open Source" model. Navigate to another article just published on Aras website – PLM Licensing is so Old School. Here is an interesting passage:

If your PLM software deployment gains wide-spread adoption (a goal of every successful PLM implementation), you will need to purchase more licenses. PLM license expenses can be huge up-front, but broad, global roll-outs are where the costs absolutely skyrocket. Effectively, the PLM project becomes a victim of its own success.

The last point about PLM upfront licenses preventing wider adoption of PLM software in the organization is interesting. PLM vendors are looking towards how to make PLM products available downstream in manufacturing organizations as well as in the supply chain. The high end-user cost is clearly not helping to make this dream come true.

What is my conclusion? In my view, PLM cost future trajectory is going towards "usage" and not "upfront cost". It is true in other places, but for PLM it can be a significant change that energize future increase in PLM software adoption and… consumption. It will be driven by major factors such as internet distribution channels as well as open source and service engagements. I don’t see big difference here – both strategies basically removes upfront cost and focus on usage. The changes are unavoidable. Business transformation train left the station. It is just a question of time. In my view, all PLM vendors are actively researching what does it mean for their current businesses and how to act (or react). Just my thoughts…

Best, Oleg


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