How cloud pricing war will affect PLM?

October 3, 2014

plm-and-cloud-price-war

Large infrastructure cloud providers are slashing prices. TechCrunch article Nobody Can Win The Cloud Pricing Wars is providing some additional details about the situation. The same article speaks about the moment when CIOs won’t be able to ignore the pricing advantage:

Earlier this week, Google lowered prices 10 percent across the board on their Google Compute Engine cloud platform . The cost is getting so low, it’s almost trivial for anyone to absorb the costs of running infrastructure in the cloud, but you have to wonder as the cloud pricing wars continue, how low can they go and if it’s a war anyone can win.

In spite of the low prices, there are still plenty of companies talking about the cloud with disdain and fear, but the fact is how long can CIOs ignore pricing as it goes this low? It doesn’t make good business sense, and whatever risks a large enterprise believe they might face with cloud services, it has to be offset by the plunging costs.

Are you confused by comparison of cloud infrastructure prices? You are not along. GigaOM article provides one easy chart that will help you to demystify cloud prices.

RBC’s formula condenses cloud services into one unit price based on “total spend per GB of RAM,” which includes storage, compute, memory, I/O and other base features. That makes it easier to compare cloud pricing across vendors. Per a research note from RBC analyst Jonathan Atkin this week, the second half of 2014 saw less price cutting than the first half — which included a round robin of competitive cuts from Google, Amazon and Microsoft in March.

RBC-cloud-price-per-GB-RAM1

The devil is in details and I’m obviously interested to see how it will impact (or not) PLM vendors. When it comes to "cloud", not all PLM vendors are the same. While most of them are publicly announced cloud strategy, the diversity of cloud solutions is pretty much high – public cloud platform, leveraging IaaS cloud layer and developing of colo-hosting solutions.

It is important to see business aspects of cloud PLM. Thomasnet article by Verfi Ogewell PLM Market Faces Challenges, Hints at Possibilities provides an interesting perspective on PLM market and impact cloud PLM created. Read the following passage:

One problem in assessing PLM investments for 2013 and beyond has to do with the changing licensing models, a matter which to some extent is connected to merging technology platforms, like the cloud. Increasingly, vendors are moving from paid-up licensing models to subscription models. Paid-up models have annual maintenance fees in the range of 18 to 22 percent of the license purchase price. Subscription models demand payment each year that is in the range of 30 to 40 percent of today’s list software pricing.

Has the hype around PLM in the cloud resulted in customer investments? So far, the answer is no. In fact, it may be the other way around. The cloud has affected the pricing and results on the on-premise market negatively, plus, while many PLM vendors have offerings, most have yet to see any real returns on their investments. Meanwhile, the discussion of SaaS (software-as-a-service) has created expectations of at least more effective pricing models. This picture may change quickly if the new business models for delivery and support of PLM act as triggers for greater investments.

So, what will cloud infrastructure price drop means for PLM vendors? My hunch, this is a good news for PLM vendors hosting their solution on IaaS infrastructure. This is very costly option, especially with existing "on-premise" single tenant PLM architecture. Lower price will allow to PLM vendor to adjust their expenses. It can be even more beneficial for vendors building optimized cloud PLM multi-tenant architecture. However, it probably won’t impact vendors focusing on private and hybrid cloud infrastructure. While regardless on PLM architecture, 50% of PLM project is services cost provided by vendors and implementers, the overall impact of infrastructure cost will have less impact.

What is my conclusion? Cloud pricing war will impact customer mindset. It will increase customer demand to lower cost of PLM solutions. It will shift CIO’s perspective on how to leverage cloud infrastructure in their business. Low cloud infrastructure cost won’t make cloud PLM software free tomorrow. At the same time, it will help PLM vendors to adjust overall cost of PLM services and implementations. Better architecture of cloud PLM solutions will help vendors leverage offsets in infrastructure cost to bring more cost effective PLM cloud services. Just my thoughts…

Best, Oleg


PLM vertical PaaS strategies

July 25, 2014

PaaS-plm-large-manufacturing

SaaS, PaaS, IaaS, DMaaS, … I’m sure marketing folks are having lots fun of new xaaS acronyms. The amount of publication about various strategies of services is skyrocketing. EDACafe article – The Platform-as-a-Service Provides European Aerospace & Defence OEMs and Partners with Greater Collaboration Capabilities brings a story of “AirDesign” – the European aerospace and defense industry’s collaboration platform by BoostAeroSpace and Dassault System. The article taste a bit marketing. Nevertheless, I found the following passage capture the rationale behind what AirDesign supposed to provide:

AirDesign drastically reduces operational costs for all partners through a single infrastructure, common exchange methods, open standards and easy access, all without adversely impacting existing information systems. All the primary European OEMs jointly requested and defined this platform in order to facilitate exchanges, support their suppliers’ ecosystems and generate new opportunities with services.

MMT article provides more analyzes on what Dassault and BoostAerospace are doing:

To manage the exchange of PLM data between all partners whatever their systems may be, AirDesign delivers three key capabilities through its digital exchange hub: 1/ The first allows an OEM to organize exchanges in the context of programs and projects, including the delegation of administrative roles; 2/The second is an integrated, secured and automatic technical data package exchange. The traceability needed for complex programs is a native capability, ensuring proper management of large technical files between OEMs and suppliers; 3/The third capability consists of access to a wide variety of services, including converters based on standards or approval services that a partner can use during an exchange.

The set of functionality above aren’t new. Large PLM implementation did it in the past. The problem of standardization and platform cost in supply chain eco-systems is critical. So, it is not unusual for partners to share single enterprise software infrastructure for design supply chain and more.

However, the notion of PaaS (Platform as a Service) is interesting. I’ve been blogging about that earlier – Will Cloud PLM develop PaaS option? and Cloud PLM and PaaS dilemma. It looks like PLM vendors is moving towards more vertical platform architecture. Especially for large companies and business eco-systems, PaaS can provide an interesting solution – standardization and cost benefits. The information about private cloud deployment by AirDesign confirms earlier news about Dassault developing all cloud PLM options.

What is my conclusion? I think we are going to see lots of PLM PaaS variations in a near term future. Large manufacturing companies are looking how to optimize cost and standartize infrastructure. This is an opportunity for PLM vendors to re-establish and sometimes re-develop their legacy systems in a new way. I’m sure lots of ENOVIA applications will be used in announced AirDesign PaaS. Overall looks like PaaS is another way to sell PLM cloud system to large manufacturing eco-system. Just my thoughts…

Best, Oleg

picture credit to MMT article

 

 


Why Siemens PLM can develop PaaS option

July 16, 2014

cloud-paas

PaaS is a category of cloud computing service providing platform and solution stack. This service model is including not only computing infrastructure (IaaS), but also application design, development, testing, team collaboration, integration features, database integration, scalability, security and others. In addition to that, it might provide service management capabilities such as monitoring, workflow management, etc.

As cloud market becomes mature, IT, customers and application development are looking into complete solutions. All PLM vendors are in full swing into IaaS cloud PLM option. Cloud PLM experience brings the need to dig more into nuts and bolts of cloud business. It includes understanding of cost, scale, service maintenance, application development, partnership. So, fundamental question many vendors and customers have is what is the best way to make cloud PLM efficient? Understanding of PaaS option is an important step. I shared some of my thoughts about PaaS and PLM before- Cloud PLM and PaaS dilemma, Will cloud PLM develop PaaS options?

My blogging buddy and well known PLM analyst Chad Jackson tweetstormed what he learned at Siemens PLM about furure TeamCenter platform development. While I’m still waiting for full blog post on Chad’s Lifecycle Insight, the following filtered tweetstorm can give some idea about Siemens PLM platform strategy:

chad-jackson-siemens-plm-tweetstorm

It resonated with my previous thoughts about cloud PLM and PaaS and made me think why Siemens PLM as well as any other PLM vendor can consider PaaS as a right option for their cloud PLM strategy. Here are my 3 reasons to develop PLM PaaS:

1- Agile development.

Vendors should be able to go fast in the development of applications, ability to customize existing features and supporting new opportunities. Businesses are much more dynamic these days. Everyone wants to be agile. PLM vendors too. So, to get up to speed with business, PLM vendors need to have a stable platform to build on. PLM PaaS can be one.

2- Better upgrade strategies

Let’s take marketing gloves off. Regardless on deployment options (on premise; private cloud; public cloud), you need to deal with upgrades. Databases, services, data model changes- this is only a very short list. PaaS can hide upgrades from customer and application developers by providing a stable platform layer. This layer requires less frequent upgrades.

3- Scaling factor and cost.

Cost is important. Cloud is not cheap as many of us thoughts from the beginning. Customers are demanding new business models and optimized cost. The development and customization cost is another problem. Scaling and keeping cost low is also huge challenge. Utilization of enterprise servers is still relatively low. PaaS can answer on the question how to share resources and scale with low cost.

What is my conclusion? Most of PLM vendors took IaaS option as a starting point to develop cloud business. It is okay and will provide important experience from different perspective – technologies, business, user interface. However, IaaS won’t remove fundamental enterprise PLM issues – implementation complexity, upgrade challenges, high diversity of requirements and business changes. PaaS option can become the next logical step to optimize platform and application for agile delivery. It looks like Siemens is making steps towards this direction. Just my thoughts…

Best, Oleg


OpenStack for Private Cloud PLM?

June 12, 2014

openstacklogo

The debates about cloud and PLM are in full swing. In my view, Why Cloud? is a wrong question these days. I think, the question "How to cloud…?" comes to the first place. One of the most prominent discussion is about private vs. public cloud. The concern about potential leak of corporate knowledge is a valid concerns. For companies in heavy regulated industries private or hybrid cloud is probably the right solution compared to widely used public clouds from Amazon and other cloud infrastructure vendors.

My attention was caught by ReadWrite article – The Open-Source Cloud Takes A Step Toward Simplicity. OpenStack is fast growing free and open source cloud computing platform primarily deployed as an Infrastructure As A Service (IaaS) solution. It is available under Apache license and currently managed by OpenStack Foundation.

The article speaks about company Mirantis that decided to simplify the deployment of OpenStack. The result is product – OpenStack Express hosted by IBM Softlayer infrastructure. Here is a passage from article that will give you the idea what is that about:

Mirantis hopes to change that with OpenStack Express, an OpenStack-as-a-service offering hosted on IBM’s Softlayer infrastructure. It’s intended to make deploying OpenStack easier and faster, freeing developers to focus on their applications. IBM provides the data center underpinnings, and Mirantis provides the software and 24/7 support for the self-service, on-demand offering, the first of its kind in the OpenStack world.

"What Amazon does for public clouds, we do for private clouds," said Adrian Ionel, CEO of Mirantis. OpenStack Express essentially lets you rent bare-metal servers that don’t get shared with other customers, quickly deploy software, and manage everything via a console.

The idea to have easy deployed IaaS platform for private cloud is interesting. It can become an ideal platform for many manufacturing companies looking for cloud solutions and still having concerns about public cloud. It is also a benefit for for PLM software vendors that will be able to provide their cloud PLM platforms on both private and public cloud with minimum infrastructure changes.

What is my conclusion? Development cost and maintenance is critical factor for every cloud PLM providers. This is one of the reasons many of them are focusing on public cloud only. However, availability of Amazon-like private cloud platform can be a game changer in PLM cloud adoption. Just my thoughts…

Best, Oleg


Cloud PLM Scaling Factors

November 26, 2013

plm-cloud-scale

Scale is one of the most fancy word which is coming in place when different technologies are discussed or debated. So, speaking about cloud CAD, PDM and PLM, the discussion must go towards "scaling factor" too. Since PLM Cloud Switch finally happened, it became clear, vendors and customers will have to go down from buzzwordy statements about "cloud" into more specific discussions about particular cloud technologies they are using. Very often, cloud deployment is related to so called IaaS (infrastructure as a service) used by vendors to deploy solutions. PLM vendors are using IaaS as well. I’ve been talking about it a bit in my post – Cloud PLM and IaaS options. In my view, Siemens PLM provided the most bold statements about following IaaS strategy in delivery of cloud PLM solutions. At the same time, I believe all other vendors without special exclusion are using variety of IaaS options available on the market from Amazon, Microsoft and IBM.

An interesting article caught my attention earlier today – Google nixes DNS load balancing to get its numbers up. Article speaks about Google demoing cloud platform scaling capabilities. Google blog articles provides a lot of details about specific setup used for tests and measurement:

This setup demonstrated a couple of features, including scaling of the Compute Engine Load Balancing, use of different machine types and rapid provisioning. For generating the load we used 64 n1-standard-4’s running curl_loader with 16 threads and 1000 connections. Each curl_loader ran the same config to generate roughly the same number of requests to the LB. The load was directed at a single IP address, which then fanned out to the web servers.

It is not surprising that Google put some competitive statements trying to differentiate itself from their major competitor – Amazon. Here is an interesting passage from Gigaom writeup:

“Within 5 seconds after the setup and without any pre-warming, our load balancer was able to serve 1 million requests per second and sustain that level.”… this as a challenge to Amazon Web Service’s Elastic Load Balancing. ”ELBs must be pre-warmed or linearly scaled to that level while GCE’s ELBs come out of the box to handle it, supposedly,” he said via email. Given that Google wants to position GCE as a competitor to AWS for business workloads, I’d say that’s a pretty good summation.

The discussion about cloud platforms and scalability made me think about specific requirements of cloud PLM to scale and how it can be related to platform capabilities. Unfortunately, you cannot find much information about that provided by PLM vendors. Most of them are limiting information by simple statements related to compatibility with a specific platform(s). However, the discussion about scaling can be interesting and important. Thinking about that, I came to the 3 main group of scaling scenarios in the context of PLM: 1/ computational scale (e.g. when PLM system supposed to find design alternatives or resolve product configuration); 2/ business processing scale (e.g. to support a specific process management scale in transactions or data integration scenarios); 3/ data processing scale (e.g. required to process a significant data imports or analyzes). Analysis of these scenarios can be an interesting work, which of course will go beyond short blog article.

What is my conclusion? Coming years will bring an increased amount of platform-related questions and differentiation factors in PLM space and enterprise in general. It will come as a result of solution maturity, use cases and delivery scenarios. Cost of the platforms will matter too. Both customers and vendors will be learning about delivery priorities and how future technological deployment will match business terms and expectations from both sides. Just my thoughts…

Best, Oleg


Cloud PLM and PaaS Dilemma

June 4, 2013

IaaS, PaaS, SaaS… Most probably you are familiar with this abbreviations. These are fundamental layers in cloud computing these days. IaaS stands for Infrastructure as a service. PaaS stands for Platform as a Service and, finally, SaaS stands for Software as a Service. These concepts were around for some time. SaaS is probably one of the earliest and it became a delivery model for many software providers these days. Salesforce.com, Google Apps, Workday – this is a very short list of notable SaaS providers. On the opposite side, IaaS offers virtual computing power – virtual machines, servers, storage, networks, etc. Amazon delivered the most reliable IaaS infrastructure today – AWS. Other competitors are scratching their heads these days trying to understand how to compete with that.

Let me get back to engineering, manufacturing, PDM and PLM. IaaS and specifically AWS became a mainstream for almost everybody. It is hard to find development organization that is not using AWS for some purposes. Massive amount of cloud applications today are dependent on IaaS cloud infrastructure. Some of PLM vendors decided to to leverage the power of IaaS to turn their existing solutions into cloud ones. I covered this topic couple of months ago here – Cloud PLM and IaaS Option.

The part of SaaS is clear as well. We can see a growing number of cloud (SaaS) applications. Notable vendors in PLM are Arena Solutions, Autodesk and some others. The topic I want to discuss today is PaaS. According to PaaS wikipedia definition

Platform as a service (PaaS) is a category of cloud computing services that provides a computing platform and a solution stack as a service.[1] Along with software as a service (SaaS) and infrastructure as a service (IaaS), it is a service model of cloud computing. In this model, the consumer creates the software using tools and/or libraries from the provider. The consumer also controls software deployment and configuration settings. The provider provides the networks, servers, storage and other services.[2] PaaS offerings facilitate the deployment of applications without the cost and complexity of buying and managing the underlying hardware and software and provisioning hosting capabilities.[3]

Here are few examples of notable PaaS providers – Heroku, Windows Azure, Google App Engine, and few others. If I think back to the idea of turning you PDM/PLM application to a platform in a conventional (pre- PaaS world), than I will think about usage of PLM as a platform to develop variety of applications and implementations. If you remember history of PDM /PLM platforms, you probably agree with me that it took a significant effort and time to leading PLM vendors to create platforms that can be easy used and evolve in the future is incredibly complicated tasks. Still existing platforms such as Enovia, TeamCenter and Windchill are complex and hard to use. It made me think more about PaaS and ability of PLM to leverage PaaS in the future.

The following article caught my attention last week – The problem with PaaS. Read this article and make your opinion. According to the article, the central paradigm of PaaS is to provide development and deployment environment to the user. I found the following passage interesting. It describes the problem very well. Take a read.

The central idea of PaaS is the CSP provides a development and deployment environment to the user. True, PaaS abstracts the underlying infrastructure, but that’s the role of the IaaS underneath the PaaS platform. The goal of PaaS is to abstract the development environment details themselves. Unfortunately, building an abstraction at this level is extraordinarily difficult, because developers typically require fine-grained, hands-on control of their development environments. Change a classpath or config file setting or environment variable or any number of other nuts and bolts that make up a coder’s day-to-day work environment, and everything the developer has built will crash and burn.

What is my conclusion? What is the future of PLM and PaaS? It is a complicate task to build a scalable, flexible and expandable PLM platform in the cloud. Some vendors are following this path now and some of PLM vendors are looking how to turn their existing systems into cloud PaaS. I can hardly see how cloud vendors will be able to leverage existing PaaS because of complexity of implementations, integrations and system conflicts. It would be very interesting to see if one of the existing cloud PLM products will turn into scalable PLM PaaS. Just my thoughts…

Best, Oleg


IaaS, Cloud PLM and Disruptive Pricing

January 18, 2013

PLM vendors are continuing to adopt cloud. I can clearly see a difference between people attitude for cloud solutions now and 4 years ago. Here is my simplistic definition of changes that happened for the last 4 years. The following sequence represents a typical reaction on "cloud PLM" for the last 4 years. 2009: What is cloud? 2010: Why I need cloud? 2011: Why not to use cloud? 2012: How to use cloud?

The last question, actually, has multiple angles. It means all – technology, implementation, product licenses and finally pricing model. The last one is obviously important and I can see some interesting dynamics between cloud and on premise software in coming years. The following Infoworld article caught my attention – Oracle’s faux IaaS now gets faux on-demand cloud pricing by David Linthicum. Take a read. I found it interesting. Oracle is a king of enterprise software market has a lot to lose when it comes to cloud adoption. I found the following passage the most interesting:

Oracle’s "on-demand private cloud" isn’t merely an equipment lease either. It’s an odd hybrid created because Oracle finds itself stuck between the rock and the cloud, reluctant to devalue its hugely lucrative enterprise software products by folding into cloud-service pricing. The rise of cloud computing very much goes against Oracle’s highly profitable way of doing business: enterprise license agreements, maintenance contracts, and all the other trappings of big software.

2013 is perhaps the first year where Oracle will feel real pain from public cloud providers, such as Amazon Web Services, Rackspace, and Google, as well as emerging private cloud providers such as Eucalyptus and those based on OpenStack or CloudStack.

I made me think more about what happens in PLM vendors ecosystem. Traditional PLM vendors (Siemens PLM, PTC and Dassault) are selling premium lucrative enterprise oriented packages with a lot of functionality and value behind that. Autodesk is a newbie of PLM market is playing "cloud alternative game" with SaaS prices and less functionality out of the box. Aras Corp. is providing Aras Innovator using disruptive enterprise open source. I can see some similarities in the attempts of traditional PLM vendors to embrace cloud technology and delivery models. You can see how Aras position their solution as "true cloud" with all advantages of cloud and on premise software. Aras leverages Microsoft Azure platform. Navigate to this link to read more. Siemens PLM introduced TeamCenter IaaS option delivery few months ago. I wasn’t able to get information about IaaS and cloud prices for both Aras and TeamCenter. Both website provided contact option to request the price, but no price.

What is my conclusion? Cloud plays a disruptive roles these days in many markets. Enterprise software is one of them. We can see an interesting combination of vendors, IT and infrastructure providers plays. IaaS vendors will keep existing technological platforms afloat by providing a seamless cloud infrastructure environment to support existing server-client and web technologies. Oracle is a good demo how vendor can reposition and tailor technology model to new conditions. I think, we will see lots of "cloud innovation" from traditional PLM providers in a near future. For a long run, cost matters. Just my thoughts…

Best, Oleg

Image courtesy of [Stuart Miles] / FreeDigitalPhotos.net


Follow

Get every new post delivered to your Inbox.

Join 253 other followers