A couple of years ago PLM wasn't something that appealed to Autodesk's CEO, Carl Bass. "It's a load of crap", he said, "something that the big vendors like Dassault, Siemens and PTC invented to get more money from their customers".
That was a bold statement even in 2007 when he said it, but the great thing about an open mindset is that people can change. And Bass did. Today Autodesk is one of the most enthusiastic PLM advocates on the market. More specifically, a PLM in the Cloud advocate.
Bass laughed out loud when I reminded him about his statement back in 2007 during the recent Autodesk University in Las Vegas. "But, you know I was right then because we didn't have the Cloud", he countered, "now we do and this really changed it all".
He was persuaded by the facts, he said, and once there was a way to deploy PLM it made sense. And so now he has great expectations, "Definitely, when people see it (PLM 360) and what it's capable of we are confident that it will make them want to change. In some cases there are those that will not change quickly or companies that will change differentially on different fronts; but generally things are underway".
So, what about Autodesk's market penetration for their Cloud offering? How far have their customers come in terms of PLM in the Cloud? In general, are they ready for the Cloud?
Carl Bass, CEO Autodesk – "persuaded by facts"
The optimism of Autodesk's chief is underscored by the fact that the company has been the most successful "newcomer" in the PLM market during the last couple of years. It may be surprising that Autodesk can be a newcomer given how long time they have been in the 3D CAD, CAE and PDM market, but the PLM concept extends beyond point solutions. According to analyst Gartner's definition, "Product life cycle management is a philosophy, process and discipline supported by software for managing products through the stages of their life cycles, from concept through retirement."
It was not until as late as 2012 that the analyst CIMdata "accepted" Autodesk on its list of the PLM Mindshare Leaders, an exclusive group of companies that includes Dassault, Siemens PLM, PTC, SAP and Oracle.
Today Autodesk is on CIMdata's top 7 list when it comes to market share based on direct PLM revenues in 2013 (partners direct revenues included, royalties excluded):
1. Dassault Systemes, 7.7%
2. Autodesk, 6%
3. Siemens PLM, 5.7 %
4. IBM, 4.2%
5. PTC, 3.7 %
6. SAP, 2.8 %
7. Oracle 1.8 %
Source: CIMdata 2014 ("PLM Market Categories – three major segments comprise the PLM Market: cPDM – collaborative Product Data Management, Tools - Authoring, analysis, modeling, simulation and documentation of product and plant/facility information, Digital Manufacturing - process planning, resource definition, factory floor layout and product flow simulation and analysis.)
Digital Prototyping brings siloed software together
PLM from Autodesk: Digital Prototyping and the Cloud
The solution that got Autodesk onto this list was a combination of the "Digital Prototyping" (DP) concept and the set of tools for PLM in the Cloud (the PLM 360 solution is today a part of "Digital Prototyping"). However Autodesk's cloud services also include AutoCAD 360, (Inventor) Fusion 360, Simulation 360 and CAM 360.
The idea of DP is to bring together siloed software covering the product development phases, and to a limited extent areas like factory design, maintenance and sales & marketing.
All of this is framed by the programs in the Product Design Suite which has solutions for conceptual design (like AutoCAD, Alias), PDM (Vault), engineering (Inventor, AutoCAD Electrical and Mechanical), simulation (Autodesk Simulation, Moldflow, Simulation CFD), manufacturing (Factory Design Suite), and some additional things mentioned above.
Features in PLM 360 are:
* Bill of Materials management (BOM)
* Change management - Engineering Change Requests (ECR) and Engineering Change Orders (ECO)
* New product introduction tools (NPI)
* Supplier collaboration
* Quality management
* Cost management
Generally Autodesk's portfolio - the Cloud solutions included - can be regarded as a viable PLM alternative for small-to-midsized companies. But this doesn't mean that the large corporations don't use Autodesk programs. On the contrary, big companies like SKF, Sandvik and Tetra Pak often have hundreds, if not thousands, of licenses of AD software.
Autodesk and Jitterbit created a product that allows
So far the move to the Cloud has been measured
Autodesk PLM 360 users to integrate their PLM data
with other business application data like Oracle or SAP
Nobody said that it is easy to establish new technology. It's a job that demands great ideas, inspiration and a lot of hard work as well as timing and financial resilience.
Moving to the Cloud is a good example of a challenge that will force Autodesk to face a couple of tough years before they eventually will reach their goals. Generally it doesn't matter how good the underlying structures of the new technologies are; as long as they contain more complex elements, users won't adopting them overnight. This was true for PLM and it's going to be true for PLM in the Cloud.
Analyst CIMdata agrees,"So far Autodesk's move to the Cloud has been measured, with adoption coming from existing as well as new clients. While the progress has been steady, we don't expect Autodesk's business to change overnight. In the case of Cloud-based PLM solutions, adoption has generally been measured, with small to mid-sized companies adopting more quickly than larger ones."
The fact that Autodesk has chosen this path can be a chatalyst for change,"Thats's right", says CIMdata's Peter Bilello, "in general we expect the revenue generated from Cloud-based PLM solutions to increase over the upcoming years at a steady rate. A limiting factor is that many companies are still concerned that placing their product knowledge in the Cloud could be a threat."
CIMdata, however, doesn't believe that security is an issue because Autodesk and others are building comprehensive solutions that are as secure as anything a single company could do or afford on their own.
The problem of replacing behind the firewall solutions
This is also in line with what Autodesk's Director of Industry Strategy and Marketing, Ron Locklin, claims,"When we began selling PLM 360 in early 2012, there were many questions about security in the cloud, data ownership and the physical location of servers. These were probably the most prevalent concerns we heard. But times have changed. Business consumers of SaaS-based enterprise apps are getting more comfortable with these areas, as the solutions become more prevalent in the CRM, ERP, and consumer worlds."
He also points out that Autodesk have invested heavily in security; "in certifying our environment and servers, so that our customers feel secure; and overall, it is pretty apparent many businesses know that a cloud-based system in reality is as secure as what their own IT department and investments can ensure".
Products in the Cloud, but is PLM in the Cloud an option?
Chemring Group PLC, a global
manufacturer of defense
and security products, recognized as the Autodesk June
Inventor of the Month last year for its use of Product
Design Suite and Vault Professional
There are other angles the security issue. Certain markets demand "behind the firewall solutions", such as military, aerospace with strong security concerns, government as well as heavily regulated industries. These may require software apps certification with every new release of the product.
"We see adoption as lower in these markets", Ron says and adds, "That said, we are constantly being asked by government agencies, systems integrators and heavily regulated companies about how and when they can jump onto this trend and take advantage of it".
The main arguments for investement in PLM 360
Security and IP protection seems to remain the most important obstacle to PLM in the Cloud. These concerns are not reflected in Carl Bass' view of how things are going. "We are way ahead of plan and even more successful than we imagined", he said in Las Vegas and asserted that Autodesk's PLM business has already taken off.
PLM 360 – "winning against traditional PLM players"
Ron Locklin agrees, boiling down "many, many reasons to invest in PLM 360" to two main arguments:
- "It gives customers deep insights into their product development detail and processes that they have never had before, and PLM 360 saves customers lots of money by reducing scrap and waste, very rapidly coming on-line to manage messy processes that were manual and controlling very expensive engineering change orders."
- "It is interesting to point out that we are succeeding on two very different and perhaps orthogonal fronts: First, we are winning against the traditional PLM players. We win deals based on compelling ROI, extremely compelling time-to-market metrics and because a lot of existing PLM users are not happy with the expensive, bulky, slow solutions they already have in place. Second, we are succeeding with the new world of SaaS-based enterprise solutions. A lot of this is in conjunction with our strategic relationship with NetSuite (a cloud-based ERP software). In this market, customers demand rapidity, zero IT infrastructure and the ability to integrate with other SaaS solutions. And we are quickly becoming the PLM solution of choice in this arena.
Low cost is an important selling point
"No matter how you look at it, PLM 360 is extremely cost-effective. One named user license of PLM 360 is priced at $ 900/year, and that is undiscounted. The price includes any new releases, and "maintenance" (in the traditional definition). A 'viewer seat' of PLM360 (for review, sign-off and so on) is $ 300/year for a named user. Therefore, we are talking well under $ 10,000 per year for a 10-seat environment of this solution, which can be up and running in literally minutes", says Ron Locklin.
How many PLM 360 customers are there today?
"We have now surpassed 14,000 users of the product and are very pleased with our growth", Ron says and adds that Autodesk corporate is very pleased with that number.
The main segment where PLM 360 has gained traction is with small-and-medium businesses, which in "Autodesk's book" includes companies with less than 1,000 employees, or in divisions of larger companies with fewer than 1,000 employees. "Seventy-five percent of our PLM 360 deals since we launched in February 2012 have been to this SMB segment. However, we are certainly seeing large company adoption and significant large-company interest."
Currently the largest deployed PLM 360 site is 400 seats, "But we are in discussions with multiple customers and prospects to deploy on a scale from 1,000 seats (an existing customer) to 15,000 seats (a prospect/new customer for PLM 360)", Ron continues claiming that the SaaS environments they run in and the PLM 360 architecture "are extremely scalable".
Marc Halpern: "No solution for advanced configuration
Gartner's Marc Halpern: "Compelling advantages"
management or systems engineering, but a software
good enough for PLM for SMBs – it will grow..."
Gartner PLM analyst, Marc Halpern generally supports the cloud vision,"For a first generation new product PLM 360 looks pretty good and I believe it's good enough for SMB's", he says. "Naturally it depends of the level of sophistication they are looking for, but if it is about things like work flow, core PDM functionalities such as vaulting, access control, revision control, and fundamental collaboration the solution seems fine."
He also mentions that companies he talked to using 360 indeed validated that it is much faster to implement than traditional PLM solutions. "But it also provides a great deal more flexibility because nothing needs to get implemented if you for instance acquire a new company; it's simply a question of bringing on new licenses and give the new users access."
So, will Autodesk and PLM 360 bring SMB's to the Cloud?
Halpern added, "Not only will they bring smaller companies to the Cloud. I know already of some larger companies that are interested in PLM 360 because of the cost advantage. It's so compelling in terms of implementation and upgrade costs as well as need for internal support staff and hardware infrastructure upgardes".
According to Halpern, PLM 360 has garnered a lot of attention and will continue to grow revenues and users, "The inhibitors to that growth are going to be the companies that fear the Cloud model because their Cloud assets are outside the 'four walls', as opposed to being managed inside those walls." The most likely scenarios for many companies at first will be to use AutoCAD Vault or Autodesk Vault to maintain content inside the 'four walls', but use PLM 360 for work flow such as engineering change request."
Halpern also note that the solution lacks support for private clouds at this point in time.According to Ron Locklin Autodesk does get inquiries about this but it's not yet on the roadmap, "A major reason for this is that there is enormous opportunity for PLM 360 in purely public cloud environments. Also, we are seeing an evolution in attitude and architectures over time as well as an increasing acceptance by many segments of the market that are currently demanding private cloud solutions to be able to deploy and excel with their applications in a public-cloud environment."
Carol Bartz, former Autodesk CEO, made SolidWorks'
Autodesk's former CEO, Carol Bartz, wanted to buy SolidWorks
founder, John Hirschtik, an offer he could resist"
Disruptive technology is a part of Autodesk's history. In fact the company was born from one: The first electronic drawing board ever, AutoCAD. It came some 30+ years ago and was a huge success.
On the other hand Autodesk isn't immune to technological setbacks. The birth of Inventor is an example of this. 3D CAD on the Windows platform took some time to evolve and it wasn't until the 3rd or 4th version that Autodesk had a solution that could compete with SolidWorks and Siemens PLM's Solid Edge. For a while Carl Bass' predecessor, Carol Bartz, was actually negotiating with SolidWorks' founder, John Hirschtik, on buying SW instead of continuing to develop the "Rubicon" project as Inventor first was called. But the price was too high; Bartz offered $ 12 million, Hirschtik wanted $25M and so the deal was off.
The point is that success isn't always immediate, especially when dramatic changes are involved. Dassault Systemes is going through a simular experience with the 3DEXPERIENCE solution right now, and although Carl Bass claims that PLM 360 is a success beyond what he could imagine, my take is that 14,000 users is a bit lower than calculated. A not entirely unreasonable guess is that Autodesk is sitting with some new cards up its sleeve,perhaps in the form of a "repackaging" of the PLM on the cloud offer.
But that's just a wild guess. The only thing we can be pretty sure of is that PLM in Cloud is coming. The question is when it will arrive in a big way?