PLM developer Aras, with its successful Innovator solution, seems to be in the middle of a shift in how the company is governed.
PLM developer Aras, with its successful Innovator solution, seems to be in the middle of a shift in how the company is governed, both in terms of executive management and at the board level.
Only a week after Aras’ announcement that it had recruited Jim Cashman, former CEO of simulation software developer Ansys, to the board, Aras revealed that long-standing Aras CEO and founder, Peter Schroer, will be replaced by Roque Martin. The latter comes most recently from PTC, where he served as general manager of the division that supplies system and engineering software for manufacturers of advanced products. Prior to that, Martin had a long career at IBM, where he worked with SaaS (Software-as-a-Service) and integration of acquired businesses and development of competitive strategy.
All in all, Martin brings with him a highly competent background in areas that also happen to be of great importance when it comes to to where today’s PLM solutions, companies and business models are headed. Specifically, subscription of software capacity (SaaS) in the cloud, where easily accessible AI-packed program apps cover broad areas of IT and AI support in product development and manufacturing automation, and where platform technology provides the infrastructure, software platforms and processing capacity required to take development work to the next level. This is also a path that Aras, under Peter Schroer’s leadership, has strived for and delivered solutions on.
So, why the change at the top right now? Are the company’s investors dissatisfied with the development of revenues? Have they started thinking about changing the business model? Or is Peter Schroer simply done with leading the operational day-to-day work after his many years as CEO?
It’s definitely easier to understand Cashman’s entry into this sphere. Simulation and analysis (S&A) is the sub-PLM star of the last five years. This is partly because it has grown enormously in technological importance in recent years as digital prototypes and 3D models have increasingly replaced physical ones, and partly because the former Ansys CEO—in his capacity as former leader of the S&A market’s dominant company—understands this development in depth, and knows what technologies are required and how to commercialize them.
What Role Do Investors Play In Aras’ Executive Change?
Exactly what the reasons are for the announced changes taking place in Aras PLM is not entirely clear, but some indications of they reasons can be found in the press releases about these events.
Is the executive swap something that the investors in the company wanted in order to match the explosive technology development of recent years and the establishment of new business models? This thought struck me when reading statements made in Aras PLM’s press release about the matter.
For example, it is not entirely common to include statements by investors in the press material for an event like this. The chairman of the board? Sure. The outgoing CEO? Absolutely. But the main investor? Generally, no, unless this partner takes a very active part in how the company is run.
An interpretation of this could be that the change was initiated by the investors; in this case, Travis Pearson, who is the managing director and co-head of private equity at GI Partners.
He has made statements at both of these events—both Cashman’s announced entry into the board, and now the change to the CEO post. It certainly looks as though the GI Partners director has heavy influence and takes an active part in the change work.
It is not uncommon for this type of organizational remodeling to take place. For example, if an investor thinks that revenues are not growing as desired and as planned, or that a new suggested business model will encounter resistance at the operational level.
I do not not claim that this is the case with Aras, but the thought occured to me. This is also supported by the fact that the announcement of the departure came and was executed extremely quickly; the press release notes that “the transition is effective immediately.”
Travis Pearson commented in the press release, “We thank Peter for his vision and leadership, and for his ongoing contributions as a member of the Board. With his extensive engineering software leadership experience, Roque will play a critical role in delivering value to customers, scaling the company for sustainable growth and building the workforce of the future.”
Silver Lake Kraftwerk Selling Its Aras Holdings To GI Partners Created Questions
Speaking of investment capital from private equity firms, during the AEC user event in April 2021 Peter Schroer said that GI Partners, “with a substantial investment, will accelerate the establishment of Aras’ low-code platform and its global expansion and customer success.”
The size of the investment was not apparent from Schroer’s statements, nor from the press material sent out at the time.
There were also statements in this material which, together with the fact that no investment amount was published, created some doubt as to what exactly the investment from GI Partners entailed. For example, a question arose as to why the previous investor, Silver Lake Kraftwerk, withdrew from its Aras venture and sold its stake to GI Partners.
When I raised the issue with Peter Schroer, he said, “The GI Partners investment was a majority transaction, which often do not include amounts due to investor sensitivity over disclosing information that could be used to determine valuation. The deal included the purchase of Silver Lake’s share. In addition to GI Partners, Aras employees remain significant shareholders. We chose GI Partners for the shared vision in how to fuel growth with enterprise customers and the flexibility they offered us in achieving our aggressive goals. This investment includes Aras’ continued access to GI Partners funding sources to further expand global operations, R&D and acquisitions.”
He added that he believes that the COVID pandemic “has forever changed the PLM market, particularly in the largest companies, and that this represents a very exciting opportunity.”
Positions Innovator As A Low Code Platform
Whatever the reasons for the transformation are, Roque Martin’s mission—based on his proven experience—is to penetrate new markets, drive profitable growth and scale globally.
What this means for Aras remains to be seen. In recent years, Aras has increasingly positioned itself as a supplier of a low-code platform to provide “open, low-code technology that enables fast delivery of flexible, upgradeable solutions for the design, manufacture and maintenance of complex products.”
This is not a bad idea, and is a bit reminiscent of how market-leading PLM developer Siemens Digital Industries markets itself. Since the purchase of the low-code platform Mendix, Siemens has directed the spotlight toward the capabilities that characterize low-code, and points to the solution as a glue that holds together the entire product realization loop.
The “low-code” epithet can be perceived as a simple solution that does not handle complexity, when in fact it is just the opposite. The complexity of low-code is below the surface and anyone who wants to use the software for its primary purpose—for example, to build customized apps—does not need to code in the programming. Instead, the software does this.
The user only needs to “drag and drop” and can build a dashboard in a custom appwhich provides current status reports, access to 3D models, BOMs, simulation sessions, OT data (Operational Technology) and other data from all the software and machines which are part of a company’s configuration of the production apparatus. The dashboard can also be provided with measures related to various alerts and things that need to be fixed.
And as I said, all this is possible without the need for a lot of coding—hence the term “low code.”
Fantastic Results and New Challenges
Finally, Peter Schroer says that he and his team have achieved fantastically good results in terms of the capabilities that today characterize Aras’ PLM platform, Innovator. This is a definitively true statement. Schroer’s entrepreneurship has resulted in a company that the analyst CIMdata regards as a “mind share leader” in PLM.
“I am extremely proud of the results our team has achieved for our customers, and I look forward to continued innovation when we welcome Roque Martin to Aras,” says Schroer, pointing to how Martin’s “vast experience working with the largest corporate customers and most complex applications makes him ideal for driving Aras’ future growth, scalability and industry leadership.”
According to the press material, Schroer will continue to actively engage in the company through his role on Aras’ board, but his focus will shift from day-to-day operational work to implementation of corporate strategy and growth planning.
On the board, Schroer is joined by former Siemens PLM chief, Tony Affuso.
“Peter Schroer and the Aras team have built a fantastic company that delivers unsurpassed value to customers by enabling smoother digitization than previously possible,” commented Martin. “As we now continue to enter the market with our open low-code platform, I look forward to working with the Aras community to build on this momentum as we change the way the world manufactures products.”
There are a number of exciting names on the Aras customer list: Airbus, Audi, Denso, Honda, Kawasaki, Microsoft, Mitsubishi and Nissan, to mention a few. They all use the platform to handle complex changes and traceability.
It can, of course, simply be the case that Peter Schroer, after many years of handling the day-to-day management, is simply done with this side of the business and wants to pursue new challenges.
