CEO Spotlight features Aras, PTC and Siemens at PLM Road Map & PDT North America 2022.
Many articles quoting CEOs tend to start with a recitation of vexing problems and end on a hopeful note—that they are addressing these issues effectively. This article is the reverse of that due to the resurgence of business that PLM solution providers see in the wake of the COVID-19 pandemic.
I recently moderated a session at CIMdata’s PLM Road Map & PDT North America 2022 conference featuring the CEOs of Aras, PTC and Siemens Digital Industries Software. This CEO Spotlight opened with questions about PLM’s place in the expanding organizational architectures and end-to-end connectivity seen in today’s businesses.
“Our growth rates are great,” said Jim Heppelmann, president and CEO of PTC. “I never thought I’d see the day when Windchill has growth rates in the mid-teens and Arena has growth in the mid-twenties,” adding that even stronger growth is forecast. Historically, Windchill has focused on on-premises PLM and Arena on Cloud-delivered PLM. “PLM has never been more exciting than now,” Heppelmann added, “more so than it has been for a long, long time. These are the good old days…”
Roque Martin, CEO of Aras, noted that Aras’ “compound annual growth rate (CAGR) has been north of 35 percent for the past seven years. New users sticking with us,” he added, “at a rate north of 95 percent.” Martin succeeded Aras’ founder Peter Schroer in late 2021; prior to that, Martin was with PTC.
In complete agreement was the third Spotlight participant, Tony Hemmelgarn, president and CEO of Siemens Digital Industries Software (Siemens). “When people tell me this industry is maturing, I just laugh at them. But of course, there is always more to do.”
In boardrooms, PLM is at last gaining parity with ERP. The participating CEOs listed several ways PLM, often in the broader form of “lifecycle management,” is gaining mindshare with C-level leadership. Similarly, product development and engineering are gaining mindshare, a form of parity, with finance and IT.
Hemmelgarn of Siemens observed that years ago, the CIO of a large manufacturing company told him that “PLM was not in the boardroom like ERP.” He added that this is no longer true, noting that the many impacts of the COVID-19 pandemic have helped bring PLM into the boardroom. “It is up to us to make sure that lifecycle management is in the boardroom.”
Heppelmann of PTC noted that today PLM often has more impact inside companies than ERP does. (ERP, or Enterprise Resource Planning, is typically the financial solution that runs the business side of a company.) PLM “is no longer regarded as just a new form of engineering data management or product data management,” Heppelmann continued, “PLM has much more to offer than ERP in running the business.” Even in the boardroom, PLM is seen as “the anchor store in the customer’s digital transformation plans.”
Moreover, Heppelmann added, the many new technologies and techniques in product development “…give us entirely new ways of looking at PLM.” All three CEOs cited new ways that the boardroom, a.k.a. the C-suite leadership, is looking at PLM.
The difference between PLM and ERP is worth noting here. PLM, or more broadly, “lifecycle management,” develops assets for sustainability, including innovation, profitability and competitiveness, while ERP and its many ways of managing business transactions holds down costs and helps avoid awkward surprises such as part outages. I observed that a business can be managed more effectively with PLM than with ERP, and the others concurred.
The pace with which PLM solutions and platforms are moving to the Cloud is accelerating as the Cloud increasingly gains preference over on-premises enablement; this simplifies PLM for developers, users and tech support. PLM has lagged in transitioning to the Cloud even though providers of systems, tools and applications that have made the jump as well as seeing sales and revenue accelerate in their new Software as a Service (SaaS) business models.
SaaS and the Cloud do help make integration of systems easier, said Heppelmann of PTC, “but this all starts with the attitude of the developers and users toward their tools.” Effective SaaS business models “won’t just happen.” PLM has lagged other solutions in getting into the Cloud, with SaaS PLM still in single-digit percentage growth. He said that for SaaS business applications across all industries, growth is 15 percent “…but on-premises growth is 0 percent for that same group.”
The CEOs agreed that putting solutions and data in the Cloud has to start with a new understanding of PLM’s purpose—a top-to-bottom rethink.
PLM is increasingly recognized as crucial to advancing interoperability between all those systems, tools and applications, in the sustainability of supply chains, and in a new determination to help customers build and support products rather than just manage data.
“PLM and supply chain are coming together,” said Hemmelgarn, the Siemens CEO. “95 percent of the sustainability issues are in the supply chain, and PLM will have a major impact on sustainability. To enable users to build any product anywhere in the world at any time,” he added. At the end of 2021, Siemens acquired Supplyframe, based in Pasadena, CA, for about US$700 million.
I asked the CEOs what “openness” and “interoperability” mean in the sustainability of PLM environments as they rethink business and product development strategies. I also asked them which two or three things solution providers should increasingly focus on.
“I wish we could keep it to just two or three,” said Martin, the Aras CEO. After a pause, he said, “The reality is there are so many things that companies are challenged with every day, and it’s important that we don’t try to predict or outsmart, but let the world happen. We’re focused on making sure we enable our customers to keep pace with change and take advantage of advancements as they become available.”
Martin cited the Airbus “greenhouse” approach using Aras to rapidly develop new applications that coexist with other systems Airbus uses — “eight years and 30 projects later, Airbus has continued to Aras in this way,” Martin noted. “We are focusing on making sure that our customers and users are prepared to take advantage of changes, rather than predicting which one will come to bear when.”
“New Technologies and ‘Forcing Factors’”
“Working with the digital thread, a concept I really like, that coordinates everything as in configuration management,” said Heppelmann of PTC. “End-to-end connectivity,” he added, “is like the information brain and spinal cord with many appendages that need to be coordinated
with systems of records, the interoperable collections of information-rich data formatted specifically for products, customers, employees and so on.”
“Expanding the architectures of information,” Heppelmann said, “means bringing IT and OT together, which is not unlike bringing electronic design and mechanical design together.”
“Interoperability is [also] critical for PLM,” he continued. “Without it, PLM can’t work and can’t move” higher in the enterprise. “For all the tools and systems used by our customers to be interoperable, we need to find a heterogeneous architecture.” Because interoperable means different things to every solution developer, “it isn’t practical to homogenize before we can optimize.”
Hemmelgarn of Siemens added that, “every product and process also has a standing architecture that gets more and more complex” over time as features are added. Standing architectures are fundamental product and process information constructs that are on par with systems of record.
The CEOs agreed that openness and interoperability enable the continuous transformation that is essential to competitiveness and sustainability. Continuous transformation is central to what we do and has been since day one,” Martin said. “Our APIs (application programmable interfaces) have been the same for the entire history of Aras. We took it a step further with our recent investment in xPLM, which provides the global market with open, vendor-independent connectivity solutions. xPLM Solution GmbH is based in Dresden, Germany.
External pressures more or less unique to public companies have raised awareness within PTC of PLM’s potentially huge role in environmental sustainability, “finding ways to help our customers shrink their climate footprints,” Heppelmann said. “Our climate footprint is tiny—building emissions and airplane tickets—but the footprints of many of our industrial companies are massive and ugly in comparison. Reducing emissions has to start way, way upstream” in the development of products and operations. Heppelmann added, “PLM vendors have a big role to play in helping help our customers predict, understand, circumvent, optimize, produce and service in a more sustainable way.”
Heppelmann also noted a PTC push—joining agile product development to support customers’ vertical PLM integration and match the many different forms and styles of product development. He contrasted the rapid “churn” of footwear and sportswear products with their four-month product cycles and speed-to-market needs with Volvo, which uses the same engine designs across all its motorized products. He pointed out that each of these platform strategies “requires a slightly different PLM approach.”
Closing Thoughts
“Our mission is to transform the way you build new products,” said Martin of Aras, a theme that Hemmelgarn and Heppelmann reiterated. “We want to ensure that you can continue to innovate, grow and evolve with your PLM solution,” Martin continued, “so it doesn’t hold you back, and you can continue developing the products we depend on every day.”
Less obvious was a terminology shift to “helping build products” instead of “helping to develop” them. This reflects how PLM encompasses the supply chain and its relationship to sustainability, as well as PLM’s place in the expanding organizational architectures and the vital role of end-to-end connectivity.
Or, as Heppelmann at PTC sees it, “Customers don’t just want their data managed. They want their problems solved!”
Addressing the attendees at the end of PLM Road Map’s first day, I summarized, “We’re not just ‘product lifecycle management’ anymore. PLM has moved above and beyond product development to a bigger place. Now it’s ‘lifecycle management,’ not just EDM or PDM or whatever they call it. Lifecycle management is no longer just about coming up with new stuff. We’re seeing more excitement and passion in our customers, and I think this is why.”
Maybe PLM’s new name should be “Enterprise Lifecycle Management,” as suggested by PLM veteran Roger Hobley, technology development manager, Maritime Services, BAE Systems Inc., Canada, in his presentation earlier that day.
The next CEO Spotlight will take place at PLM Road Map & PDT EMEA 2022, in Gothenburg, Sweden, in October.
