A few days ago Jim Brown at Tech-Clarity had posted on “the impact of the economy on the engineering software industry?”… This topic is a bit different than the implications for end user customer companies. The emphasis is on the engineering software products and associated PLM vendors.

The most interesting response on the thread came from Bob McCarthy, formerly of IBM’s Software Group for Industrial Sector in the Americas, who said:

I've worked directly with the sales and product development groups at all of teh large PLM vendors, and was a member of the offering team that was putting together IBM's integration offerings in Industrial Sector. Some observations...

1. The PLM software sector and manufacturing software in general is at an inflection point. The business model for new product development relies on external business partners to provide product innovation and perform the design tasks for the OEM's. The current generation of PLM product create obstacles to collaboration and are making NPDI more expensive and error prone than the OEM's and suppliers can tolerate. The 787 program is an example of this.

2. The current situation of tool many PLM tools that can't exchange data is impacting the business. Customers are eager to embrace another solution that allows them to quickly set up new product development programs and manage external suppliers. The marketplace is ready for a new, non-CAD centric software approach that provides global visibility to metrics on cost, quality and cycle time.

3. This time, the next generation of PLM software will come out of China, will be delivered over the Internet as SAAS, and will replace the heavyweight software models used by SAP, Dassault, PTC and Siemens. The key constraint is the capacity to precisely protect intellectual property.

His first observation, the fact that the current PLM technologies are getting in the way of secure inter-organizational collaboration, is not a surprise to anyone at a company that has an existing major PLM system. The second observation makes sense to me as well, that the marketplace is hungry for a new, non-CAD centric solution that includes PLM business intelligence (aka Product Intelligence). This is what Aras represents and why we are bullish on the future.

The third point, however, I have to question. Not exactly sure where the next-gen PLM solution will emerge from (personally would argue it’s already here today in Andover, USA). The light-weight Internet architecture is clearly the way of the future and WILL replace the complex ‘heavyweight’ PLM systems. That it can be deployed securely on the World Wide Web, laid down quickly on a private network, or split between app server in the Cloud and vault on-site is what companies want and need. That’s what Aras is… that’s how Aras can be deployed (any one of those 3 ways). The idea that it’ll be SaaS or nothing is to me a red herring.

Now, related to a SaaS PLM system out of China where your design files are on some server in Shanghai… I’ll save that one for another post.

What’s your take? Is there a ‘sea change’ coming in PLM software? Or will your company forever be stuck with yester-year tools that weight you down and lock you in?

Here’s the Innovator’s Dilemma-style graphic (from Wikipedia) that demonstrates the disruption concept of the next generation PLM technology.