Open Source |

Advantages & Benefits

Economic Advantages & Financial Benefits of Enterprise Open Source in PLM

Over the past 10 to 15 years the use of open source software in global corporations has increased dramatically. Today, led by IBM, Red Hat, Oracle and even Microsoft, as well as engineering software providers such as Aras and OpenCFD, the software industry is engaging in open source to create high quality software solutions for a variety of purposes.

As enterprise open source momentum continues to increase in PLM, it is important to understand how the format works, how it is different from conventional proprietary licensed PLM offerings and what the business benefits and technical advantages are of this approach.

Aras's PLM solutions are freely available for no charge with unlimited user access (no user license costs and no module fees). Companies can download, install, customize and use the Aras PLM solutions forever without any financial obligation to Aras.

Aras utilizes a Red Hat (NYSE: RHT) business model making money by selling optional subscription packages, consulting services and training. The Aras subscription packages are the equivalent of enterprise software maintenance, albeit, with a number of additional benefits unavailable in traditional maintenance such as no charge for Upgrade Services including solution customizations, free training, discounts on consulting and more.

From a financial perspective, Aras operates an annuity-based business that drives scalable, recurring revenue. Aras is a high growth business structured for profitability and cash flow positive operations. The enterprise open source format that the company uses is designed to provide a series of economic benefits to customers.

Customer's Business Benefits:

  • Eliminates PLM License Expenses - Removes the up-front capital expense for PLM licenses and the incremental license costs associated with roll-out.
  • Improves Time-to-Value - The elimination of the sizable initial expenditure on PLM licenses means that the time to positive payback for the PLM solution is much shorter.
  • Reduces Project Risk - Because the customer no longer has a significant up-front expense the financial risk is reduced and the user and provider are both economically motivated to succeed.
  • Creates Balanced Relationship - With no licenses to sell and subscription revenue dependent on successful, continued use of the software better alignment is achieved in the relationship.
  • Validate Before Committing - Instead of spending money to buy PLM licenses before knowing if the solution will work for a specific process or scenario, the company can verify fitness for use before making an organizational commitment.
  • Fixed Cost Predictability - The cost of an optional subscription is fixed over the term, providing budget certainty and ease of budget planning.
  • Greater Control & Flexibility - Company has complete freedom to use, customize, integrate and extend the PLM solutions and can share customizations internally or with other companies such as suppliers and outsourced partners.
  • Cuts Total Cost of Ownership - Eliminating PLM license fees can reduce TCO from 15-38%. The initial start-up costs are decreased and the expansion costs are reduced, substantially for larger scale deployments.
  • Improves Return On Investment (ROI) - Reduced TCO means that a positive ROI is more quickly and easily attained; the Net Present Value (NPV) of the project is lower and an advantageous Internal Rate of Return (IRR) is more achievable.

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