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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.

Cloud computing makes these goals achievable, while at the same time, cloud operations improve efficiency, reduce risk and decrease costs. The future impact of cloud-based platforms however is even more significant. Cloud architectures will deliver the power to transform processes by securely connecting enterprise systems to aggregate data sets, online services and analytics for new, more effective ways of conducting business.

As companies around the world increasingly understand the business benefits of open source in addition to the technical advantages, the adoption of open source solutions has expanded significantly. A survey conducted by Accenture in 2010 of 300 large organizations in both the private and public sectors found that 50% of respondents are "fully committed to open source" in their business, that 69% of organizations anticipate increased investment in open source software, and 38% expecting to migrate mission-critical workloads to open source in the next 12 months.

A research note by Gartner emphasized that, "many open-source technologies are mature, stable and well supported. They provide significant opportunities for vendors and users to lower their total cost of ownership and increase returns on investment. Ignoring this will put companies at a serious competitive disadvantage."

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.

Enterprise Open Source PLM

The leading provider of enterprise open source PLM solutions worldwide, Aras is a for-profit, American corporation with a global presence. Aras is comprised of executives and technologists from the other major PLM/PDM companies including Agile/Oracle, Dassault Systèmes, PTC and Siemens PLM Software, as well as, Computer Vision, Eigner+Partner, MatrixOne, Workgroup Technology and others. Aras personnel typically have 10+ years in PLM/PDM.

ROI & Time-to-Value Comparison
Traditional PLM Licensing & Maintenance vs. Aras Enterprise Subscription
Aras Enterprise Application Framework

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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