Episode 6: Cloud PLM - Not out of Reach

A podcast for engineers, designers, and innovators.

Gavin Quinlan: Welcome to "The Connected Engineer," a podcast for engineers, designers, and innovators. I'm your host, Gavin Quinlan, and each week I'll invite experts to join us and discuss the product development challenges we're facing today as well as the trends of tomorrow. The topic of today's episode is product life cycle management, or PLM, in the cloud. Today it's seems like almost everything we interact with is on the cloud. From the social networks we're engaged in to the music services we listened to one our phones or computers to ensure in will never lose an embarrassing vacation photo. And on the work side, our email and our file storage. The cloud is almost inescapable, and truth be told, why would we want to escape it given all it does for us? So it only makes sense that PLM is also making the move to the cloud. Today we're joined by Stan Przybylinski, VP of research from CIMdata, a leader in PLM research, consulting, and education. Hello, Stan. Can I ask you to introduce yourself, tell us a little bit of your background, and tell us a little bit more about CIMdata please?

Stan Przybylinski: Sure, Gavin. Yeah, CIMdata's been around since the early '80s. We're a strategic management consulting and market research firm that focuses on PLM. We have quite a broad definition. We include all the things that PTC and your competitors do as well as a number of other areas that, frankly, some of the people don't do. But we work with companies like PTC as well as with industrial companies that need help on their PLM strategy and how to go forward. I've been in this position with CIMdata as vice president of research for about a little or six-and-a-half years now. My main responsibilities are about our global qualitative and quantitative research that we do every year. Prior to CIMdata, I spent 7 years at one of your competitors as manager of market and competitive intelligence, and a previous stint as consultant with CIMdata, and then 20 years prior to that mostly in aerospace and defense, usually around software and R&D.

Gavin: So a deep experience about the area of PLM there, Stan. So let's start with clearing of some of the terminology around PLM, the cloud, for our audience and get it to act as a basis for our chat. Often terms like cloud and SaaS are used interchangeably but don't mean the same thing. In explaining what PLM and the cloud is and, if possible, maybe we can go through a few phrases and just sort of get us simple explanation for each.

Stan: Well, the core of the back-end of the phrase is as a service, and there's different layers. Many people have defined these things. The U.S. National Institute of Standards and Technology, NIST, has a definition that we like to use because it's fairly straightforward. So the lowest level is infrastructure as a service. Now, most of the PLM providers probably wouldn't be considered down there because that's really giving the bare hardware and letting people put everything on top. Many of them play in the next level, platform as a service. So if you're taking a piece of your software and running it out on platform like AWS, you would fit in that model. And then software as a service is sort of, on top of that, we are actually providing access to a particular set of software as a service. You're not delivering it on-premise, which is where many software solutions sit today. You're actually providing access to it usually through a web browser or some other UI.

Gavin: Okay, so you mentioned on-premise there, let's clear that one up. What does that mean?

Stan: Well, on-premise, I mean it's the stuff running on either your machine or the machines around your servers that your company has. It's the locally installed software that is prevalent in a lot of PLM disciplines the way CIMdata defines it.

Gavin: Okay, and two other phrases that keep popping up when I'm, you know, reading about PLM and the cloud today is single versus multi-tenant. Now it's probably bit of an inside baseball type commentary, but maybe again, you can just help the audience understand what those mean.

Stan: Okay, well, single tenant means that you have a server dedicated...you know, you're the only thing running on that server. Multi-tenant is the ability of a piece of software...you have to think about it more as a database where you can have multiple segments of the same database as different tenants for industrial company A, industrial company B, industrial company C. So the data's segregated, but they're running on the same database, and more importantly, they're providing the same type of functionality to all of those users. That's sort of the key thing about the software as a service level is you're getting a consistent product, for the most part, out of it.

Gavin: Okay, I think that's very helpful for the audience as a starter. Would I be correct in saying that the current state of most organizations, when it comes to PLM, that they're still on premise?

Stan: Yes. Yeah, no, the data management part of this goes back to the '80s where you were doing it for teams or larger engineering groups, and then the solutions now are for global enterprises, but it's still the same basic concept. But the core usually runs on premise and it's very often customized by the companies as part of that on-premise installation. And the other big thing is integration, from that to the other enterprise systems and data sources, as well as out to their customers and the supply chains if they decide to go that route.

Gavin: Understood. So, well, what is driving organizations like to consider...or those who have actually made the move to cloud, what are like a list of things that are driving those organizations to do that?

Stan: Well, actually, one of the last things that I just talked about, having more complex value chains and costumer relationships, it's much easier to do that stuff if it's a cloud-based solution than it is to worry about your own firewalls. One of the big things is lower start up costs. I've been involved in this for over 20 years now, and usually if someone wants to get started it's like, "Okay, give me a half million, give me a million," and now...that's actually one of the really interesting things about this segment. You can get started on somebody's credit card, right? "Hey, I wanna do something. I wanna buy four seats for a couple of months," and you can do it on a credit card, your own or a company one. So that's the interesting dynamic for me, is it changed the decision making level where people can get started. But the same thing applies in terms of lower startup costs. You can ramp as slow or fast as you want.

Gavin: And I guess then lower start up cost leads to some level of faster time-to-value for this test.

Stan: Yes. Yeah, well, if you stay focused, right? You have to have your eyes on the prize there in terms of the processes and the data and the collaboration that you wanna enable. But yeah, you know, you should be able to get there a lot faster because the technical stuff doesn't really get in the way.

Gavin: Right. And then again, that gives you the flexibility to scale up or scale down, if things are going well, or things are going badly.

Stan: Correct, correct. And in a lot of types of businesses, you really need that because you have very flexible projects, like project-based businesses in particular, you have an influx of talent to work on different things. To be able to support them quickly without calling IT, without all of those issues, is a really big benefit for a lot of types of companies.

Gavin: Right. So again, I guess that does raise a good question. How does IT themselves then play into this cloud thing, does just their role change in how they support the platform?

Stan: It varies company by company because some companies, IT does manage their PLM implementation. A lot of companies have engineering IT that does stuff in collaboration for better or worse with corporate. You know, there's a lot of different organizational arrangements, and this can take some of the politics out of all that. I've always said that the PLM is not product, it's politics, and IT politics is a big part of cloud and some people believe why it's made it be slower because IT, they built those budgets and they resist getting those budgets decreased because you're not gonna run a server anymore, you're just gonna buy licenses to something that runs somewhere else.

Gavin: Right. I mean I guess that was the most obvious one is, again, like you said, so the start up cost will be cheaper, but from an ongoing perspective you don't need to buy a lot of tin.

Stan: Yeah, you have to buy a lot of hardware that's gonna depreciate as soon as you march it in the door. There's lot of things, and if it's done right, you don't have to have a lot of installs on local machines. That a huge expense that can be avoided.

Gavin: Yeah, and rollout costs and time.

Stan: Rollout costs, migration costs, right? If you're all working off the same basic set of code, migrating from version to version, most applications, now, you get migrated all the time. I don't know if you use Facebook or other things like that, you go on there from one minute to the next, it seems, and buttons pop up and they're putting different things in UI. So it should be fairly easy in SaaS models to be able to do that, and that's a big headache for people on-premise.

Gavin: So you know, it's my understanding CIMdata's done quite a bit of, you know, research into software vendors and, I guess, their plans on what they see in terms of how many customers or what percentage of customers are either already made the move or are strongly considering in making the move. What could you share with us around that?

Stan: Yeah, we were actually kicked off, a couple months ago, a project with PTC and many of their competitors in the PLM space looking at cloud adoption. My premise was if you look at the enterprise system's adoption, things like ERP, CRM, that some people believe it's as high as 20% or 25% of the enterprise market. And PLM, if you add everything up, it's nowhere close to that level of percentage, so what's the difference? So we wanted to do some research looking at adopting organizations, are they already using cloud? So I'm looking at some data here of the people, we have several hundred responses now, over 35% of the people are using cloud-based solutions. The main one's Salesforce. So people are using it, but not as much PLM so far and not as fast. But there are a lot of people out there, you know, because there are a lot providers. It just hasn't reached critical mass yet.

Gavin: Was there anything in the research that talked about, you know, future years of how that was gonna transition stuff?

Stan: Yeah, we actually do an event around the world, the PLM Market & Industry Forum, where we have leading people from provider organizations, so PTC and their competitors, systems integrators. And we do polls of those people who have good visibility into the sales and issues that their customers are facing and we ask them, you know, what percentage your customers are either already using it or considering it? And almost 45% are at least thinking about it in a significant way. But then we asked the same question, we said, "All right, so if there's that many people that are hesitant now, what it's gonna look like three years from now?" And then there's only about 18% that are still putting their toe in the water. Everybody else is either strongly going or could be there already, so people are getting ready to go, I think.

Gavin: Good. So let me key off that word that you mentioned there, hesitation. From a personal perspective of, you know, working with engineering organizations and, you know, admittedly, mostly on the small side, I was always very conscious of their sensitivity to put their intellectual property outside of the four walls of business. Now, we used to constantly have discussion saying it's probably safer outside than it is inside, but what's the thinking about that?

Stan: Well, I mean security is a big issue. Unfortunately, whenever there is a public security event, cloud-based products, whether they have anything to do with it or not, take a tiny step backwards. But the thing I always tell people is that the security that you're gonna get in those solutions is way better because there's multiple levels before the software, and everybody is working on security. Everybody is spending more that you can possibly spend, and they don't have machines on their desk with USB ports that you can readily plug into to take any data, and they're not emailing files. So security is big issue, but if people really think about it, they really have to admit that it's not that big of an issue. There are some technical issues, but nothing that people haven't overcome.

Gavin: I guess one the other aspect of this is I think people often think that a cloud solution is delivered in one size fits all type of approach. You know, again, take your social network interface, everybody gets the same one. Is that something that, you know, again, our listeners should be thinking is not the case or is that the situation?

Stan: Well, now, there's a difference between tailoring and customization. Even the things that you get, like Facebook, you can tailor them, you can cut certain people out, you can control a certain level of what you see, and that's true even with a single instance or a multi-tenant instance of software as a service. So you can make it look how you want. You can make some features more readily available, some others not, depending on the user. You can still do a lot of that, but that's sort of circumscribed by the software provider. The software provider has to plan that ability for you to do that in there as opposed to now with on-premise, depending on how much money you have, you can hire a systems integrator and get them to do just about whatever you want.

And that's a good thing and a really bad thing for PLM, in general, because it creates instances and implementations that can't move. They're sort of stuck. It's the "if the ain't broke, don't fix it" thing. And people, it's hard for them to get off the dime because they actually have something running. Making that commitment is a commitment. It's a decision that has to be proactively made and it seems like people are coming over mainly because of other business pressures, right? They have much more flexible business arrangement they need to be in, that need to be supported more quickly. Cloud does that really, really well. So it looks like it's getting ready to move because the hardcore technical limitations have been overcome by different providers in terms of size of files and things like that. That's not as big an issue as it used to be.

Gavin: Exactly, as the internet has improved and bandwidth becomes more available, things like that. So again, moving, let say, to the credit side of the balance sheet then, so moving away from the hesitations. Like the benefits to your overall business, which I think we covered some of in, you know, understanding the drivers behind this. What are the distinct benefits that, you know, again, your clients and customers who were considering this move are getting to take advantage of?

Stan: Well, there used to be talk in the strategy literature back in the '80s and '90s about focusing on your core competencies, and unfortunately, a lot of companies are in the IT business and it's really not core to what most of them do. So using this approach gets you out of the IT business more so that you might otherwise be, and depending on the level, you're still gonna have some level of support but it's gonna be much more minor than running your own servers and installing your own on-premise software, both on those servers as well as on client machines around the building. So it's gonna get you out of that business. It's gonna help people, we talked about this a little bit, be more flexible. It used to be, when I first started doing this back, you know, almost 20 years ago, people would do these implementations, they'd buy every piece of software they would ever need for the whole implementation right upfront because they'd get a better deal.

People stopped doing that and they want more flexibility, and this is the ultimately flexible model. You can take 10 seats. You can take 20 seats. In talking to one of PTC's customers, they were talking about the ability to quickly ramp up instances to try things. "Hey, we have this project team. We might wanna extend our implementation to cover this aspect of project management or this aspect of collaboration. Give me an instance. Give me 20 licenses for 3 months because we're gonna have these people go off and do it." Doing that on-premise was a huge headache. Now, it's just very easy to be able to do that, stand it up, use it for what you want, learn what you need to learn, and then shut it off if that's what you decide you need to do.

Gavin: Yeah, I think that makes a lot of sense. And I guess then, like we said, that ability to ramp up quickly should bring more, again, distinct time-to-value, I guess, or time-to-market benefits.

Stan: Yeah, you're still gonna have the same implementation though. At CIMdata we always talk about it being people, process, and technology. And this takes the technology, for a lot of people, out of the problem area. You're still gonna have to have your processes right. You're still gonna have to work with your people, and that's a role for PTC and its channel partners to continue because you're still gonna need that if you're gonna go forward well. We talk about Facebook, and Facebook and PLM are not the same thing. They're both software as a service, they are pieces of software, but you know, you're solving much more difficult problems with PLM-related software.

Gavin: Yeah, I guess it depends on your problems, maybe. So in terms of the day-to-day individual...so again, business seems to be very clear: get out of the IT business, ramp up quickly, get going faster. You know, all those really nice tangible benefits that the business gets. What about the individual members of the product development team themselves? I hate to use this word, but what about our average listener, maybe, to the podcast? What would they personally get out of a cloud deployment?

Stan: Well, one of the big things is getting access to things when they need them. In a non-premise environment it can be very difficult to give people new functionality, particularly on a temporary basis. Right, it used to be, "Oh, I wanna use that. I need a non-premise perpetual license," and do that for year, and you know, pay maintenance for certain period of time. Now, it's like, "Hey, I wanna use this particular cam software," or, "I wanna try this particular augmented reality software," or something else, much easier. And again, it goes back to the decision making process. It depends on the companies, right? But it can be much easier, much lower-level decision to be able to do that stuff. And any time away from trying to do IT is gonna give the engineers more time to innovate. The way the systems have been designed...the big problems engineers always have, "Oh, I hate having to manage my data. It's just a pain. It breaks my flow." And you know, they're very creative, so you don't wanna annoy them too much.

Gavin: Yeah, until they get the wrong drawing out.

Stan: That's right. Yeah, but that's sort of the problem, is people don't wanna do it but, you know, you end up pulling the wrong drawing and you, you know, spent a bunch of hours, you don't wanna do that. So the systems have been designed better, and cloud puts it at their fingertips more easily to be able to manage that stuff more effectively and hopefully make their lives much simpler. The other big thing is on being able to get access to new versions of the software you use all the time. You know, putting up a new version of on-premise, people have roadmaps, usually they're two or three releases behind, right? And now stuff comes out, and we know how software companies work, right? They want people to run it on-premise, they want people be on newer releases, so they only put the new stuff on the newer releases. Well, you don't have that here, right? You can get access to it, it can happen fairly quickly when it comes out.

Gavin: And again, from my background, obviously we used to deliver PLM initially to the engineering team. You know, they were the people who were struggling the most with making sure the versions were right and the right things are being sent out to suppliers, etc. But one of the values we did, you know, try to explain to them was the fact that their data could be used so much more efficiently in the rest of the business, and I guess a cloud deployment would also help, you know, ramp up outside of engineering too.

Stan: Yeah, oh sure. No, people have very dynamic value chains now between their suppliers and their customers, and particularly now with smart connected products. That's one of the great things about all of this stuff is that...I always talk about products used to be fire-and-forget, right? You would design a product. It would be targeted toward a particular consumer with a particular set of functionality. You'd send it out there, and yeah, you would get some information back on returns or warranty claims or complaints, but now, you actually know how those products are being used. And the cloud helps mediate a lot of that communication and data management and all of that stuff much more easily, and it allows people to adopt this stuff, again, by the sip. "Hey, I have this stuff, now I'm ready for some IoT," or, "I'm ready for some other types of functionality," or maybe, "I have field service." "I move from selling just a product they care more about spares," or maybe, "I wanna try some other things." And you know, it's much easier to expand your vision of your company and of what you offer when the stuff is cloud-based.

Gavin: Yeah, inherit to the workflow of what they're doing anyway. Yeah, and like you said, I think, again, from personal experience, you know, being able to get access to upgrades or the newer releases of a product, that can typically be pretty helpful too. Our audience has been sort of spoiled in the previous episodes with, you know, some of our customers, some of our peers who've been present, sharing the successes and how they've made better use of, you know, the technology that's available. Have you an example of a company that has made the move, or you know, even if you wanna, you know, protect the name, maybe a sense of what a company, what wins they've had, maybe something more tangible for our audience?

Stan: Yeah, I actually interviewed a company, they won't allow me to identify them by name, but they're a large North American CPG company that have been using cloud-based solutions form PTC for a while now. They made a major expansion of their implementation more recently, but they've had your cloud-based solutions for some time. And they see it as a way to get more rapid time-to-value, have a much easier phased implementation for the several products from PTC that they are implementing as part of this. So they've seen significant benefits with their users in terms of helping people to get more quickly engaged. I don't have any quantitative numbers that I can give you, though.

Gavin: I understand. So look, you've given our listeners a lot to think about today whether they're considering implementing, I think PLM, you know, at a core level or perhaps redeploying on the cloud, Stan. Am I correct in saying that CIMdata provides dedicated training programs on best practices for PLM they can [crosstalk]?

Stan: Yeah, we have a PLM certificate program that we do. Most of our events are around best practices. We have an event coming up called the PLM Road Map event. It's pretty much where more experienced people come in and talk about the things that they're doing around PLM technology and processes, and it's a really good way for people to get engaged. We do have the certificate programs, as I mentioned. And that's actually the type of work we do with industrial companies, is really help them get up to speed, so we do workshops and things of that nature too.

Gavin: That's all for this episode of "The Connected Engineer." A big "thank you" to Stan for joining us today and providing us a great overview and a lot of useful information about PLM and the cloud. I believe it's clear to see, as in all the examples of our daily lives where the cloud now exists and is relied upon, that PLM in the cloud is also an area that will start to take hold and could deliver significant advantages over non-premise setup. Thanks again for listening. Make sure to subscribe to our podcast, and we look forward to welcoming you back for our next episode.


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