The battle for a place on the podium in the PLM  “olympics” is fierce, but usually among the same competitors. After 15 years with the same few dominant players, aren’t there any new ones that can seriously threaten Dassault Systèmes, Autodesk, Siemens PLM, IBM, PTC, Oracle and SAP PLM?

Is this competitive playing field to remain constant for the foreseeable future? Or could the present age of disruptive technology and platform development change all that?

A simple answer to these questions would be a plain, “No”. The PLM market is characterized only by very big or very small companies. The area in between is virtually non-existent. There are challengers who are working hard to take the field, but so far the progress is slow.

According to statistics from CIMdata, there are no competitors which, on a short-term basis, can threaten the longstanding hegemony of big players from an overall PLM suite perspective.

However, the effects of the digitization trend, new technologies and the development of Product Innovation Platforms (PIP)—which is global and covers all industry sectors—can change things faster than expected. Platforms like the Cloud and technologies such as IoT and M2M, combined with quickly changing consumer patterns pointing toward the product-as-a-service direction, have the power to induce transformation.

Aras PLM, with their Innovator software, is one of several PLM vendors aiming to earn a place in this industry segment. Can they battle their way into this sparsely  “populated” area and perhaps even reach the podium?

Aras has enjoyed a number of successes lately; the Airbus order of 30,000 seats last year is a good example, as is the Microsoft deal. But the commercial impact of a basically free program can limit the potential for a revenue breakthrough.

Another potential weak spot is how a player who supplies free software can still create a good enough income to re-invest in software development for complex areas such as PLM and ERP?

CEO Peter Shroer, whom I recently met with in Stockholm, asserts that Aras’s open-source technology together with their own competent development crew, will be sufficient to take care of this critical aspect of the business. The basic idea is that users will contribute to the needed innovation; but is it enough?

And finally, how does the program perform technically against established PLM solutions like Siemens Teamcenter? I have met with Siemens PLM’s Nordics Sverker Nordlander and discussed these questions.  

To be fair, it is relevant to mention that the podium according to CIMdata  can look a little bit different than what is suggested above depending on the parameters used.

In actuality, SAP PLM is number one in the sub-segment cPDM for 2015, followed by Dassault Systemes, Siemens PLM and PTC. That is, at least when it comes to direct sales revenues.

Clearly SAP dominates the ERP arena, but what about the overall PLM market? SAP is big in this space too and has been a long-time player, but this is not without issues.

PLM competitors sometimes accuse SAP of buying their way into the space simply because customers that have deployed SAP's ERP system get PLM for "free." While the "PLM for free" aspect is debatable, some facts are not. In terms of revenues in the overall PLM market (which includes CAD, CAE, CAM, Virtual Manufacturing and etc.), SAP PLM was ranked fifth in 2015 behind Dassault Systemes, Autodesk, Siemens PLM and PTC.    

Movement Beneath the Surface

Even though the top players of PLM in terms of revenue remains pretty static year after year, there is movement ocurring underneath. Specificallay, this movement is being felt in the cPDM field.

This movement is both technical and commercial. Autodesk’s bet on the Cloud, and their growing number of Cloud PLM subscibers in terms of both PLM 360 and the newly integrated PLM capabilities in Fusion 360 (Autodesk Fusion Lifecycle) is one good example.

Another example are the aforementioned Aras PLM successes last year, including a major order from Microsoft. That announcement was topped by the 30,000 seat installation at Airbus. A third example concerns established big ERP players with less comprehensive PLM solutions that have begun to move in new directions. For instance, Oracle is building new native-cloud PLM to complement its on-premises PLM capabilities.

Furthermore, there are some newcomers to the game, of which Propel PLM may be the most interesting. This is the first cloud-based PLM offering built using the salesforce.com Software Development Kit (SDK).

Aras, Autodesk 360 and Propel PLM Push Competition Upstream

 “I see Aras, Autodesk, and Propel PLM pushing upstream as competition for the ’big three,’ while Oracle and SAP ’push down’ from a broader enterprise play,” commented Gartner’s leading PLM analyst Marc Halpern. The ”big three” he refers to are the traditional cPDM dominators: Siemens PLM (the Teamcenter suit), Dassault (Enovia), and PTC (Windchill).

Halpern continued,  “Among those, I am getting a growing number of inquiries about Autodesk's PLM 360 (Autodesk Fusion Lifecycle). It is cloud based and has a very clean user interface. It is also architected for strong collaboration with customers and suppliers.  Although Autodesk's PLM revenues are still modest compared to the ’big three,’ I expect Autodesk's Fusion Lifecycle revenues to continue growing as Autodesk's customers become increasingly interested in PLM.”

This shows big potential for growth, but what about Aras and its Innovator software? They’ve had a couple of huge commercial successes last year, and some people are even talking about a breakthrough for this solution.

CIMdata’s VP and analyst Stan Przybylinski agreed, and concluded,  “I do think Aras can rise to be a mid-range provider in terms of revenues. Our cPDM charts (below) show there is a big gap between the top five and the next grouping. Their solution provides solid value whether used as the sole data and process management solution, like at Microsoft, or in conjunction with other existing implementations, like at Airbus. Their enterprise open source model makes it easier to try, and their pricing makes it more affordable to get started than other traditional solutions.”

Gartner’s Halpern discussed the steady growth curve for the company in this context. “Although Aras revenues are still modest, I have seen significant growth in Aras since 2009,” he said adding that their business model can be an advantage.  “Aras offers a ’Freemium’ model where users can download the software for free. However, if they want ’bug fixes’ and ’updates with enhancements’, they must pay for a subscription.”

PTC Remains at Airbus, Supplemented by 30,000 Seats of Aras

One conclusion drawn from Halpern’s and Przybylinski’s statements is that money talks, so it is no surprise that Airbus´ Anders Romare, VP of engineering solutions, pointed at the  “cost” argument as one important reason for the investment of 30,000 seats of Aras Innovator.

“The unique SaaS (Software-as-a-Service) subscription business model of Aras, which eliminates up-front license costs and includes system upgrades with customizations, is also quite compelling,” Romare said.

Of course, it’s easy to see the value of low investment costs and a low TCO (Total Cost of Ownership), but ultimately the solutions must work according to high standards. With their  “heads at stake,” every IT team realizes this basic fact. In the light of this, it is reasonable that Aras, at least in Airbus’s estimation, can handle the scale and complexity of the PLM requirements of a huge global manufacturing company. 

When it comes to Airbus’ committed 30,000 seats, the Gartner analyst notes that Aras will not replace PTCs Windchill.  “It’s rather to be seen as a complement to PTC,” Haplern said, adding that,  “From a technical perspective, Aras has a very clean architecture and excellent workflow capabilities.” This means that PTC will remain as the main tool for BOM creation, with the next step being SAP as the formal solution for issuing the BOM. Aras Innovator is being used for, among other things, engineering and supply chain collaboration.

The Open Architecture with High-End Data Modeling Attracted Airbus

Notably, several different PLM platforms were evaluated by Airbus in order to reach their objective of simple and agile solution delivery. 

In the end, Aras was retained as the preferred platform based on the following parameters:

• Open architecture with high-end data modeling “on the fly,” no development involved.
• Significant coverage of the expected scope.
• Upgrade services for customizations included as part of the subscription.
• Easy integration and handling.
• Long term viability and total cost of ownership.

Out-of-the-box functional requirements included data and document management, lifecycle management, change management, project management and access rights management for security. 

IS architecture requirements included deployability, connectors, migration and data loadingand support, along with back-end and front-end IT capabilities.

“Our success with the deployment of Test Information Management for aircraft end-to-end across the structural test pyramid in multi-site operations including our extended enterprise proved the viability of Aras for complex engineering business processes,” Anders Romare commented.

Aras PLM at Microsoft: A Classic Diversity Challenge

But there are other cases outside of these industry segments where the solution has become a foundation of the PLM support. Microsoft is an excellent example of a much deeper establishment of Aras, where the solution is the very foundation of the development activities

The background is a classic one: Acquisitions requires integration, not only in terms of business IT, but also when it comes to product development related IT, such as methodology, workflow structures, organization and PLM and ERP software connected to manufacturing. 

As it turned out, Microsoft’s $7 billion acqusition of Nokia’s struggling phone business a couple years ago was no walk in the park from an PLM/PDM and related product realization process standpoint. A complicating factor was that that Microsoft’s existing development teams also represented a variety of differences in size, processes and priorities.

Altogether, it was a case of disparate product development environments containing business groups who each used their own different software solutions and typically did not share systems to operate their business functions. The vision of an efficient and agile Microsoft Phone’s operation was more of a dream than a reality. Microsoft IT had to act. 

A Tough Journey for Microsoft Phones, But OnePDM is a Success

There are no natural laws saying that such a change is simple.

These changes take time—typically 18 to 24 months—and contain many dramatic situations with a mix of setbacks and successes, where change in itself creats anxiety.

Out-of-the-box solutions are fine, but in this context they are only a marginal help. PLM at this level is a complex process. At Microsoft, it involved numerous global teams working nonstop to release new products, and spanned from envisioning products through retirement, and involved many areas of the business.

So far, Microsoft Phone’s journey has been anything but easy and the commercial future doesn’t look very bright. The market share for Microsoft’s phones is presently less than one percent, and the new releases of Windows phones have not been able to turn the deteriorating sales numbers back upwards.

In such a situation, downsizing is a given, and outsourcing product manufacturing is another possibility. A third option—if circumstances demand it—is a bet on new unified methods combined with a strong, consolidated IT-solution to streamline product development and manufacturing.

Notably, the first two measures also serve as business drivers for the third, which are PLM-related investments. PLM enables global coordination for things like design sharing, product visualization, configuration and engineering change management.

These are all important issues that PLM can address. ”The ability to handle complex product structures and engineering changes, and provide visualization of complex designs, is essential for companies in this field to deliver new products at target cost and on time,” asserted CIMdata’s Przybylinski.

These factors were relevant in the case of Microsoft generally, and from a PLM/PDM perspective, the acquisition of Nokia did not make life easier. Bad news seldom comes alone, however, and the good news centers around what Microsoft did to get itself out of this technically challenging situation.

According to a casestudy by the IT giant,  “In the case of the Nokia integration, we analyzed the state of the disparate and out-of-date PDM systems (among others Dassault Systèmes’ Matrix and SmartTeam), and  decided to migrate everyone to a new unified platform, OnePDM. In considering this, Microsoft Device teams requested we use this as an opportunity to move our hardware teams to a platform with industry-leading capabilities. Creating a centralized solution was also an important step toward a larger initiative—establishing a single product lifecycle management (PLM) platform.”

This platform was built on Aras.

The Cultural Shift at Microsoft

The push to move to a unified platform marked a cultural shift for Microsoft IT. Many existing processes across the businesses had evolved over the years, and unifying them into a single PDM process and system required significant collaboration with the product groups and the supply chain. This complex collaboration needed to be done without affecting product build and release schedules.

“The complexity required us to reconsider how we organized and engaged with others to quickly establish a robust, dynamic PDM platform. Agile development was integral to quickly prototype working software that global teams could evaluate quickly, resulting in faster, more efficient delivery of OnePDM,” Microsoft asserts in the casestudy titled  “Harnessing the Power of Agile Development” (March 2016).

“The System Will Save A Million Dollars in Its First Two Years.”

We spoke about the  “money factor” earlier in this article, and this aspect of business life is not irrelevant for Microsoft. Lower initial license cost is one thing, but there are other even more important aspects of this: how much time will it take to get the system up and running and deliver gains?

The implementation time of a PLM system varies, but typically takes 18 to 24 months for a large corporation. Swedish telecom giant Ericsson, which recently decided to change systems from Dassault’s Matrix 10/Enovia V5 to the 3DEXPERIENCE platform with Enovia V6, expected a period of 14 months before they seriously will begin to reap the benefits of its investment in the new system.

In this first phase, according to Ericsson’s CIO Johan Torstensson, the 25,000 co-workers in the R&D department will devote time to things such as the migration of legacy data, taking the old IBM mainframe system out and replacing it with the new system. During this period, no big gains in terms of productivity and effectiveness are expected.

Microsoft had a different experience.

Within six months, they had their first program release with working software. Within the year, they were able to replace the old systems and deliver additional capabilities.

Other reported benefits include:

• Reduced development and deployment times. Code builds and environment deployments were reduced from 7,200 minutes once every three weeks to 10 minutes a day.
• Improved interoperability across engineering, manufacturing and the supply chain reduced time-to-release product data from the PDM system to upstream and downstream systems.

Similar capabilities were modeled, developed, and deployed 50 percent faster than past efforts. This is increasing both agility and responsiveness to the needs of the business.

“That’s right,” commented Microsoft’s Mike Opal, senior evangelist, Global Cloud Alliances. "What’s changed in the market is the actual speed of change. It is forcing manufacturers to think differently about the pace they need to maintain to find success in this new, accelerated reality. Deploying in the cloud allows them to spin up new products quicker, integrate new lines of business quicker and deliver results in months rather than years. It is adapting to an era of accelerated change that is driving the market.”

According to Microsoft, OnePDM will save several them  “a million dollars” in its first two years of operation, mainly by eliminating the operating expenses of multiple old PDM systems. In addition, the benefits of OnePDM include:

• Adoption of global parts and driving re-use. 
• Simplified user experience capabilities when accessing the system and product data.
• Fewer business resource requirements. 
• A much more agile platform that reduces the time required to onboard new groups.

No doubt fast implementation processes are highly valued among IT leaders. In big companies with a  “normal” organizational complexity, a traditional cPDM system would take at least 14 months to implement and be ready to run. I would say that a time frame like this can be regarded as fairly successful.

“The system was up and running at Microsoft Phones after a record-fast implementation process of just over four months," Peter Schroer shared with me. 

He did not give any specifics about the value of the deal. However, according to sources at Microsoft, it has an estimated worth of between $10 and $15 million.

Finally, it’s no surprise that Aras announced its Innovator is available on the Microsoft Azure cloud platform, in connection to the deal. 

What Differentiates Aras From the Competition?

You win some, you lose some. While Aras PLM obiously did a great job at Microsoft, they did not impress that much in the Ericsson PLM battle, where they were eliminated in the early stages.

That said, Aras has made an impressive technological journey during the last five years. As I wrote in an earlier article at ENGINEERING.com, the solution covers most of the product life cycle including product development, global manufacturing, supply chain operations and quality compliance. 

Aras Innovator has modules for all the basics such as CAD files (multi-CAD), documents, engineering changes, PDM, and BOM management, as well as environmental compliance, manufacturing process planning, part traceability, new product introduction, maintenance and calibration and more.

What it doesn’t have is CAD, CAE or CAM definitions modules. It's purely about PLM, or more precisely cPDM (collaborative PDM).

So, what is it that differentiates Aras’s technology from their competitors’ technology? A couple of capabilities stand out, such as its capabilities for customization. According to CIMdata, they have even,  “redefined customization in the PLM market.”

The take-away here is that you don't have to worry about problematic upgrade loops anymore.

Generally PLM takes time and is expensive to implement. The idea of redoing the procedure when it is time to upgrade three, four or five years ’down the road´ is nothing a CEO, CIO or IT-responsible decision maker can take lightly.

Peter Schroer, Aras CEO, explained that the architecture of his solution—unlike traditional object-based systems with static data models—is built around a modeling engine coupled to a web services catalog of PLM services. The modeling engine allows dynamic creation and maintenance of business objects, which are linked as required to the appropriate web services.

"This creates a clear separation between business logic and the web services, enabling real-time, drag and drop changes to applications - no coding required, and it means our PLM can be easily upgraded without impacting previous customizations," claimed Schroer.

Clearly the ability to deploy quickly with real-time customization of predefined best practice solutions is a key market differentiator. Also, by extension, the structure provides protection for investments and ensures future adaptability.

In this context the Aras chief underscores the benefits of Open Source and the power of the community. "Thousands of community members around the world are using Aras PLM and sharing and contributing their solutions, projects, ideas and advancements every day. These contributions accelerate the advancement of our framework and solutions in ways traditional PLM providers can't achieve," said Schroer.

Approved by PLM Authority, Professor Martin Eigner

From a technological standpoint, Aras seems to have what it takes to compete, and Peter Schroer brims with confidence. "Aras is the next leader in Enterprise Product Lifecycle Management Software," he said, and specifically pointed out that they are one of only a few companies, which dared to challenge the established PLM suppliers with its open source solution.

And this was successful. Aras’ client list includes the likes of Airbus, GE, Hitachi, Honda, Kawasaki, Motorola and Xerox.

Furthermore, it is not far-fetched to assume that Peter Schroer’s recent Leadership Award for Aras’ "Outstanding Technical and Business Leadership in the Industry and Focus and Dedication to the Needs of End Users,"from the US CAD Society, boosted his confidence even more.

Schroer is on the move, and with authorities like the German professor of Kaiserslautern Tehcnical University, Martin Eigner, on his advisory board, Schroer clearly believes the sky’s the limit. The involvement of the German professor is a sign of quality that provided Aras with a lot of technological credibility.

Competing with Big League PLM players like Siemens PLM

But what about competition? Don’t big orders from globally active companies like Airbus and Microsoft send a shiver down the spine of many a good sales manager at Dassault, Siemens PLM and PTC?

ENGINEERING.com had an opportunity to meet with Sverker Nordlander, service program manager for PLM global sales and services at Siemens, to find out if he feels those shivers when it comes to up-and-coming contenders like Aras.

“I'm not so keen on talking about the competitors and their solutions. I prefer to look at what we at Siemens are doing to better respond to customer requests and requirements to eliminate any deficiencies in our solutions,” says Nordlander.

He drew up a classic BOM structure on a whiteboard to illustrate as he continued,  “As an example, in any of today's standard PDM systems, if I check out a component or assembly in order to work with it, I will also get the other objects in the current "leg". This is obviously not good, since I thereby prevent parallel work, which we all want to do. Therefore, we have supplemented our system (Teamcenter) with a component-based model called 4G. 

"Where each component has an "address label" showing where, how and under what conditions it may be used. The component thus becomes "intelligent." Compare this with Industry 4.0, where each component announces what to do with it and where to sit. If you want to change something, you do it only on that component, which avoids deadlocks and thus provides the opportunity to work in parallel. This is just one of the new opportunities we have introduced in our solutions,”

Nordlander adds that Siemens PLM also worked closely with the systems engineering section, referred to as R-F-L-P. This is an integrated model of Requirements, Function (the solution task in the system), Logic (how the parts are affected) and P (the product or solution).

“We also consider other P's, like People, Process and Plant, because we are not only working with design and construction, but also have to ensure that it can be produced with the resources available in all the company's factories.”

In this context, Sverker Nordlander claims that Siemens has also developed a new, stand-alone configurator that can be used for all disciplines, and which through open interfaces can communicate with other systems such as ERP, MES and MRO. “This will solve many knots for users, not only in terms of systems engineering, but also for the Industry 4.0 and IoT,” said Nordlander.

“We agree that these are progressive steps, no doubt about that,” I commented, “But I still want to know if you can see a threat in what a new competitor like Aras can deliver?”

Nordlander answered with, “What I have seen suggests that there is some great functionality in Aras Innovator. Among other things, that the customers are able to build integration solutions, but it then follows that it is the customer’s responsibility that it all works and is maintained. I think, for example, that Airbus does not intend to replace their entire PLM solution. Instead they will use Aras Innovator for its global communications systems.”

Generally, Nordlander says that he is a bit puzzled by Open Source Solutions, at least initially. “Think of Linux and Android,” he said. “The operating system required and requires a lot of IT knowledge for users to get applications to function fully. Another question is, who is responsible for the quality of the apps developed in the Aras community? As a user, you take on a lot of responsibility for how things work. Compared with Apple, they do not put out a single app without first checking that it keeps its promises,” said Nordlander, revealing a skepticism for free to download solutions.
              

My Take: Aras’ Prospects of Success Are Much More Than a Mirage

Microsoft’s Windows Phones may face a tough future, however, the product development platform, OnePDM, definitely represents a strong step forward.

Are OnePDM and the big bet at Airbus enough to establish Aras as a “big league” player, and to eventually even earn a place on the PLM “olympics” podium?

This outcome remains to be seen, but Aras PLM has clearly moved into an interesting position where we can expect some powerful expansion. Peter Schroer told me that for as many as 6 to 7 years, from 2009 onwards, the company "has experienced a 60% annual growth."

Additionally, Aras is working with new, untraditional ways of distributing their PLM solution. An example is the ERP developer Infor, which integrated a version of Aras Innovator as a part of their broader offering, including PLM. The background context here is that Aras announced an OEM licensing program last year. This means that other vendors can license parts of, or the whole suite of, Aras’ PLM tools.

OEM integration is a strategic growth initiative that will enable Aras to bring its technology to new markets and expand their community faster than they could do on their own.

"New OEM partners will allow us to focus on the key business applications for our primary PLM user base, while leveraging our core technologies into new markets that we haven't even considered yet," said Peter Schroer.

It’s creative, and sort of a typical “Schroer move.” With a business pace like this, a place in the PLM market middle segment looks like much more than a mere mirage.