PLM developer Aras has announced a $40 million investment round led by Silver Lake Kraftwerk with participation from GE Ventures.
Aras wrote in a press release that they will use this minority investment to drive growth, expand operations including service and support, and further extend the company’s technology through development and acquisitions.
“We invest in breakout companies that accelerate industrial transformation through a combination of technology innovation and disruptive business models,” said Martin Fichtner, managing director of Silver Lake Kraftwerk. He added that, “Aras embodies this strategy with a game-changing platform and ‘SaaS Anywhere’ approach that has proven very compelling to customers, and we are excited about Aras’ next stage of growth.”
The bet made by Silver Lake Kraftwerk once again points at the growing importance of PLM tools in general and cPDm (collaborative Product Definition management) in particular. Only last week, ENGINEERING.com revealed JMI Equity’s venture in cloud-PLM developer Arena. According to Beyond PLM blogger Oleg Shilovitsky, whose recent post looked at these companies' Crunchbase profiles, this means that “Arena has $49.95M in total investment” and Aras Corp., according to the same source, has “a total capitalization after the $40M investment,” bringing it to $68.2M.
Another consideration is that Aras’ new board member, the former Siemens PLM CEO Tony Affuso’s old Silver Lake contacts may have played an important role. Silver Lake was one of the owners of UGS, which Affuso was also heading, when Siemens bought UGS back in 2007.
A GAME CHANGER. “Aras embodies our strategy with a game changing platform and a ‘SaaS Anywhere’ approach that has proven very compelling to customers,” said Martin Fichtner, managing director at the Silver Lake fund that decided to invest in Aras PLM.
Both of these ventures reflect that the time when industrial companies and software developers believed in monolithic enterprise applications is vanishing. As the Internet of Things (IoT), Industrial IoT (IIoT), distributed product development and manufacturing, and other concepts become more common, easy-to-use collaboration tools will become basic demands. So, too, will solutions characterized by openness and standards.
Enabling the Digital Thread
What industries all over the world will aim for are flexible platforms, “that can readily embrace tools from many providers and address emerging product lifecycle needs,” as analyst CIMdata describes it.
And maybe some of the “old” tools aren’t enough. For example, it is probably no coincidence that GM invested in 50,000 Aras seats, that Airbus went for 30,000 and Schaeffler for 20,000. These companies already had more design-centric and complex PDM solutions, but they chose to use Aras as a complementary solution — mainly for supply chain collaboration, but by no means only that.
“Exactly,” said Peter Schroer, CEO and founder of Aras. “Enterprises need a much more flexible, scalable and upgradable platform for the business of engineering.”
He also claimed that Aras helps companies transform and optimize every stage of the product lifecycle. “We do this by enabling the digital thread, which connects data and processes from systems engineering and simulation to smart manufacturing and predictive maintenance – and creating the digital twin, the exact digital representation of a car, ship or aircraft engine.”
Still Some Distance to Go
The PLM environments of today are subject to change. For example, software development tools and EDA solutions are becoming mandatory to support the development of smart, connected products.
Complex areas such as systems engineering are moving forward not only in automotive and aerospace companies, but also in segments including medical devices and industrial equipment. This in turn creates an environment where new capabilities need to be added to existing ones.
PLM developers with ambitions to become providers of the future must buy or partner with companies that can bridge gaps in their portfolios. Today’s announcement from Aras means they secured the necessary resources to follow such a path.
Aras – and its competitors, to varying degrees – still have some ways to go. The PLM and the “beyond PLM” visions have only just begun. But so far, Aras’ growing customer base seems to be pleased with what they’ve seen and where things are going.
“As a customer, we have already seen the benefits of [GE’s] PLM platform in action,” said Steve Taub, managing director of advanced manufacturing and enterprise at GE Ventures. Taub continued, “To power the next wave of global industrial productivity, GE is investing in critical foundational capabilities for the Industrial Internet. Aras’ PLM platform delivers digital twin product configuration and digital thread traceability across the lifecycle which are critical to analyzing and interpreting data from products and the factory.”
It’s a good beginning in a world where transformation has just started, and in which Aras has decided to become one of the contenders.
Why Hitachi Industrial Equipment Bought Aras
What is it that makes betting on Aras worthwhile? As I have written previously, supply chain collaboration is one of the main strengths. Hitachi Industrial Equipment offers several reasons for why they bought and implemented Aras in May 2017:
Hitachi noted that the Aras system will improve the company's build-to-order processes, help streamline order management and standardize product development management.
Hitachi identified several criteria as crucial to the decision-making process:
- Aras’ capabilities when it comes to linking and managing multiple information sources based on a single platform.
- The functionality of the BOM handling. BOMs are easy to create and structurally maintain during all stages of product life processes.
- The ability of the solution to synchronize eBOMs (engineering Bill of Materials), design and mBOMs (manufacturing BOM) that have been identified and created in multidisciplinary modes throughout the design, manufacturing and service processes.
Affuso’s Silver Lake Connections
Finally, my take on this deal is that it fills some needs for Aras both in terms of technology development and marketing resources.
Another reflection is that Tony Affuso, the former CEO of Siemens PLM and new member of Aras’ board, likely played an important role.
Siemens completed the $3.5 billion acquisition of UGS on May 7, 2007. The agreement was made between Siemens and the owners of UGS: Bain Capital, Silver Lake Partners and Warburg Pincus.
I bet that Affuso still has some great Silver Lake connections.