Where is PTC heading with its dual-CAD strategy involving Creo and Onshape? What is the role of the Atlas platform in this context? And how does the Software-as-a-Service (SaaS) model fit into this?

In this two-article series, I dig into these questions through a discussion with PTC’s CEO Jim Heppelmann; Jon Hirschtick, the founder of SOLIDWORKS whose browser-based CAD platform Onshape was bought by PTC in 2019; and PTC's CTO, Steve Dertien. I have also quoted statements made by the PTC leaders in an earlier video interview with Ulrich Sendler.

PTC’s parametric 3D modeler Pro/ENGINEER was a formidable success at its launch in 1987 and is considered one of the major breakthroughs in the CAD world. In just over a decade, PTC established itself as a world-leading CAD company; in fact, it took 20 years for the company to surpass the market value it had in 1998. It was only under Jim Heppelmann's leadership in May 2018, with a total market capitalization of $9.8 billion, that PTC managed to exceed the total market cap with which the company peaked on Wall Street in 1998, $9.4 billion.

This says something about the commercial and technological strength of the Pro/ENGINEER software, which was later improved with role-based apps and renamed Creo. But it also says something about the power of the new vision being translated into solutions under CEO Jim Heppelmann. His hand is felt in everything from the rewriting of the code in the PLM platform Windchill prior to 2010, to the pioneering investment that subsequently led to one of the PLM market's most successful IoT/IIoT conceptual approaches to date with the ThingWorx platform, to the development of sharp digital twin and digital thread concepts.

The question now is whether the latest big idea from PTC’s Heppelmann and Jon Hirschtick, the founder of SOLIDWORKS—browser-based CAD and PLM in the cloud, packaged in the Atlas platform and built on the Software-as-a-Service (SaaS) model—has the same breakthrough force that enabled the parametrics in Pro/ENGINEER to take the market by storm.

The Potential of the Cloud and SaaS

There are tangents when it comes to development that Jim Heppelmann believes gives cloud and SaaS solutions enormous potential.

“To begin with, let's look back at how COVID has affected education around the world. To use CAD in a classroom environment students must use computers, but students do not generally own computers powerful enough, so they often did their CAD work on campus. Then the pandemic struck and most CAD classes around the world were canceled from one day to the next,” says Heppelmann.

“This is the beauty of the cloud. Onshape lets a student work in the computer lab. After the lesson, the same student could go over to the library, open his laptop and see the exact same model, right where he left it in the lab. Later, he or she could take a bus home and use his or her phone during the trip to see the model; again, just where he left it on his laptop. Once home, he could use his parents' computer to retrieve the exact same model again, including the very latest changes made to his mobile phone during the bus journey.”

What Heppelmann is pointing out with this statement is that the world has changed radically in a very short time—and these changes are not always clear to those who have worked for a long time in older solutions rather than the very latest.

“Exactly,” says Hirschtick. “Let's take a step back and realize that students today of course know what a file is, what a Windows workstation is, or what you mean if you say SQL—but that doesn’t mean that they generally prefer to work in such environments.”

PTCs CTO, Steve Dertien, agrees. “Their whole world is centered around search and collaboration.”

Collaboration Magic on the Onshape Platform

So, how should we look at Onshape; what exactly are we talking about?

“Onshape is built on a platform that we call Atlas,” says Heppelmann. “And honestly, Atlas gives it this a kind of ‘collaboration magic,’ which we also want to use for Creo. What Onshape enables is collaboration between several users within the same design. This is very different from classic paper-based version control. Every CAD system in PLM so far is really a digital replication of paper.”

PTCs CTO, Steve Dertien, picks up this thread.

“Right. It’s like this: you versioned your model, stamped it, created the drawing, put it in a folder, released it. Managing it in Onshape, we can do all sorts of things: compose, compile, merge, generate basically any result that the engineer wants. Some CAD engineers are usually afraid to make certain changes due to effects that may cause an interruption somewhere later. But with Onshape, it is no longer a problem.”

“Just to clarify,” says Hirschtick, “when we built Onshape, we also called the platform Onshape, but have since renamed the platform Atlas to help distinguish between the CAD software Onshape and the cloud platform to which other PTC products will be migrated.”

“This is very important,” says Heppelmann. “When we went to PTC's board to ask for their approval to buy Onshape, we said that we were buying two things: First a cloud platform, which we later renamed Atlas, and then a CAD system running on this particular cloud platform. But we imagine that many of our other products will run on that cloud platform. That's how good it is.”

PTC’s Roadmap for Onshape and Atlas

What does the roadmap behind PTC’s plan look like? What will it take to establish Atlas as a platform not only for Onshape, but also for a potentially larger part of PTC's portfolio?

“We expect to be able to serve about a third of our customer base by 2025 or 2026,” says Dertien. “Part of Creo is already on Atlas and within the next two years we expect to have most of Creo on Atlas.”

But more will be added, says Heppelmann. “If we draw out the tangent in the roadmap, we will see Windchill on the platform during the second quarter. Creo will have a new delivery this year with Atlas features. If Parasolid is a geometric core, you can think of Atlas as a cloud core, or better yet, a cloud platform—a set of technologies that allow you to quickly build something new that already has all that power. Today, about 15 percent of PTC's total business is software as a service. Our plan is for it to grow to 33 percent in five years, or three to four points per year.”

It should be noted that at this point Atlas runs on both Amazon's AWS and Microsoft's Azure.

The Difference Between Creo and Onshape, and PLM as a "System Brain" at Volvo Trucks

In terms of integration, there is still much to come in PTC's plans for the future. But there are also limits; for example, Heppelmann clearly answers “no” to the question of whether there are any plans to merge Creo and Onshape into one solution.

“No, there really are no such plans to make two products into one. We know that users have different needs, and we want a best-in-class product for every need. Just as Jon Hirschtick had a breakthrough with Windows, he found an equally significant breakthrough with the cloud. Onshape complements Creo. Onshape is not a replacement, but solves another problem that customers have,” he says.

He exemplifies the matter with an interesting example, Volvo Trucks, where the background begins with being able to manage the complexity of variant handling at the PLM level, before coming to what each CAD system can assume for roles.

“Windchill is a PLM system, or a broad solution for product life cycle management,” Heppelmann says. “One could express it in such a way that PLM should be considered as the brain that provides the CAD system with, for example, all the configuration possibilities that may exist. This is how I think of it: Volvo Trucks manufactures the same engine, which they put in trucks of several different brands, in buses and in ships. They do not need factories that build engines for trucks and other factories for boats and still others for buses. Only one engine factory is needed. This gives Volvo a huge operational advantage. A Volvo truck comes in literally millions of possible configurations. Windchill can handle all of these. A user can model five configurations, while 5,000,000 may be possible.”

“There is a crossroads here that is important to understand: Creo and Windchill try to make it easy to reuse geometry millions, billions and even trillions of times. This is because Onshape tries to solve problems for companies that develop products with a short life cycle. The needs of these customers are different. PTC offers Creo solutions for platform products and Onshape for what we call agile product development.”

BMW Wants to Act Like a Startup, Rather Than an Old-Fashioned Vehicle Manufacturer

One issue that arises from the discussion above is whether Onshape is actually intended for small and medium-sized companies.

“Do not think about the size of the company,” Hirschtick says. “Whether Onshape's customers are small or medium is not the decisive feature or even the correct question. Instead, it's about flexibility. Small and large companies are always looking for smoother processes. They may not actually call it agile, but that's what the agile concept adds. You want to work PDM without a PDM system. It may sound a bit paradoxical, but it means that they need to release data, but not by copying around files and redoing paper flows. There are even bigger companies that want to change the way they work. They say, ‘We need to work faster, we need to be more innovative, we need to be agile.’ One point is that when you think of agile, you think of the rate of change in ideas.”

“That is why we do not set any limits for the functionality that we can develop in Onshape,” Heppelmann adds. “We build much of today's most advanced technology into Onshape, such as generative design or solutions for agility versus platform. Listen to this quote from Jon: ‘Onshape is for start-ups and for companies that act that way.’ An example might be BMW; they want to act as a startup company. They are by no means a small company, but they want to work differently. It turns out that they are far from alone in this, and many large companies say that they should act as a startup company, work differently and be more agile.”

How does PTC define the PDM approach that is Onshape's hallmark?

“Let us first state that Onshape's built-in PDM provides all the power of a traditional file-based PDM system, but without workflow problems or costs for traditional PDM systems,” Hirschtick says. “Traditional PDM relies on installed software and dedicated servers that copy files to and from users' computers. It creates bottlenecks such as file check-out, locking and copying, which slows down teams and limits iteration. Copies of files multiply security risks. Users have to wonder where the latest version is, and will they overwrite each other's changes? Traditional PDM also costs money and time for server hardware, installations, upgrades and maintenance. Some file-based PDM systems are now partly cloud and copy files to and from cloud servers—this helps but does not fix traditional PDMs' inherent problems.”

“Onshape's PDM is different,” he says. “It is based on a unique cloud-based architecture. Data is stored in one place in a database in the cloud—and data is never copied anywhere. There is no locking or check-out. Each user always looks at the same master data, updated globally in real time. Teams work faster, are free to iterate and innovate, and work in parallel instead of serially. No copies of data mean it is much more secure. No server hardware, no installations, no upgrades—and none of their costs and wasted time.”

Hirschtick compares this to what PTC did with Pro/ENGINEER (now Creo):

“We are taking a major development step again, but now with the cloud, Onshape, Creo and other products in the roadmap. We develop and provide the most comprehensive extension of what can be offered to engineers through CAD and I am proud to be a part of it.” 

A Proactive Player in the Market

PTC has chosen an interesting way forward. This platform for knowledge and know-how provides an operational backbone to new business models and plays a crucial role. On the new-age platforms in product development, you can combine the different programs in several domains. In addition to traditional mechanical CAD, electronics and integrated software development are advancing. In all these respects, simulation tends to become an increasingly important part of development work, and where humans previously had an undisputed dominance in design, AI-related technologies such as generative design and automated multiphysics solutions are beginning to take over more and more of the assessments—and even parts of the creative process.

The manufacturing side has also been included in these dynamics, and the dream of a cohesive product development system. It could also handle automation and operating technology (OT) in parallel, and freely link product development and design work. PTC has taken a much bigger plunge here by allying with Rockwell Automation. At the same time, 3D printing is not only about to become part of what CAD programs can and should handle, but almost revolutionizes and radically changes methodology and design on the manufacturing side.

Forget the thought of CAD as a staple. Instead, the fact that PTC is now taking a step into the future in the way PTC’s management shares in this article shows that it has grasped perhaps the most pointed modernity in the product development area—particularly with the values ​​that cloud CAD in Onshape, the Atlas platform, Creo and the SaaS model can add.

With its dual CAD strategy, its cloud investment and its SaaS business model, PTC is one of the industry's most proactive players. It is no coincidence that the company's total share value on Wall Street is generally higher than ever before. PTC's total market capitalization is $11.9 billion. Of course, the value goes up and down a bit over time, but today is steadily above the value of the 1990s.