After 21 years, Aras PLM’s founder Peter Schroer handed over the executive leadership of his creation to former PTC Senior Vice President Roque Martin in October last year. One of Martin’s first major initiatives was to buy the company’s largest reseller and global PLM partner, Minerva. What were the reasons for this acquisition?

“In all fairness, when I arrived the strategy behind this was already developed. Peter Schroer had made the foundation, and it became my job to take this deal the last mile. But it all made sense: Minerva was a gold partner level reseller and very well aligned with Aras. They brought a tremendous amount of industry knowledge. The intellect, the experience, the customer relationships and the understanding of the market were simply the main reasons for the purchase,” Martin says.

“From the high-end this was derived from relations like Airbus, as well as industry knowledge from the upper midmarket and smaller customers. Frankly, this helps us a lot when bringing these two cultures together. And … they also contribute with advanced industry solutions related to areas such as medical devices, high tech and electronics which fully take advantage of the power of the platform.”

This idea and deal was, Martin states, “Peter Schroer’s brainchild.”

One of Aras’ posterchild installations is with the European aerospace manufacturer, Airbus—a project in which reseller Minerva has also been involved. This company is also a part of the CIMdata initiative called the A&D PLM Action Group, where leading OEMs such as Airbus, Boeing, Bombardier, GE Aviation, Rolls-Royce, SAFRAN and others have banded together to force the top PLM vendors to “take action” on persistent product/process deficiencies. In one of the projects, industry strategic PLM providers Dassault, Siemens, PTC and Aras were invited to show how each of their solutions can address the real-world use case complexity of transforming engineering Bill of Materials (EBOM) into Manufacturing Bill of Materials (MBOM), with engineering changes, manufacturing changes, etc. One of Aras’ points is a firm belief that their low-code platform flexibility gives an advantage, especially for the most complicated BOM transformation processes.

When asked if there were more reasons behind his acquisition idea, Schroer pointed to the people in Minerva’s organization, such as well-known Danish PLM expert Leon Lauritzen, as good reasons for the acquisition.

“It’s not just that the high-tech solutions are valuable for Aras. Our company has several hundred developers around the world, and we are now able to take the power of that really large team and even improve the Minerva solutions. If you went back ten years ago and saw the relation between me and Leon, this acquisition was destiny,” he added.

“Right,” says Martin. “We shouldn’t forget that these great industry solutions that Aras brings to the table can serve as patterns for other segments. That’s another attractive angle.”

When a PLM Company Offers 100,000, SAP Can Add a Zero

A couple of months ago, I discussed the medical segment with Minerva’s Leon Lauritzen. The essence of what he had to say about this is that the medical industry has a lot still to be done in terms of what digitalization generally—and PLM specifically—can do to produce more effective processes and, at the bottom line, faster time to market and revenue generation. They have the money, they have the resources and are accustomed to a level of charge for its investments that is at the height of SAP, or as a high-ranking Siemens coworker jokingly described it:

"When the PLM offer is at 100,000 dollars, SAP can calmly add a zero and get the job. For any CIO or CTO there are few investments in SAP that meet with internal protests, because it is considered fairly risk-free, even if the deliveries occasionally leave more to be desired."

“Companies in the medical industry have often produced large profits. They have seldom been forced to invest in, for example, IT or PLM for financial reasons since the businesses have been going so well as they are; rather, they have seen the surpluses go to the owners. There is nothing wrong with that, but as the world has developed technologically with fantastic new digital technology options, it may be a good idea to start looking at what systematic digitization and sharp software tools could provide,” Lauritzen said.

The Acquisition of Minerva brought high-level medical-related PLM closer to Aras’ heart. From managing short innovation cycles, growing interdisciplinarity high-complexity research and development processes and ever-stricter regulatory requirements, medical device companies must overcome several challenges to stay ahead of the competition. Minerva’s PLM solution here, based on Aras solutions, supports medical device companies from the first idea to market approval and re-certification through secure development processes. Automatic documentation traceability and quality management to manage compliance, designs, change management and reporting are good examples of the solution’s capabilities. “This is a very interesting area of growth for us,” comments Aras’ new CEO.

This may be one of several good reasons for Aras to bet on making Minerva part of the “mother” company. Dassault Systèmes’ purchase of companies in this segment has proven to be a financial hit; remember Dassault’s 2019 $5.8 billion cash acquisition of Medidata, which has saved the company’s revenues and economy during the pandemic.

So, it looks like an interesting market.

“Absolutely,” asserted Roque Martin. “It already is, and our Minerva acquisition enables us to penetrate it and drill further. Let me reference the pattern here. It really comes down to effectively being able to address things like U.S. Federal Drug Administration (FDA) compliance. But it’s not the only industry that has similar patterns. Aerospace and automotive are just two examples. They have similar engineering practices, workflows and regulations that need to be followed. These and other industry segments certainly give us many commercial and technological options to explore as our solutions and vision expand.”

Ever-growing complexity, not only with mechanical but also with electronical and software integrated products, is typical in today’s world of product realization. Aras is well-suited to meet these demands, asserts Roque Martin.

Aras’ Technology Structure and the Future

That said, look at what market needs and developments have looked like in terms of technology in recent years, and what Aras’ new executive management sees coming.

“The rate of change of the complexity of the products our customers need to build is incredible,” says Martin. “As the product gets more complex, not only the engineering but also the service and manufacturing challenges are affected by the complexity of the product and the complexity that goes into designing, manufacturing and servicing the solutions.”

Why is that?

“There are several different dimensions,” Martin says. “Increasingly, the value of the products is more and more defined by electronics and software. That means that you need to have the mechanical engineers working in sync with the electrical and software engineers, which in turn means that you need to have assistance from engineering disciplines to manage and coordinate. That was always necessary, of course, but the increased complexity of the products further accentuates that problem.”

An example of a workflow process in Aras Innovator. The company’s solution offers cross-discipline product structure with online change workflow processes. In configuration management, it provides a comprehensive closed-loop system using CM2 certified methods for managing the configuration of a product or system throughout its life. In change management, Aras streamlines change requests, assessments and orders and ensures visibility across disciplines and in the extended supply chain, reducing errors and avoiding delays.

No Company Works in a Homogenous Environment

The other thing Martin points out is that no customer IT environment is pure and homogenous; there are always a bunch of products from different software developers that need to be integrated and brought together to be able to work together. He defines this as the critical role he sees Aras Innovator play.

“Yes, the inherent integrations and flexibility that Aras provides is key, and critical to bringing those different engineering disciplines together as well as stringing together all the different applications that feed into the engineering processes,” he says. “Because of the uniqueness of the Aras platform, you get this digital thread that carries throughout the lifecycle of the products. PLM, yes, but in this case not from the perspective of managing the engineering Bill of Materials (eBOM), but instead PLM as a carrier of the entire lifecycle from concept through product development and manufacturing, to service and end of life. We provide that digital thread through a common data-model and through integrations into the entire IT ecosystem.”

Furthermore he points out that Innovator’s architecture and its modular setup provides the capability for each company to configure exactly the system it needs, on premise as well as on the cloud as a SaaS solution.

For companies in cPDm/PLM with ambitions to provide a comprehensive platform, a partnership with simulation and analysis leader ANSYS is not a bad idea. Aras PLM is one such developer with strong ambitions for growth, and it is a category of player that has taken its place on the stage in a number of the world's larger companies. In early 2020, an in-depth strategic partnership was announced. The agreement is based on Aras licensing its lifecycle-based platform technology to Ansys. This means that the latter used this Aras technology to develop dedicated solutions in configuration management, PDM/PLM interoperability, API integration and also added simulation-specific functions to deliver scalable and configurable products that link simulation and optimization to engineers and development activities. The new Ansys solution is called Ansys Minerva.

Low-code and the Ansys Arrangement

These are some of the key challenges that Martin asserts Aras will address quite well. But there’s more: lately, Aras has begun to profile its system as a low-code one.

“What mainly makes low-code valuable is a couple things,” says Martin. “That’s what enables the highly flexible configurability I talked about earlier. Secondly, it’s the ability for the customer to quickly develop their own applications on top of the platform. Moreover, it’s actually not just for the end-user customer, but it is also highly leveraged by some key partners in the PLM industry such as Ansys and their Minerva simulation data management solution. They have leveraged the low-code capability to build their application on the Aras platform, and basically created a business based on that. We’re not in the position right now to share anything more, but we’ve got other powerful arrangements coming up that will expand our presence on the market in similar way.”

In this respect, the Ansys arrangement is interesting since it brought Aras into a new proactive situation. They even hired former Ansys boss, Jim Cashman, to the board. “What are you aiming at here?” I asked Schroer.

“You probably think of Aras as a PLM solution in automotive, aerospace & defense and more, and now with Roque we’re entering a more systems and software engineering influenced era. That’s fine, but as a company of our size we can build one set of solutions and we can reach a certain segment of the market quite well. But if we try to do everything for everybody, we’re too thin,” Schroer says. “Reflecting back to the Ansys partnership allowed us to go quite deep on simulation management, which was a new topic for us. It really does complement the digital thread for us in a great way, since it is of utmost importance to capture simulation and analysis in modern decision making. The next couple of OEM relationships will expand Aras into other markets where we don’t have the expertise today, but allows that same common platform to be used across a very broad set of solutions without having us, Aras, to do all the work.”

Martin agrees, and sums up Aras’ bets in the sub-PLM area of simulation and analysis as “very important and worthwhile.”

“Yes, indeed,” he says. “What’s new perhaps is that these are engineering assets which, just like CAD design, eCAD design, a service document or requirement, need to be lifecycle managed, change managed and configuration managed. So, you need to have the ability to have those designs, the simulations and the contexts of the different variants of the products. It’s increasingly a bigger and bigger part of the engineering process.”

It is easy to agree. S&A is “the star of PLM”, as the PLM analyst CIMdata formulates it—and Aras, Roque Martin and Peter Schroer are going after it. There is no doubt that this sounds like well-thought-out idea.

“Aras, for me, has so far been a 21-years-long story. We’ve gone from originally two employees to more than 800 as of today. I have a lot of milestones behind me and honestly the day-to-day operations of the company mean a lot of work. It was time for me to change my role,” says Aras founder, Peter Schroer.

Why Did Peter Schroer Want to Leave the Executive Role?

Finally, it came as little surprise when Aras made an official announcement that Peter Schroer had left the helm to Roque Martin. Why did they look for a new CEO?

Schroer told me that he is not leaving the company, “but after decades on the top post I got a little tired.”

“Aras for me has been a 21-years-long story. We’ve gone from originally two employees to more than 800 as of today. That’s quite a journey, and in that time we have had investments, like the big one from Silver Lake, Goldman Sachs and then recently last year that quite substantial investment from GI Partners. That’s a lot of milestones behind me, and honestly the day-to-day operations of the company mean a lot of work. It was time for me to change my role. After 21 years, you get a little tired. But to be clear, I’m not leaving, I’m still very strongly associated with Aras, I’m on the board of directors, but my role is more around strategy and growth. The day-to-day execution, managing so many people; yes, it was time to find someone who could take the ball the next couple of yards,” Schroer says.

“The organization and the investors are on their toes, and now it is up to Roque Martin (left) to show where he can take the organization and the Innovator PLM suite, both technologically and commercially,” Verdi Ogewell concludes.

A Nice Profit for Silver Lake and Goldmann Sachs

This development is far from unique; we have seen it in many growing companies. Growth means that the basic conditions can change a lot, with new challenges related to things such as establishing new locations, new technologies, hiring new people, buying companies and solutions, and continuously expanding administration, global marketing, partnerships and more. Suddenly, what was a small startup rises to become a vast operation that may need other types of leadership than the ones originally established.

Just take Jon Hirschtick’s SOLIDWORKS, which was a small startup that got investors, grew rapidly and was sold to Dassault Systèmes. On the march to the global market, new leaders were needed at different stages as things evolved to match the new positions.

GI Partners made a substantial investment, Schroer claims. Did they have any demands in terms of new leadership of the company?

“No,” Schroer says. “Actually, Silver Lake and Goldman Sachs exited, and they made a very nice profit. For me it was about getting GI Partners on to the team, that was my milestone. It was time for me to make a transition if we could find the right person, which Roque Martin definitely is. He understands the vision of Aras, can bring in some new ideas and other strengths, which was the condition for me to find that other role.”

During the interview Peter Schroer said he had a dream: to build a hundred-million-dollar-company. He didn’t want to reveal if Aras is there, but my qualified guess is that they are.
It is often said that the first million of revenue is the hardest to reach. That goal is settled, the organization and the investors are on their toes, and now it is up to Roque Martin to show where he can take the organization and the Innovator PLM suite, both technologically and commercially.