Not ”a load of crap” anymore: ”PLM 360 is way ahead of plan”, says Autodesk’s Carl Bass

A couple of years ago PLM wasnt something that appealed to Autodesks CEO, Carl Bass. "Its a load of crap", he said, "something that the big vendors like Dassault, Siemens and PTC invented to get more money from their customers".
That was a bold statement even in 2007 when he said it, but the great thing about an open mindset is that people can change. And Bass did. Today Autodesk is one of the most enthusiastic PLM advocates on the market. More specifically, a PLM in the Cloud advocate.
Bass laughed out loud when I reminded him about his statement back in 2007 during the recent Autodesk University in Las Vegas. "But, you know I was right then because we didnt have the Cloud", he countered, "now we do and this really changed it all".
He was persuaded by the facts, he said, and once there was a way to deploy PLM it made sense. And so now he has great expectations, "Definitely, when people see it (PLM 360) and what its capable of we are confident that it will make them want to change. In some cases there are those that will not change quickly or companies that will change differentially on different fronts; but generally things are underway".
So, what about Autodesks market penetration for their Cloud offering? How far have their customers come in terms of PLM in the Cloud? In general, are they ready for the Cloud?

The optimism of Autodesks chief is underscored by the fact that the
company has been the most successful "newcomer" in the PLM market during
the last couple of years. It may be surprising that Autodesk can be a
newcomer given how long time they have been in the 3D CAD, CAE and PDM
market, but the PLM concept extends beyond point solutions. According to
analyst Gartners definition, "Product life cycle management is a
philosophy, process and discipline supported by software for managing
products through the stages of their life cycles, from concept through
retirement."

It was not until as late as 2012 that the analyst CIMdata "accepted"
Autodesk on its list of the PLM Mindshare Leaders, an exclusive group of
companies that includes Dassault, Siemens PLM, PTC, SAP and Oracle.

Today Autodesk is on CIMdatas top 7 list when it comes to market
share based on direct PLM revenues in 2013 (partners direct revenues
included, royalties excluded):

1. Dassault Systemes, 7.7%

2. Autodesk, 6%

3. Siemens PLM, 5.7 %

4. IBM, 4.2%

5. PTC, 3.7 %

6. SAP, 2.8 %

7. Oracle 1.8 %

Source: CIMdata 2014 ("PLM Market Categories – three major segments comprise the PLM Market: cPDM – collaborative Product Data Management, Tools - Authoring, analysis, modeling, simulation and documentation of product and plant/facility information, Digital Manufacturing - process planning, resource definition, factory floor layout and product flow simulation and analysis.)

PLM from Autodesk: Digital Prototyping and the Cloud

The solution that got Autodesk onto this list was a combination of the
"Digital Prototyping" (DP) concept and the set of tools for PLM in the
Cloud (the PLM 360 solution is today a part of "Digital Prototyping").
However Autodesks cloud services also include AutoCAD 360, (Inventor)
Fusion 360, Simulation 360 and CAM 360.
The idea of DP is to bring together siloed software covering the
product development phases, and to a limited extent areas like factory
design, maintenance and sales & marketing.
All of this is framed by the programs in the Product Design Suite
which has solutions for conceptual design (like AutoCAD, Alias), PDM
(Vault), engineering (Inventor, AutoCAD Electrical and Mechanical),
simulation (Autodesk Simulation, Moldflow, Simulation CFD),
manufacturing (Factory Design Suite), and some additional things
mentioned above.

Features in PLM 360 are:

* Bill of Materials management (BOM)

* Change management - Engineering Change Requests (ECR) and Engineering Change Orders (ECO)

* New product introduction tools (NPI)

* Supplier collaboration

* Quality management

* Cost management

Generally Autodesks portfolio - the Cloud solutions included - can
be regarded as a viable PLM alternative for small-to-midsized companies.
But this doesnt mean that the large corporations dont use Autodesk
programs. On the contrary, big companies like SKF, Sandvik and Tetra Pak
often have hundreds, if not thousands, of licenses of AD software.

So far the move to the Cloud has been measured

Nobody said that it is easy to establish new technology. Its a job that
demands great ideas, inspiration and a lot of hard work as well as
timing and financial resilience.

Moving to the Cloud is a good example of a challenge that will force
Autodesk to face a couple of tough years before they eventually will
reach their goals. Generally it doesnt matter how good the underlying
structures of the new technologies are; as long as they contain more
complex elements, users wont adopting them overnight. This was true for
PLM and its going to be true for PLM in the Cloud.

Analyst CIMdata agrees,"So far Autodesks move to the Cloud has been
measured, with adoption coming from existing as well as new clients.
While the progress has been steady, we dont expect Autodesks business
to change overnight. In the case of Cloud-based PLM solutions, adoption
has generally been measured, with small to mid-sized companies adopting
more quickly than larger ones."

The fact that Autodesk has chosen this path can be a chatalyst for
change,"Thatss right", says CIMdatas Peter Bilello, "in general we
expect the revenue generated from Cloud-based PLM solutions to increase
over the upcoming years at a steady rate. A limiting factor is that many
companies are still concerned that placing their product knowledge in
the Cloud could be a threat."

CIMdata, however, doesnt believe that security is an issue because
Autodesk and others are building comprehensive solutions that are as
secure as anything a single company could do or afford on their own.

The problem of replacing behind the firewall solutions
This is also in line with what Autodesks Director of Industry Strategy
and Marketing, Ron Locklin, claims,"When we began selling PLM 360 in
early 2012, there were many questions about security in the cloud, data
ownership and the physical location of servers. These were probably the
most prevalent concerns we heard. But times have changed. Business
consumers of SaaS-based enterprise apps are getting more comfortable
with these areas, as the solutions become more prevalent in the CRM,
ERP, and consumer worlds."

He also points out that Autodesk have invested heavily in security;
"in certifying our environment and servers, so that our customers feel
secure; and overall, it is pretty apparent many businesses know that a
cloud-based system in reality is as secure as what their own IT
department and investments can ensure".

There are other angles the security issue. Certain markets demand
"behind the firewall solutions", such as military, aerospace with strong
security concerns, government as well as heavily regulated industries.
These may require software apps certification with every new release of
the product.

"We see adoption as lower in these markets", Ron says and adds, "That
said, we are constantly being asked by government agencies, systems
integrators and heavily regulated companies about how and when they can
jump onto this trend and take advantage of it".

The main arguments for investement in PLM 360
Security and IP protection seems to remain the most important obstacle
to PLM in the Cloud. These concerns are not reflected in Carl Bass view
of how things are going. "We are way ahead of plan and even more
successful than we imagined", he said in Las Vegas and asserted that
Autodesks PLM business has already taken off.

Ron Locklin agrees, boiling down "many, many reasons to invest in PLM 360" to two main arguments:

1. "It gives customers deep insights into their product development
   detail and processes that they have never had before, and PLM 360 saves
   customers lots of money by reducing scrap and waste, very rapidly
   coming on-line to manage messy processes that were manual and
   controlling very expensive engineering change orders."


2. "It is interesting to point out that we are succeeding on two
   very different and perhaps orthogonal fronts: First, we are winning
   against the traditional PLM players. We win deals based on compelling
   ROI, extremely compelling time-to-market metrics and because a lot of
   existing PLM users are not happy with the expensive, bulky, slow
   solutions they already have in place. Second, we are succeeding with the
   new world of SaaS-based enterprise solutions. A lot of this is in
   conjunction with our strategic relationship with NetSuite
   (a cloud-based ERP software). In this market, customers demand
   rapidity, zero IT infrastructure and the ability to integrate with other
   SaaS solutions. And we are quickly becoming the PLM solution of choice
   in this arena.

Low cost is an important selling point
"No matter how you look at it, PLM 360 is extremely cost-effective. One
named user license of PLM 360 is priced at $ 900/year, and that is
undiscounted. The price includes any new releases, and "maintenance" (in
the traditional definition). A viewer seat of PLM360 (for review,
sign-off and so on) is $ 300/year for a named user. Therefore, we are
talking well under $ 10,000 per year for a 10-seat environment of this
solution, which can be up and running in literally minutes", says Ron
Locklin.

How many PLM 360 customers are there today?
"We have now surpassed 14,000 users of the product and are very pleased
with our growth", Ron says and adds that Autodesk corporate is very
pleased with that number.

The main segment where PLM 360 has gained traction is with
small-and-medium businesses, which in "Autodesks book" includes
companies with less than 1,000 employees, or in divisions of larger
companies with fewer than 1,000 employees. "Seventy-five percent of our
PLM 360 deals since we launched in February 2012 have been to this SMB
segment. However, we are certainly seeing large company adoption and
significant large-company interest."

Currently the largest deployed PLM 360 site is 400 seats, "But we
are in discussions with multiple customers and prospects to deploy on a
scale from 1,000 seats (an existing customer) to 15,000 seats (a
prospect/new customer for PLM 360)", Ron continues claiming that the
SaaS environments they run in and the PLM 360 architecture "are
extremely scalable".

Gartners Marc Halpern: "Compelling advantages"
Gartner PLM analyst, Marc Halpern generally supports the cloud
vision,"For a first generation new product PLM 360 looks pretty good and
I believe its good enough for SMBs", he says. "Naturally it depends
of the level of sophistication they are looking for, but if it is about
things like work flow, core PDM functionalities such as vaulting, access
control, revision control, and fundamental collaboration the solution
seems fine."
He also mentions that companies he talked to using 360 indeed
validated that it is much faster to implement than traditional PLM
solutions. "But it also provides a great deal more flexibility because
nothing needs to get implemented if you for instance acquire a new
company; its simply a question of bringing on new licenses and give the
new users access."

So, will Autodesk and PLM 360 bring SMBs to the Cloud?
Halpern added, "Not only will they bring smaller companies to the Cloud.
I know already of some larger companies that are interested in PLM 360
because of the cost advantage. Its so compelling in terms of
implementation and upgrade costs as well as need for internal support
staff and hardware infrastructure upgardes".

According to Halpern, PLM 360 has garnered a lot of attention and
will continue to grow revenues and users, "The inhibitors to that growth
are going to be the companies that fear the Cloud model because their
Cloud assets are outside the four walls, as opposed to being managed
inside those walls." The most likely scenarios for many companies at
first will be to use AutoCAD Vault or Autodesk Vault to maintain content
inside the four walls, but use PLM 360 for work flow such as
engineering change request."

Halpern also note that the solution lacks support for private clouds
at this point in time.According to Ron Locklin Autodesk does get
inquiries about this but its not yet on the roadmap, "A major reason
for this is that there is enormous opportunity for PLM 360 in purely
public cloud environments. Also, we are seeing an evolution in attitude
and architectures over time as well as an increasing acceptance by many
segments of the market that are currently demanding private cloud
solutions to be able to deploy and excel with their applications in a
public-cloud environment."

Autodesks former CEO, Carol Bartz, wanted to buy SolidWorks
Disruptive technology is a part of Autodesks history. In fact the
company was born from one: The first electronic drawing board ever,
AutoCAD. It came some 30+ years ago and was a huge success.
On the other hand Autodesk isnt immune to technological setbacks.
The birth of Inventor is an example of this. 3D CAD on the Windows
platform took some time to evolve and it wasnt until the 3rd or 4th
version that Autodesk had a solution that could compete with SolidWorks
and Siemens PLMs Solid Edge. For a while Carl Bass predecessor, Carol
Bartz, was actually negotiating with SolidWorks founder, John
Hirschtik, on buying SW instead of continuing to develop the "Rubicon"
project as Inventor first was called. But the price was too high; Bartz
offered $ 12 million, Hirschtik wanted $25M and so the deal was off.

The point is that success isnt always immediate, especially when
dramatic changes are involved. Dassault Systemes is going through a
simular experience with the 3DEXPERIENCE solution right now, and
although Carl Bass claims that PLM 360 is a success beyond what he could
imagine, my take is that 14,000 users is a bit lower than calculated. A
not entirely unreasonable guess is that Autodesk is sitting with some
new cards up its sleeve,perhaps in the form of a "repackaging" of the
PLM on the cloud offer.
But thats just a wild guess. The only thing we can be pretty sure of
is that PLM in Cloud is coming. The question is when it will arrive in a
big way?