Why Companies Are Jumping on the Cloud PLM Bandwagon

Trends / Why Companies Are Jumping on the Cloud PLM Bandwagon
SaaS cloud PLM

Summary: there are two cloud PLMs on the market now. SaaS Cloud PLM — where providers embrace iterative development, SaaS business models, and software integration — and Cloud Lite, where products are delivered over the internet but are at best a reskin of on-premise solutions. While a step in the right direction, Cloud Lite fails to achieve the benefits SaaS cloud PLM delivers. 


Over the last 12 months, we’ve noticed a shift in what how PLM providers and analysts use the term “cloud PLM.”

And we think some nonsense is a-foot.

The term cloud PLM is being diluted as products jump on the bandwagon of cloud products.

But you can’t transform an on-premise solution into a cloud just by dropping it into an AWS data center.

Because cloud PLM is more than a deployment mechanism. It’s a whole product solution.

Cloud PLM isn’t just a deployment mechanism. It’s a whole product solution.

So how do you tell the difference between cloud PLM and Cloud Lite imitators?

Today we’re going to look at exactly that.

What is a true cloud product?

Before we even get into PLM, we need to clarify what the cloud is.

According to Microsoft Azure:

Cloud computing is the delivery of computing services—servers, storage, databases, networking, software, analytics, and more—over the Internet (“the cloud”).

This means that something like Salesforce is a cloud product because it delivers CRM software over the internet. You don’t need to install Salesforce — you just need a decent internet connection.

And this is where cloud gets tricky.

Because cloud in this narrow, technical sense is a delivery mechanism.

It’s describing how the product gets to the user.

But cloud solutions extend beyond the delivery.

The letter of cloud technology is very different from the spirit of cloud technology.

And the spirit of cloud technology must include these 4 core things:

1. Iterative and agile development

Cloud products overwhelmingly follow an iterative development practice.

They don’t make one release, once a year.

Small releases come out all the time. End-users, of course, never notice…

But every time they open the product, it’s a little better.

2. Multi-tenant design

Multi-tenant design is when multiple clients are hosted on the same server, and their data is partitioned to keep it separate.

There are plenty of benefits to this format but the big three are:

  1. Cost: it’s cheaper because hardware and maintenance costs are shared among hundreds of clients.
  2. Scaling: organizations can grow or shrink their IT usage without capital investment.
  3. Elastic resources: organizations can rapidly turn on additional resources to cope with traffic and usage spikes without impacting performance.

Together, these benefits mean companies get a better product, for less.

3. SaaS business models

The Software-as-a-Service, or SaaS business model is when a company charges their client a recurring fee for the amount of their product they use.

For instance, if you buy our SaaS cloud PLM and only want 10 licenses, then we only charge you for 10 licenses.

Likewise, if you need 10,000, we charge you for 10,000.

The SaaS cloud PLM business model means that users only pay for what they need as a service rather than buying the software as a one-off product purchase.

The SaaS business model means that users only pay for what they need.

It also means that companies are incentivized to keep their customers as happy as possible for the entire duration of their service, because if they leave, then the company stops making money.

4. Cloud supports best of breed solutions

This isn’t true across the board.

But in general, SaaS cloud PLM solutions are much more likely to support best of breed software and integration.

First, it’s what customers demand.

Because SaaS providers focus on lifetime customer value are, they incentivized to provide whatever integrations their customers want.

Second, SaaS cloud products are designed to integrate easily.

Open APIs to push and pull data, as well as service development kits (SDKs), mean products like true SaaS cloud PLM tend to work well together.

Finally, there’s a generational trend.

Cloud technology tends to be built on newer architecture (e.g. rest APIs vs SOAP APIs), which means that it’s been built in a world where integration was the norm rather than the exception.

The rise of Cloud Lite

So let’s compare our definitions again.

Cloud in a technical sense is any computing service delivered over the Internet.

Cloud in spirit is a solution that is:

  • Always improving
  • Hosted on a multi-tenant structure to reduce costs
  • Scales instantly
  • Based on a user-centric SaaS business model
  • Integrates easily with other software solutions.

And we’ve noticed major PLM providers claiming that they’re SaaS cloud PLM solutions.

In reality, though, they just offer a new delivery mechanism for their existing on-premise solution.

And this raises a number of problems:

  • Licensing model remains the same: there’s no move to SaaS pricing, so customers are stuck paying the same high fees without the ongoing product improvement in PLM functionality that a SaaS pricing structure demands.
  • Configuration and implementation costs are lower, but not much: there are some cost savings, but because it’s based on a single-tenant structure, the provider still needs to spin up a server. This is faster and cheaper than if you have to start from scratch, but still takes more time and effort than a true cloud solution.
  • Integration remains difficult: there’s no change in how easy it is to connect software solutions because there’s no change in the on-premise solution other than the location of the server. Connection with other software is complex and often requires custom coding.

And we’re not alone in feeling that the meaning of SaaS cloud PLM has been diluted.

A leading industry analyst we spoke to explained:

“Traditional PLM providers are essentially offering the same aging technology with all its hang-ups and challenges – they’re just offering it through a web browser instead of a desktop app.”

To be fair, there are some benefits to Cloud Lite applications.

For instance, it is better to outsource your hosting to a data center because they’re better at hosting than an organization can hope to be.

But that’s not enough to brand your on-premise solution as a “SaaS cloud PLM.”

Why Cloud Lite?

Why are we seeing this development in the marketplace?

If you’re going to invest the effort into a marketing and product release saying ‘we’re now cloud!’ then why not actually be a thoroughbred cloud solution?

The short answer is:

They can’t.

First, traditional PLM providers are old.

They’ve been around for a long time, so a lot of their solution is built on creaking infrastructure.

Second, traditional PLM providers overwhelmingly offer PLM as an auxiliary product.

It’s not their primary focus and has been developed internally with limited resources or purchased at some point and bolted on.

Finally, traditional PLMs have grown through acquisition.

While they position their on-prem solutions as single suites, if you pop the hood you see dozens of software products, purchased and then stitched together.

The result is that it’s not possible to turn their existing software solution into a cloud one without huge resources to completely restructure their product.

Conclusion

The expectations for SaaS cloud PLM technology have reached new heights.

Now, “cloud” is synonymous with fast, cheap, multi-tenant solutions that scale with your business and are delivered on a SaaS business model.

Integration is the expectation, and continuous improvement is the norm.

But there’s a fox in the henhouse.

Increasingly, traditional PLM vendors are arguing they provide a cloud solution when in reality they leverage cloud computing as a delivery mechanism only.

Implementations remain long, custom integrations remain the norm, and hosting costs remain high.

Technically, it is a cloud solution.

But does it embrace the spirit of cloud computing, leveling silos and fuelling collaboration, simplicity, and ease of use?

Not a chance.


Image credit: Ethan Richardson via Unsplash

2018-12-12T14:11:23+00:00