PLM as a Strategic Weapon: An Underlying PlanetPTC Live 2011 Theme - Part 1

Living in close proximity to the headquarters of PTC (NASDAQ: PMTC) in the Boston metropolitan area, and given numerous contacts and interactions with the vendor in the past, it might sound surprising that only this past summer I attended the vendor’s annual PlanetPTC Live conference for the very first time. Well, at least my former colleague Kurt Chen did attend PlanetPTC Live 2010, and based on his report from the time, there were no major earth-shattering announcements.

To be fair, the 2010 event showcased Windchill FlexPLM [evaluate this solution], a specialized version of the Windchill product lifecycle management (PLM) suite based on the 2005 acquisition of Aptivis, which has since enabled the vendor to address the needs of softline retail footwear and apparel/fashion firms. Also at last year’s conference, PTC announced a few new Winchill modules such as Windchill ProductPoint and Windchill SocialLink.

By extending the capabilities of Microsoft SharePoint, these collaborative solutions enable the sharing of computer-aided design (CAD) and other structured data among teams through social computing and associated Web 2.0 technologies. PTC hoped that these offerings would attract interest among PTC's customers and small to midsize manufacturers seeking a team-centric PLM offering with a good understanding of how design teams collaborate on new product development.

Community-based product development certainly makes sense since few PLM tasks nowadays are really standalone or can be automated via, say, electronic data interchange (EDI) in enterprise resource planning (ERP) systems, but again, it did not sound like a blockbuster announcement. For example, Dassault Systemes has a collaborative product called 3DSwYm, which was developed in-house, and is not based on SharePoint (since Dassault is mainly a Java shop).

As for the lower end of the market, Siemens has the Velocity series for small to medium businesses (SMBs), which includes the Teamcenter Express, Solid Edge, Femap and CAM Express components. For its part, Smarteam is Dassault’s longstanding midmarket product data management (PDM)/PLM solution (although there have been some rumors about the product's discontinuation or spin-off). Nowadays, Dasault’s V6R2012 suite is also available for SMBs via "express" applications, and Solidworks is a successful mid-market 3D CAD product. Needless to say, prior to being acquired by Oracle, Agile PLM has been an incumbent mid-market product.

To be fair, at PlanetPTC Live 2010 there was a hint of a major (even revolutionary) new product design “uber” suite in the making, code-named Project Lightning, but in general, the annual event was fairly subdued. Well, what a difference a year can make!

Blockbuster PlanetPTC Live 2011 Announcements

For one, in late 2010, Project Lightning turned from a fledgling pie-in-the-sky project into a ravishing product suite called PTC CreoAs discussed in my recent blog post, Creo leverages the pertinent cherry-picked functional components of Pro/Engineer (Pro/E), CoCreate, and ProductView, all of these rewritten in a unified data layer, to accommodate all of the following product design requirements (methods): 2D drawings/sketches, 3D direct modeling, 3D parametric modeling (a.k.a., history-based modeling that preserves the designer’s intent), dynamic bills of material (BOM), and visualization. To that end, PlanetPTC Live 2011 was the place where the first nine Creo 1.0 applications were officially released to perform particular design tasks for a variety of user roles.

Another major announcement was expectedly about the vendor’s flagship PLM suite. Namely, Windchill 10.0 is the latest release that shipped in April 2011, and has been rewritten to have a distinctly browser- and Microsoft Windows-like user experience. In fact, its primary navigation window is dubbed Windchill Navigator. As I said in my recent post, 10.0 has been the largest release of Windchill PLM suite [evaluate this product] ever, with a US$100 million research & development (R&D) investment after being in the works (including feedback from over 55 beta customers) for 27 months. (To be fair, Oracle did this feat at Agile PLM over two years ago, and the “Navigator” title might have been “borrowed" from here by PTC.)

In paving the way for this release, PTC acquired the assets of Synapsis Technology (subsequently renamed InSight) in 2008, Relex Software in 2009, and Planet Metrics in 2010 for product environmental compliance and cost analysis, product quality and reliability solutions, and environmental impact capabilities respectively. These products have meanwhile been turned into new integrated modules for the idea, concept, and product design phases of the product lifecycle within PTC Windchill. As a corollary, PTC has lately been able to tackle some vertical sectors (e.g., high-tech and medical devices) with the newly added support for environmental compliance regulations within Windchill.

While the recordings of the PlanetPTC Live 2011 keynote presentations can be seen here as well as the report by Oleg Shilovitsky at his Beyond PLM Blog, what follows now are my major observations and impressions of both PTC and the PLM/CAD market trends. Overall, PTC seems like a reenergized company, both creatively (spirit-wise) and financially.

The Numbers Speak Volumes

For some time now, market observers and the vendor alike thought of CAD (or “desktop solutions” in PTC’s lingo) as a mature if not even stagnant market, where all the major players had already staked their territories. In 2010, Heppelmann and his lieutenants did some in-depth soul searching and asked themselves whether the CAD market was indeed that mature, i.e., whether all the product design problems have been solved. The answer was a resounding “no,” which then made them decide to “blend” all of the best functional components from PTC’s renowned and once pioneering legacy design systems and create Creo as a brand new product with an overarching and diverse functional scope.

Thus, at PlanetPTC Live 2011, Heppelmann sounded quite upbeat on PTC’s CAD business growth, which was the best in last 15 years due to the market’s interest in PTC Creo applications. CAD business had been stagnant at PTC for several years, but Creo apparently energized it in late 2010 and 2011: hefty 40 percent growth in new CAD license revenue, the like of which was last seen way back in 1996.

The automotive sector was explosive for PTC in 2010: 28 percent growth, with a whopping 73 percent growth of Windchill. My guess is that PTC remains a good fit for Tier 1 and lower automotive suppliers, given that the automotive original equipment manufacturer (OEM) market is pretty saturated and defended by Siemens and Dassault. Except for the major recent win at Hyundai/Kia, where PTC got everything including the body in white (BIW) design, I suspect that PTC is still talking about winning in power train design organizations.

Moreover, the medical devices vertical is the fastest-growing market for PTC, although starting from a much smaller starting point and facing fierce competition from Oracle Agile PLM as the leader in the segment. PTC seems well-positioned here because of Windchill's solid document management and quality and compliance capabilities, in addition to PTC’s CAD and field service (Abortext) capabilities. With all this in mind, at PlanetPTC Live 2011 PTC expressed its desire to become US$1.6 billion company in 2014

Enterprise-wide Relevancy

But beyond these hard numbers, PTC has become a relevant participant in conversations at many departments and management levels within corporations. Namely, when it comes to CEO’s, CIO’s (and other C-level executives), PTC’s solutions are able to help them in terms of globalization (developing globally competitive products), IT consolidation, closed-loop quality process, and green and sustainability issues. Even in its strongholds, the engineering departments, PTC has lately embarked on noble initiatives to help designers with rationalizing mushrooming product variants (in these days of mass customization), systems engineeringagile (product) development, and multi-CAD systems.

The aforementioned Windchill FlexPLM product is PTC’s answer to supply chain management (SCM) and manufacturing operations of apparel & footwear retailers and manufacturers. During his keynote presentation, PTC’s CEO talked about JC Penney and Target using the offering, in addition to about 40 other retailers. While I was aware of PTC quietly gaining market share in the space, I did not know about the touted material management and supply chain optimization capabilities.

My belief is that Windchill FlexPLM is still much more often used for managing product development for the private labels that these retailers have. CAD to PLM integration is critical in fashion retail supply chains. Most of the manufacturing is outsourced and manufacturing execution systems (MES) capabilities are far less important (which plays into PTC’s hand, given the lack of its own MES and plant automation offerings).

Last but not least, service departments have long been served well by PTC’s Arbortext service manuals publishing solutions. In the realm of service information, Arbortext has been superior in terms of 2D & 3D illustrations, structured authoring, structured content and change management, and technical publishing, especially in the military and civil aviation sector.

However, as admitted by Heppelmann, the focus has lately moved from delighting the folks that publish manuals to the recipients and users of those manuals, and how to make reading these instructions faster and easier. Electronic delivery is the way to go vis-à-vis getting rid of unwieldy (and environmentally unfriendly) paper manuals, and Arbortext has lately been helped by Windchill’s document management and Creo’s 2D sketching/drafting capabilities.

To be fair, within the burgeoning SAP PLM suite (see TEC’s previous article on the product), SAP has lately garnered significant field service capabilities. Even if SAP is currently somewhat functionally weaker, the giant vendor brings execution and management capabilities to the so-called “SAP shops.” For a non-SAP shop, PTC still has a better service info solution, given that a non-SAP shop is unlikely to buy standalone SAP PLM. The importance of service info capabilities can be seen from Dassault’s 3DVIA Composer offering and Siemens’ recent partnership with Cortona3D.

Trailblazing System Design (Engineering)

Via PTC Creo (and its aforementioned predecessors) PTC offers CAD solutions throughout the entire enterprise: from 3D/2D design and/or validation via 3D/2D manufacturing information to 3D/2D service information. In a similar manner, Windchill offers BOM (PDM) information throughout the enterprise: from engineering BOM’s (eBOM’s) via manufacturing BOM’s (mBOM’s) to service BOMs (sBOM’s).

But one trend has almost unnoticeably sneaked up on all of us: virtually every product involves some software component in its design. As the percentage of software in discrete products increases, embedded software design and application lifecycle management (ALM) has become a mission-critical issue. Heppelmann gave an example of utility meters going from primarily a mechanical design to primarily a software design. Moreover, software components are by far the most serviceable parts of many products that change much more often than their mechanical counterparts (from physical wear and tear).

PTC has not only noticed the trend but has decided to become a trendsetter in the market by forking out US$300 million for MKS Inc. in May 2011, and the company’s market-leading Integrity product for embedded software PLM and bug and version management, competing with Jira, Bugzilla, etc. Over time, the Windchill RequirementsLink module will be superseded by MKS Integrity Requirements as a more complete ALM solution

With some help from Creo (i.e., Mechanical CAD [MCAD] and Electronic CAD [ECAD] applications) MKS Integrity will cover the following systems engineering bases: requirements management, system design, detailed design (MCAD, ECAD, software), subsystem testing, and system verification and validation. Currently, these capabilities are cutting much broader swaths compared to PTC’s main competitors.

Indeed, the main goal of Dassault Systemes’ 2010 acquisition of Geensoft was to digitally validate embedded software in intelligent vehicles. The product will evolve over time, but at the moment, it is much more specialized (or narrow, if you will) compared to MKS Integrity. For its part, given Siemens’ stronghold in the automotive sector, system engineering is packaged with requirements management together in Teamcenter Requirements as one module. Siemens has been a PLM leader in requirements management and systems engineering for over a decade since the acquisition of Slate, but my understanding is that requirements management is still the main strength of the product.

Part 2 of this series will continue with the remaining PlanetPTC Live 2011 announcements and how they compare to the rest of the CAD/PLM market. In the meantime, your comments, thoughts, suggestions, or individual experiences with the aforementioned product development issues and PTC’s related solutions are customarily more than welcome.
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