CIMdata's Vice President, Stan Przybylinski, recently sat down with Jon Hirschtick, Executive Vice President and President of SaaS at PTC and David Katzman, Head of Customer Experience and Strategy, Onshape at PTC, with a focus on learning about the cloud strategy at Onshape and Atlas.
Let's find out!
The content was edited for length and clarity.
How important are cloud-based solutions to the strategy of your company?
Stan Przybylinski (SP): The first question, how important are cloud-based solutions to the strategy of your company? Obviously, Onshape is core to PTC, but most of PTCs current business is on-premise. There’s a cruise ship (the bulk of PTC’s revenues) and a harbor boat going in parallel, and at some point, they must merge into something that will be a supertanker or something better.
Jon Hirschtick (JH): Well, you know, great navies have more than one ship! First, cloud solutions are really important to PTCs strategy. I think that mirrors the importance to the customer, not because of what the customer is asking for, or what they sell or buy, but because of the potential of cloud used properly to enable higher benefit to the customer. Just like computers in general gave benefits to the customer. Cloud has potential, there’s a number of ways to use cloud, and we’ll talk about that and how each of them have escalating levels of potential to impact and benefit the customer, whether they realize it or not. It’s super important to us because it’s super important to our customers whether they know it or not.
SP: You said that ‘Cloud is an important technology, and there’s multiple and different ways to use it to benefit the customer.’ To me that’s the most important thing. A hosted solution provides benefit to the customer, it just can’t provide the same benefit as other applications of cloud technology.
JH: Correct, that’s just the point, a legacy solution provides some benefits too. We’re not trying to tell every customer to switch midstream, that wouldn’t be good for them. One of the points I really want to emphasize, because I thought it would come up, would be this idea of different ways to use cloud to produce different benefits.
Q: Please describe the ecosystem of infrastructure, applications, and partners that are part of your offerings?
JH: The core of Onshape has evolved into becoming the Atlas platform, for not just Onshape but a range of PTC applications that are under development. We’ve announced a couple like GDX for Creo generative design extensions for Creo that’s going to be on Atlas, Vuforia is moving to the Atlas platform with their current solutions moving over and some certain new solutions. Creo and Windchill are going to build let’s say “SaaSified” offerings, like we say there are levels, and even Jim (Heppelmann, PTC CEO) would tell you this, there are levels of “cloudness” there, so we will bring some benefit to those users too.
Outside of Onshape we have a whole ecosystem of partners in areas like rendering, simulation, CAM, mathematics tools, and more. These are third-party applications that can be either full cloud, directly integrated apps that live inside the Onshape window; they can be what we call “Cloud connected” apps that live in a separate browser window side-by-side with Onshape, or they could be desktop apps, traditional apps that communicate using our Onshape Cloud API. The other category that’s worth mentioning is customer developed applications, because customers write software that uses our API. Those are things that you’re not going to see or hear about, but I’ll just say that they do it. I think that gives you an idea of the ecosystem, the picture of it, and what I’d say is in the full cloud world it opens the door to all sorts of integration possibilities that were impractical in the old world, and we’re seeing people take advantage of that, and we expect to see more in the future.
SP: You said customer developed apps? Is there a way for those for customers to put their apps somewhere so other people can get them?
JH: Well, if they wanted to, they could put them in our App Store. I can’t think of any customers that have done that so far, but in theory they could.
We do have examples of that in the customer feature world. I just talked to a customer recently that has a project to do some piping design and they were happy with some features created with FeatureScript. (FeatureScript is a new programming language designed by Onshape for building and working with 3D parametric models. -Ed) I don’t remember who it was written by, but they found it online and used it very successfully. They were very happy with it.
David Katzman (DK): I’ve spoken to customers who have taken some of those open source custom features and evolved them for their own use cases, building off of it to directly address some of their challenges from their design process. One customer I know alone has over 10 FeatureScript-based custom features that I believe they deployed across their organization to do a variety of things. They are not open source.
JH: Yeah, they’re not. They’re not publicly visible, but they are used in our solution pretty heavily. In fact, I had a customer tell me they considered the existence of their application to be a trade secret. The CEO does not want their competitors finding out what they have been able to do with Onshape. They literally did not want us to suggest using FeatureScript to achieve such high levels of automation.
SP: Let’s talk about cloud infrastructure. Which cloud services do you use?
JH: Onshape is on AWS right now. For Atlas we use both AWS and Microsoft Azure.
SP: Is there an Onshape channel?
JH: Yes, we work through the PTC Partner channel and they’re just ramping up now with selling some Onshape. There is a case study online: https://www.youtube.com/watch?v=k39nE1j9Rhw&feature=youtu.be
Q: How does your solution and its go-to-market address the issues raised by your customers and prospects (e.g., packaging, licensing, deployment options)?
JH: Well, there’s the solution and the go-to-market. Those are more integrated for our solution than for any other system in the market I would imagine. From a solution standpoint, we basically solve the problems of licensing deployment so well that we can almost say they are eliminated. You know, I won’t say they’re completely eliminated because you can’t just imagine in your head that the other colleagues get it. You do have to type an email address to have it happen. So yeah, we could deploy 1000 users with CAD and PDM globally, including being sure it’s going to work reliably on all their hardware and do it securely in less time that’s taken for this call so far.
SP: As long as you can adjust to an Excel sheet, right?
JH: Yeah, well, you don’t even need that, Stan. We tried to limit it because the Excel sheet is too much work for some people, so we have single sign on (SSO).
If you have a CIMdata SSO, we don’t care if it’s Azure or AWS, just use your ID to log in. That’s it. It’s like insanely easy when you look at the costs. Every customer I’ve ever been to either just finished some huge upgrade process, they’re just in the middle of some upgrade process, or they’re planning some big upgrade process. And sometimes all three at once. They’re so used to having teams of people and headaches and complexity and configuring computers and all this stuff and we just shove all that in the ocean.
The SaaS buyer doesn’t really think that way. The Cloud hosting buyers say they need to know all about where you’re hosting it, but the SaaS buyer is more like, hey, you’re going to take care of that for us.
DK: I think you are alluding to the integrated go-to-market and service that comes with the Integrated go-to-market. What I have found is that is one of our differentiators goes beyond the technology: the pre- and post-sales support that actually comes from our tech services and then the integrated support capabilities that come with the SaaS platform.
Tech services and support can access the models a customer is working on and provide support in that context. It’s such a unique feature that really is only available in SaaS deployment. In fact, it’s one of the key attributes of SaaS in general. We continue to see that our integrated go-to-market and support model is one of our key attributes and differentiators that we’re bringing to market.
Q. How would you describe your primary target customers (e.g., startups, small to medium sized enterprises, anyone) for Onshape? Or the Atlas platform?
JH: These are two very different things that should be taken separately. Our target customers are across the board and size. They could be small companies; they could be large enterprises.
That doesn’t mean that we’re doing the largest projects at the largest enterprises. We’re not doing Newport News Shipbuilding, the aircraft carrier and stuff like that. OK, we don’t do everything for everyone. But we do have a lot of interest in larger organizations and small ones.
I think that the target customers are organizations that are seeking to improve how they operate along a few different dimensions. First, sometimes an organization is very focused on improving collaboration and innovation, and they understand their current tools don’t allow them to do that.
Second, they want more efficient use of people and dollars. People ask why they are spending all this money on CAD and PDM, and by the way it’s not just about CAD it’s about data management too. Today we have a lot of deals now where people are saying “we’ve been using SOLIDWORKS but we have this huge bill on our desk to buy a PDM system. It’s going to be a server and going to be one place anyway, blah blah blah, I can’t be efficient and use all my money for that or my people’s time.”
Third is companies that are cloud forward. People have already concluded that cloud is a shorthand for the first two. Yeah, they know that full cloud solutions are going to be more efficient with their time and their money, and they know that full cloud is going to let them collaborate better. They may have already collapsed those benefits into cloud and say “We are a cloud-forward organization. We’re a new team and we’re going to get Google Docs in Gmail and we’re going to use Salesforce and we use Zendesk and we’re going to use Workday. What do you have in CAD and engineering?” And we’re the only choice.
Let’s be honest here. I know our competitors will all say they have cloud solutions. They are, as we said earlier, like in PTC where you can host Creo or Windchill in the cloud. Those are good things to do, those aren’t bad things to do, but those aren’t full cloud solutions and the same is true of our competitors.
Those are things that generally our prospective customers are looking for and I would say we do best when they’re at some kind of seam in their process, such as when they’re finishing one product and about to start another, or they’re an organization that’s always starting new products, or they’ve reorganized, or starting an innovation group. There is almost always some sort of shuffling of the deck, a good time to rethink what they’re doing. Guys, you have anything to elaborate on there.
SP: The target customers are people that are experiencing the pains and have a need to address them. That could be a small company, right? Jon talked about efficiency. Very small companies can come to you and plunk down a credit card and get a couple seats. A Fortune 500 company might come to you because, like you said, we have a corporate directive to get everything that we can on the cloud and virtualization isn’t doing it for us.
JH: Yes, absolutely. In fact, we’re doing a webinar with DHL’s digital manufacturing team. If one were to tune in there one might find, you know, 50 or 100 pretty interesting companies tuning in alongside. We’re talking to some really, really big and emerging companies. Some companies with huge brands. I wish I could tell you some places we’re in, you’d be surprised. A lot of situations are multi-CAD.
SP: That’s a use case you guys address well.
JH: But if you dig into it at the corporate level. Take some of these largest, best-known companies out there. We just did a review of some of our new crop of accounts. We did a small sampling as there would not have been time to review all of them. Those were all large companies, the kind of companies that would be talking to you, Stan, and this meeting was specifically aimed at that segment for us.
If you dig deeper they are all initiatives and projects led by someone who is that change maker who is saying, “you know I want something different for my organization. I want to change how we work. I want to be more efficient with money and time. I want to change the way we work. I want to collaborate. I want to innovate.”
In one case, a customer wants to reduce the time they’re iterating on a product design that they’re redesigning all the time. It is a very familiar product. You know marketing, sales come to him and say, “can we get a variation? Could we get another variation?” Right now, they can’t turn it around fast enough. They can’t give people access to the data. They want to change the way that dynamic works and they see our system as a platform to do it. We don’t want to talk about any of these, but I wish we could because they’re really some really great name companies where we are often working in a smaller group within the company. Some very exciting customers and projects.
Q: Can you provide any information on your installed base that are in production: how many customers, their industries, etc.? How well has it been growing recently and what do you expect over the next 2-5 years?
JH: We say we have thousands of customer companies. You know that and I’m not talking about free users and, you know, maker space. Yeah we could give you some eye popping numbers of free users. But that’s not the market. We do for that for other reasons.
I’m talking about companies that I would tell you would be the kind of people who would have bought SOLIDWORKS or others if we weren’t around. We have thousands of real companies using the system in our fourth quarter, in which we saw 80% sales growth year-on-year. And how many are in production? Great question.
DK: We don’t have an official stat. I can tell you that our churn rates are incredibly low for our professional grade customers and that’s an indication of being in production.
JH: How to measure production? What do we expect over the next two to five years? I mean, I think we expect continued growth and, honestly Stan, a tipping point. I wouldn’t say the tipping point has arrived yet in the commercial business.
Now I want to talk about another segment that I want to bring into room which is the academic and educational business. Not your focus, but just to take a moment here. If we look at that installed base there is explosive growth. We added over 100,000 educational users in September. We’re talking about a real hockey stick, reached the tipping point growth in education. We haven’t quite hit that on the commercial side. We’re growing nicely but the market hasn’t like flipped and tipped. In education though dramatic movement, particularly in K12, because of remote teaching and use of the Chromebook and iPad--we’re still the only solution that supports iPad and Chromebook. We run on all of the platform’s students have. Other solutions support some of them. We’re the only one that covers all of them and, as a result, those students and teachers are coming to us in droves and we’re really excited about that.
SP: Was that since or before COVID?
JH: Before COVID we were doing great. You know, if I had talked to you I would have said wow, we had really nice growth rate. Once COVID happened we went from nice growth to true hockey stick. Before COVID it was like this year to year, you know going up and, of course, it goes down in the summer. Then with COVID it was like a fighter jet, you know we went from being a commercial airplane, taking off to be Top Gun. You know, like we’re pulling 5Gs.
SP: And your infrastructure handles the G forces?
JH: Beautifully, beautifully. If you want to measure daily usage on our platform by students, you’d measure it in person-years. The amount of usage is mega, mega – there, so we’re really excited by the platform. It held up great.
But most people still have scheduled downtime. Do you know what our scheduled downtime was last year? Zero. You know what it was the year before that? Zero. And zero the year before that. Year before that, we’d have to look a zero again. What a coincidence. We don’t have scheduled downtime, Stan, we’ve never had any of it, period.
Q: How are your offerings going to evolve in the short to medium term (1-3 years) – what are the primary themes/strategy on your roadmap?
JH: I’ll give you 3 fronts to think about. First in Onshape. We’re adding to both our depth of capability and breadth of capability and let me elaborate in depth. We’re still adding like crazy. By the way, we’re the fastest evolving product in the market with releases every three weeks. I don’t know if you knew that, Stan, 16 releases last year. Last year 16/17 releases per year , every three weeks. So, our functionality increases at a faster rate than anyone in the industry and all our customers are always on the same release: the latest one.
So, first is depth. We’re going to be adding more depth to all areas of the product. You know, modeling, drafting, the FeatureScript language, our APIs, assembly modelling, and more. We’re never done adding features, improving ease of use, and improving performance. OK, lots to do just in the areas where we already have some capability.
The second aspect is the breadth of the Onshape product offering. We’ve constantly expanded the breath into new areas. I can tell you that we’re working on. Generative design capability will be coming out in Onshape. We are going to be launching some really cool things in ECAD/MCAD integration. Our data management range is going to increase not only with point features, but with the types of activities we cover. And you’ll see other hopefully notable new functional areas for us to come into. So that’s the Onshape agenda: more breadth, more depth.
Then on Atlas, you’re going to see Atlas evolve as a platform in the range of services it offers. The core of Onshape was built for the services Onshape needs and that evolves over time. We need to improve what we offer and so you’ll see Atlas evolve in services. And then you’ll also see more and more new applications from PTC based on Atlas, as I alluded to earlier. The themes for Onshape, more depth and more breadth offering more power for existing customers and to appeal to more customers in the market. And then for PTC, Atlas is the route to more SaaS applications delivered faster, with products that look and perform better. As a bonus those products will work well with each other both from a UI experience and a data integration experience.
SP: What you have achieved to date is impressive and you certainly have a lot on your plate. Thanks for taking the time to speak with me today.
This blog post is part of a collaborative research program on adoption and use of cloud/SaaS PLM solutions. CIMdata is looking for industrial respondents for a survey that CIMdata is running on this topic: [Take the Survey]
We look forward to hearing your comments and hope you are able to take the survey!
Stan
* On January 19, 2021, PTC announced the completion of the acquisition of Arena Solutions, a pure, multi-tenant SaaS PLM provider. PTC expects the acquisition to directly complement its Onshape pure, multi-tenant SaaS CAD and PDM solution. This combined solution will also complement PTC’s existing Windchill and Creo businesses by expanding the company’s presence in the attractive mid-market, where SaaS solutions are widely adopted.
