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Wednesday, May 10, 2017

PTC's Cloud Strategy: An interview with Kevin Wrenn

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CIMdata's Vice President of Research, Stan Przybylinski, recently sat down with PTC’s General Manager of PLM, Kevin Wrenn, so that he could learn more about PTC's cloud strategy.

Let's find out!

First some context ... PTC is one of the world’s mindshare leaders in PLM based on CIMdata’s global PLM market analysis. They offer a wide range of solutions, including Creo for mechanical computer-aided design (MCAD); Integrity for application lifecycle management (ALM); ThingWorx, Axeda, and Kepware for the Internet of Things (IoT); Servigistics for service lifecycle management (SLM); and Windchill for data and process management (the PLM segment for PTC), the focus of CIMdata’s cloud research program and this interview.

Our interviewee was Kevin Wrenn, PTC’s General Manager of PLM. His responsibilities span core PLM, SLM, Arbortext (enterprise publishing), and ALM.

How important are cloud-based solutions to the strategy of PTC?

Our customers are evolving. They are going through a digital transformation and want to get to market faster and bring down costs. They need to drive value faster through their product lifecycle management (PLM) solutions to allow for greater engagement and collaboration with their own customers, partners, and value chain. Cloud-based solutions are of top importance to PTC as they can help our customers to accelerate their digital transformation. To showcase our commitment, I’m excited to share that PTC’s cloud business doubled in 2016, and 7 of our 10 largest deals were on the cloud. All of our discussions with Chief Information Officers (CIOs) focus on their initiatives to get to cloud in 3-5 years. It is important to our customers, so it is key to PTC’s strategy.

Even if these companies are not planning to move to the cloud immediately, they always want to talk about it. They want to hold onto the benefits of their current solutions such as security and performance, while also being able to scale up or down based on their own business needs. That’s what makes PTC’s PLM Cloud software as a service (SaaS) offering attractive – it provides them flexibility. Customers who have Windchill on-premise can migrate their instance to the cloud, or PTC can help them move to a standardized offering on the cloud over time. PLM Cloud SaaS offers a breadth of capabilities with additional a la carte options – all offered through a pay-as-you-go subscription pricing model.

PTC’s strategy is to make its PLM SaaS offerings the most attractive way to buy and consume PLM value and to realize the value of an ever-increasing suite of pre-integrated capabilities for analysis, manufacturing, service information management, all the way to connected service.

Right now, our cloud business can take a couple of forms. Some customers buy licenses, either on subscription or perpetual, and PTC hosts the solution and delivers managed services for them. Getting them in the cloud provides a more secure alternative that can be more available, and PTC can be more efficient at managing it. When people want to buy SaaS, over time they will get more functionality and scalability than they will if they purchase any other way.

What about the ecosystem of infrastructure, applications, and other partners that are part of your offerings?

When PTC acquired Servigistics, the company had about 50 hosted clients on a private cloud center. That infrastructure still exists for mainly service lifecycle management (SLM) customers. The vast majority of our new offerings are hosted on Amazon Web Services (AWS).

We also use AWS for re-hosting the on-premise instances of our customers. When customers ask about cloud, our standard response is AWS. They can offer infrastructure that PTC could never approach, and unparalleled security and availability. AWS also gets more cost effective year over year.

Something else I’m really excited about is the addition of ThingWorx Navigate (that provide role-based apps) in the next release of our SaaS offering (expected in May 2017). We’re seeing that enterprise collaboration is a critical function of PLM software. ThingWorx Navigate will extend PLM to the enterprise and supply chain, and will help accelerate product development with faster time-to-value and time-to-market.

Our PLM SaaS offerings enable channel partners to reach smaller customers and startups who either don’t want or cannot justify owning and managing the hardware and software infrastructure. And the benefit to our VAR’s is that they realize the same margins on SaaS as with selling software licenses alone but on a much larger total deal. PTC shoulders the risk to deliver the service while partners can focus on the higher-value business process services. We are working with our partners to ensure that it can be a winning business, but admittedly this is a work in progress.

There’s been some reluctance because the model is different than business as usual. Together we are building a model to ensure they can still have viable growing businesses. For example, we are showing them how smaller companies can leverage data downstream where they can show some real value. Windchill is not just for expert users in PLM. When you are managing the data what is the best way to extract value of this data in manufacturing, services, or with customers? In fact, there is much more interesting work in that area.

How does your solution and its go-to-market address the issues raised by your customers and prospects?

Many cloud providers focus on whether solutions are single tenant or multi-tenant, but we have found this does not matter to many customers. They just want to pay a single fee and get up and running as quickly as possible. And, they don’t want to be limited by vendor lock-in or an incomplete set of offerings. In some ways, multi-tenant has become idealized, but in our experience customers are more focused on rapid time-to-value.

PTC has breadth and completeness to its single tenant cloud solutions – we have everything from document management to visualization, enterprise collaboration, and even system integrations. Our customers can get everything they need in one cloud instance.

Accelerating time to value to these capabilities can be realized through PTC’s fast, easy cloud deployment, free and rapid updates, upgrades, and maintenance. Customers can scale up or scale down with our “pay as you go” model. Active pricing models make it easier to promote adoption and to collaborate with partners, customers and external teams. Through SaaS delivery, we also transition PLM from being a hardware or software expense to a smaller operating expense (OPEX) – there is no capital expenditure (CAPEX) involved.

Adding to the flexibility of our cloud offerings – is our integration capabilities with on premise systems. Our customers can stay with their existing on premise instance or go completely to SaaS. There are options – it is up to them.

How are your offerings going to evolve in the short to medium term (1-3 years)?

Eventually our whole portfolio will be available on the cloud. Because this is just an idea at this point, we will have to consider how we best leverage assets on the product and service side.

To date, Windchill and our service parts management offering are available on the cloud. We want to make it easy for our customers to try new technology in the cloud - our CAD, ALM, and manufacturing offerings are heading in that direction. We will be adding more pre-integrated capabilities, and more functionality OOTB.

Vuforia, our virtual/augmented reality (AR/VR) offering, will begin to show up everywhere. In engineering, the combination of ThingWorx (IoT) and Vuforia will help customers leverage source data from IoT, PLM, enterprise resource (ERP), and other enterprise systems. We can bring this information to provide a more holistic design experience without having all the systems co-located. Currently we have some prototypes that demonstrate how this works.

On the manufacturing side, we will offer AR/VR work instructions, leveraging data from other enterprises. This will extend to service delivery in the field using remote instructions.

Overall, the cloud offers enables some exciting capabilities, so over time you will see some very interesting offerings from PTC.

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