PLM business has a clear potential to grow. The last two weeks demonstrated that some investors have strong believe in PLM business and it has a momentum. Arena Solutions and Aras Corp. made announcements about investments from growth equity funds. If you missed press releases, check few links below.
Arena Solutions press release is here – Arena Solutions Receives Strategic Growth Investment from JMI Equity.
“We’re pleased to receive this investment from JMI and now have access to their expertise and industry network, which we believe will be critical to our continued growth and expansion,” said Craig Livingston, Chief Executive Officer of Arena. “This is the right time for our business to take its next step as we are in the midst of a sustained customer expansion and evolution of our industry-leading product platform. We’re excited to be working with the JMI team as their perspective and passion for our business are closely aligned with our own.”
Aras Corp press release is here – Aras Announces $40 Million Investment Led by Silver Lake.
“Enterprises need a much more flexible, scalable and upgradable platform for the business of engineering,” said Peter Schroer, CEO and Founder of Aras. “We help companies transform and optimize every stage of the product lifecycle – by enabling the digital thread which connects data and processes from systems engineering and simulation to smart manufacturing and predictive maintenance – and creating the digital twin, the exact digital representation of a car, ship or aircraft engine.”
Although Aras and Arena Solutions are very different companies, I found lot of similarities in these stories. Both businesses were founded back in 2000s – 15-17 years old. According to Crunchbase profile, Arena has $49.95M total investment. JMI deal size wasn’t disclosed. According to Aras’ Crunchbase profile, Aras Corp total capitalization after the $40M investment is coming to $68.2M. So, we have a compatible financial size. Both companies have an interesting story, enough money in the game already and customers who believes in them.
Technologically, Arena Solutions and Aras Innovator are very different products. Arena is SaaS only software available via subscription. Software is available via Arena cloud servers probably running RDBMS database. Arena is offering out-of-the box functionality in various solution ranges. Check more on their website.
Aras is multi-tier software with RDBMS driven backend and Aras proprietary XML driven data modeling engine (known as model driven SOA). Aras is cloud-enabled and can be delivered via hosted servers. Aras famous open-source marketing and business strategy delivered much of success to them for the last 10 years growing installation and charging customers no fee for software. You can buy Aras subscription (note that not all Aras functionality is available for free).
Both companies are looking how to grow. But, in my view, their growth demands are not going to the same place. Arena is coming after high-tech and electronic companies. Those aren’t typically largest OEM and manufacturing enterprises. Although Arena earlier press release gave an indication of increased percentage of enterprise deals.
This figure demonstrates the continued strength and growth that Arena is experiencing in the enterprise sector. The need to connect to a wider array of global suppliers, ease of deployment and the desire for solutions that do not require additional hardware and IT resources continue to accelerate the demand for cloud PLM solutions. In addition, as the number of enterprise transactions has grown, so has the demand for Arena’s professional services, which were up 110 percent in Q2 2015 over the same period last year.
Aras is clearly looking into top high-end enterprise segment of market. Engineering.com article by Verdi Ogewell – PLM is Hot Again: Aras announced $40M investment brings enough examples of these large Aras deals – For example, it is probably no coincidence that GM invested in 50,000 Aras seats, that Airbus went for 30,000 and Schaeffler for 20,000. The article is also hinting on Tony Affuso’s role, former CEO of UGS and Siemens PLM, in the deal. Tony Affuso is currently serving on Aras board of directors. Read more here.
What is my conclusion? Both Aras and Arena will have to grow to provide returns to investors. And it means the balance of forces in PLM (cPDM) market segment will change. The competition between Aras and Arena Solution is unlikely to happen. The number of PLM players is relatively small. So, we will see them competing with existing PLM dinosaurs, special PLM players like Autodesk and few startup companies. Just my thoughts…
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Disclaimer: I’m co-founder and CEO of openBoM developing cloud based bill of materials and inventory management tool for manufacturing companies, hardware startups and supply chain. My opinion can be unintentionally biased.
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