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Cloud PLM strategies is an interesting place these days. When you think about how to move from one shining mobile phone to another, you mostly do care how to transfer contact lists and not to forget pictures made by phone camera. Few days and you’re done. Think about your old iPhone sitting in your desk drawer just in case you will need a piece of data from that phone? Will you like such option? I doubt…

Things are different in enterprise software. Systems are not really dying, but very often moving from one stage of use to another. The complexity of enterprise systems combined with decades of lifecycle and accumulated data won’t allow you to drop a system and replace it in a week. So called “big bang replacement” is not a real option for PLM systems. Established vendors are spending tons of efforts and resources to maintain legacy systems long time after active development is done.

The situation is really interesting these days in engineering and manufacturing companies. As a matter of fact, 99% of data is stored in local on premise systems. With a growing adoption of cloud systems by IT, the question about what will happen with this data is really interesting one. I can see few options. One of them – PLM vendors will offer cloud bridge for their on premise systems and move all data to the cloud storages and hosted systems. I’d expect system like PTC PLM cloud to support it as it advertised – “Hassle-free PTC-owned upgrades and updates”.  Another option is to leave all these old systems “as is” in a maintenance mode and build overlays to connect data to new modern cloud PLM systems.

Uncertainty is a good time for newcomers focusing on replacement of legacy systems to spread FUD about what is going to happen. It is well known marketing and sales tactic. I found an interesting example of FUD in recent Propel PLM blog – Why the Sudden Interest in Cloud Migration? by Miguel Tam, Propel’s VP of Marketing. Here is an interesting passage:

We’ve been getting a good amount of questions recently about cloud migration and PLM, especially from large enterprises. While Oracle has been pushing really hard about moving all their customers to the cloud, we’ve seen a recent spike in questions from companies using Dassault, Siemens and other PLM systems.

There have always been lots of reasons why you want to move to the cloud. But I’d like to thank the Oracle team for making it really clear to all their customers that they’re moving to the cloud whether they like it or not. In recent webinars, even Oracle partners are saying that Agile PLM is end-of-life and that “Agile 9.3.6 doesn’t have an exciting future…and would be mainly bug fixes.”

There are countless reasons why you may want to completely swap your existing on-premise PLM for a cloud PLM, but what if you’re not quite ready to do that? Organizational change, hundreds of process extensions, and countless integrations may make you hesitate in going all-in on the cloud.

Article provides also points why companies would not to move to cloud systems provided by vendors such as Oracle and instead of focusing on overlays – cloud systems such as Propel sitting on top of legacy systems such as Agile PLM.

Let’s leave cloud marketing, FUD and sales tactics aside and think about what can serve customers in a better way. I will use Agile PLM and Oracle as an example. Each large PLM vendor has its skeletons in the closet. But, regardless on specific vendor details, there is an advantages for customer to stay with Oracle. By moving to Oracle cloud systems as a replacement of Agile PLM provided by Oracle , customer will get bigger bang for the buck. Sometimes, it is not apples o apples comparison because systems have different functions, but anyway economically customer will prefer to stay with Oracle. Replacing Agile PLM with another cloud system will cost more. Here is a thing… by keeping existing PLM system and designing overlays customer can optimize his investment and spend resources to a new system. Great idea, but here is the catch… It is all about lifecycle of these systems.  Agile PLM will die eventually and will have to be replaced later by a new system. By the time it will happen, new cloud PLM system will have an advantage as a system already used by a customer. Customer might end up paying more by replacing legacy on premise PLM with new cloud systems. Choosing an option to stay with legacy PLM and migrate to their new version of cloud PLM system can be suboptimal as well because of other aspects of new cloud PLM systems. Tough choices for IT to make.

What is my conclusion? Competition with status quo is the most complex sales situation. As a company replacing old system, you need to be faster, cheaper, better. And you need to justify new investment to replace system that most probably is still operational. The decision process can take long time. After all, most of large manufacturing companies aren’t in hurry at all. They can easy spend 3-5 years on evaluation and pilot projects. Overlays might be the only option for newcomers selling PLM to large enterprises. So, by protecting existing on premise systems, new PLM vendors are increasing chances to secure future revenues from migration of legacy PLM systems to new solutions owned by new vendors. At the same time, there are lot of reasons to choose new systems without legacy and old implementation problems. We’re going to see lot of these stories in PLM for the next 5 years, in my view. The stakes are high. And the jury is still out to see results. Just my thoughts…

Best, Oleg

Want to learn more about PLM? Check out my new PLM Book website.

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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