I used an extended pause during the U.S. Memorial Day weekend to catch up on some PLM reading. The article PTC’s Cloud CAD Dilemma written by Verdy Ogewell caught my special attention. In his typical devil controversy style, Verdi brought up the opportunity for PTC to lead the future CAD / SaaS market forward using Onshape SaaS CAD and PTC Atlas platform including support by Creo, Arena, and Windchill. Read the article and tell me what you think. Verdi’s conclusion is based on a few data points and assumptions.

• Onshape is the fastest growing CAD (in small numbers, of course).
• SaaS business is experiencing explosive growth according to Gartner analysts.
• PTC Atlas platform is going to thrive and grow absorbing services such as Creo, Arena and Windchill as SaaS offerings.

Here are a few interesting passages I captured from the article.

A Powerful Opinion Leader for SaaS-Based CAD and PLM in the Cloud. PTC’s chief Jim Heppelmann is one of the players in the PLM area who is the most powerful advocate for SaaS-based CAD and PLM in the cloud. He is supported in his view of the development path by respected analysts. According to independent PLM analyst Gartner, the total SaaS software market will grow by 40 percent over the next two years.

As mentioned above, Onshape is the cloud CAD solution on the Atlas platform, including PDM functions, while in the short term the latest acquisition of the Arena PLM platform will be integrated for more complete cPDm capability (collaborative Product Definition management).

The development work has also started quickly, as expected, and a few weeks ago PTC announced that it has expanded its SaaS function with two new products delivered on the PTC Atlas platform. What is primarily included now is the Vuforia Expert Capture and Creo Generative Design Extension (GDX), which will be included in the existing Onshape offer on Atlas. This shows how PTC continues to accelerate the availability of SaaS products on the market.

PTC’s PLM business accelerated to 15 percent growth in FY20, building on the strong trend of 12 percent growth in FY18 and 13 percent growth in FY19. In the last two years, Windchill has grown 28 percent while Siemens appears to be flat or down, and Enovia grew -1 percent,” Heppelmann asserted when I asked him.

The article and discussion around the explosive growth of the PTC SaaS business made me think about two important elements that can make or break PTC’s future SaaS growth. When it comes to growth and, especially in such a new segment as SaaS, user adoption will be a groundbreaking reason for future explosive growth. In the end, it is not about price, SaaS market, and common trends. The SaaS business was growing for the last 20 years and didn’t help SaaS to win in the PLM market.

1- The speed of file rejection and browser CAD adoption

I love browser-based SaaS CAD systems. Similar to Google Docs, browser-based CAD can make your life so much easier. No need to worry about files that actually bring more hard than benefits. Here is the thing, while in a wrong run no file strategy is winning, the question of how fast existing Solidworks customers will be rejecting file-based scenarios and moving to file-less use cases will be the factor that will define the overall success of CAD SaaS in a short term. Onshape will be fighting two major headwinds – conservative customers keeping file-based CAD systems and CAD vendors like Dassault and Siemens extending their file-based CAD by cloud-based data services.

2- A cohesive set of PLM data services (merging Onshape, Atlas, Arena and Windchill).

PTC Atlas platform has Onshape core data management, which is built on a super novel, agile and powerful cloud document management database system. It scales well, runs on AWS, and provides a robust foundation for Onshape data functions. I’d expect Onshape/Atlas to continue the development of Atlas data management capabilities as a modern platform. However, adding both Arena and Windchill will bring 20+ years old database tech stack to Atlas. I didn’t find much information about how it will happen, but it should be a very interesting development from a technological standpoint. The most important will be how cohesively PTC will be able to stitch both technical stacks to make them grow flawlessly. If it won’t be possible, we might see a tactical integration and future native Atlas product development.

What is my conclusion?

The timing is everything in the business. Great technology combined with bad timing will end up as a failure. PTC’s strategy to move and grow the SaaS business is brilliant because it captures the most important element – the timing for SaaS development. The timing is right here and now. This means PTC must double down on SaaS development and not slow down because of a variety of possible factors that provide headwinds to Onshape/Atlas development. Just my thoughts…

Best, Oleg

Disclaimer: I’m co-founder and CEO of OpenBOM developing a digital network-based platform that manages product data and connects manufacturers, construction companies, and their supply chain networks. My opinion can be unintentionally biased.

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