Over the course of this week, I’ve been contacted offline and online by many people that wanted to discuss the acquisition of Arena Solutions by PTC. If you missed the news, check my earlier article – PTC doubles down on SaaS PLM buying Arena Solutions for $715M. It has been a long time since the PLM industry has seen such a level of investment in pure PLM (cPDM according to CIMdata) company. You can compare it to purchases of Agile PLM by Oracle for $495M in 2007 and MatrixOne by Dassault Systemes for 408M in 2006. Even so, what is absolutely unique is that PTC acquired the SaaS/cloud business. Although PTC acquired Onshape just a year ago, it now has at least two clouds/SaaS products and companies and it raises many questions about what will be the trajectory of integration and existing product development. I touched on this topic a bit in my earlier blog – PTC SaaS PLM Puzzle. Before jumping into the topic of possible post-M&A SaaS integration, I want to step back and talk about previous PLM acquisitions and what happened to them.
The history of on-premise PDM/PLM Integrations
The acquisition is always a complex task for both the company that acquires and for the company, product, and technology that acquired. There are tons of statistics about the successes and failures of the integrations. This is not the goal of my article. You can find them online. In the PDM /PLM industry for most of the parts, acquisitions ended with the displacement of previous products and technologies or long-time co-existence of both product and technologies followed by the shutdown of old products.
I had personal experience and involvement with acquisitions and integrations made by Dassault Systemes – SmarTeam, Enovia, MatrixOne. Over two decades of history, products co-existence and integration cost. You can still see SmarTeam customers in production and products were never integrated. MatrixOne displaced Enovia technologies and V6 and later 3DX was rebuilt on top of MatrixOne databases and server technologies.
Another story is different Solidworks PDM systems. Solidworks acquired PDM workgroup, then acquired Conisio (known as Enterprise PDM) and later made Solidworks Manage. The earlier acquired systems never integrated and were discontinued over time. Now 3DX Works for Solidworks will eventually replace Solidworks PDM Professional. It is just a matter of time.
Siemens PLM went through a long time of integration and displacement of different PLM platforms to get into Teamcenter Unified. Old platforms died. Agile PLM Software acquired Eigner PLM – products coexisted for some time, but never integrated. Arena Solution itself acquired Omnify PLM just a few years ago and for my best knowledge two products never integrated.
It requires a big engineering effort to integrate PLM data platforms and complexity of such integration is skyrocketing. Also, on premise PLM systems have a very long lifecycle and once implemented by customers are usually supported for a very long period of time.
How to Integrate SaaS PLM?
How different is SaaS integration from traditional on-premise PLM? It is actually very different because of the nature of SaaS from both technological and customer standpoint. Let me start on the customer side. The system (SaaS) is run all the time. And if it is a multi-tenant SaaS system as it was presented during PTC/Arena, the same application serves multiple customers at the same time. All changes and adaptations will impact customers at the same time. User experience is an extremely important aspect of all SaaS systems.
From a technical standpoint, there is both bad and good news. Let me start with some good news. SaaS systems owned by a PLM vendor make it easy to change- after all, customers don’t own and don’t touch any pieces of technology (unless SaaS systems are hosted on customer owned servers). So, vendors can change everything and the only thing to worry about is how the system performs for the outside world. But here is also bad news, the technology and technical stacks of SaaS applications can be very much different, which can make a merge more challenging than integrating desktop or server applications running on top of SQL databases.
What are possible patterns of SaaS integrations?
There are a few options here. First, to keep services to run ‘as is’ and to integrate them visually in the browser. For example, Dassault Systemes integrated multiple services behind the facade of 3DEXPERIENCE, but these services potentially run separately. Autodesk made several similar integrations in the past for the SaaS platforms. Onshape has an app store, which provides a way to integrate applications inside the Onshape user interface. Good news can be in fact usage of REST API as de-facto standard by most SaaS applications. However, the challenging part can be integrating user experience. In the case of Arena Solution, the user interface was developed a long time ago and it will require adaptations to fit the modern Onshape application user experience paradigm.
What is the cost of SaaS Integration after the acquisition?
SaaS product integrations are not something that can be avoided unless both products will co-exist without changes. Although it is a relatively new thing in the PLM world, outside of PLM, companies already collected tons of experience in acquiring and integrating SaaS products. You can see some online benchmarks for the cost of SaaS post-merger integrations as a function of a number of employees, customers, etc.
What is my conclusion?
For the next few years, we are going to see how PTC, Onshape, and Arena Solution will perform the merge of services and functional capabilities. Probably, the biggest PLM acquisition from both technical and financial scale will drive a lot of attention from existing customers and other PLM software vendors. What is clear is that PTC and Onshape will require spending efforts and resources to integrate products. Unless, PTC will decide to keep Arena Solutions isolated, to maintain customer subscriptions, and to migrate them to a new service that will be built on top of the PTC Atlas platform and maybe other acquisitions. It is a very interesting time to be in PLM spaces these days. Just my thoughts…
Disclaimer: I’m co-founder and CEO of OpenBOM developing a digital network-based platform that manages product data and connects manufacturers and their supply chain networks. My opinion can be unintentionally biased.