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How big is the future SaaS/cloud PLM market? As much as this number sounds simple, the answer is not easy to find. As much as I was trying to find some numbers, analysts, as well as CAD and PLM vendors, are very much silent on this topic.

One of my favorite research and blogs following the business technology, digital economy, and the development of cloud and SaaS business is Cloud Wars just published an interesting data point about $60B cloud blowout bringing a very interesting data points about top 10 companies making total cloud revenues in Q2 to $59.97B. Among them, leading companies such as Microsoft, Amazon, GCP, Salesforce, SAP, Oracle, and few others.

Here are a few interesting notes and data points about what is in the heads and minds of cloud product development. Oracle reports achieving cloud revenue breakthrough. GCP and Amazon in the aggregate are still less than Microsoft cloud business in a few others. My favorite passage from Amazon vs Google vs Microsoft comparison is about switching focus on applications and solutions, which was the Microsoft playbook opposite to what Amazon did.

Microsoft has led the way in offering cloud solutions for every portion of what Nadella calls the “digital estates” of customers, and recently highlighted that increasing focus by unifying under a single leader the previous separate business units of Dynamics 365, Power Platform, Industries, Data, AI and Mixed Reality all now report to corporate VP Alysa Taylor. For more on that, please see Microsoft Reorganization Merges Data and AI with Apps and Industries (https://cloudwars.co/microsoft/microsoft-reorganization-merges-data-ai-with-apps-industries/). Amazon has pretty much stayed out of the applications category, but with new CEO Adam Selipsky on board, and with that segment having enormous potential as well as stickiness for so many other cloud services, we should not be surprised to see Amazon begin pushing more broadly into applications to meet surging customer demand.

My top favorite recent analysis is about how the Cloud is becoming the heart of innovation engines. Here is an interesting passage is about Assets-as-a-Service and how companies are moving from products to services.

Become embedded within customers’ business models. “An example here is Asset-as-a-Service, where, in the past, I think we have sold our financial-service capabilities to the CFO or to the treasurer of corporations,” Leukert said. “But now, with the service enablement and the transformation of the business model of our customers, we want to embed our financial services into the business model. When customers are transitioning from selling products towards offering outcome, which is the service the product gives, we want to be the financial ingredient in that capability.

Another interesting data point – According to Gartner, the SaaS business will grow another whopping 40% for the next two years. Worldwide end-user spending on public cloud services is forecast to grow 23.1% in 2021 to total $332.3 billion, up from $270 billion in 2020, according to the latest forecast from Gartner, Inc. “Emerging technologies such as containerization, virtualization, and edge computing are becoming more mainstream and driving additional cloud spending. Simply put, the pandemic served as a multiplier for CIOs’ interest in the cloud.”

I asked the question about how much of these $20B annual spending increases will belong to the growing SaaS PLM business. According to CIMdata research, the PLM business is just a bit north of $50B in 2020 and according to the latest assessment made by CIMdata will grow another 7.8% in 2021.

The same CIMdata made another research about cloud PLM with the support of several CAD/PLM vendors – Dassault, PTC, Aras. According to CIMdata research, about 60% of companies responding to CIMdata surveys are considering moving into cloud PLM solutions.

Let’s get back to the question I asked at the beginning of the article – how much of the future PLM business growth can be an opportunity for a growing SaaS PLM business segment? There are few data points that can be taken into a consideration. The growth can come from multiple segments such as cloud CAD, cloud cPDM (usually called PLM), and others. Although CAD is a big portion of CIMdata PLM assessment, the recent few years didn’t provide indicators for big shifts towards cloud CAD. cPDM (aka PLM) has a substantial element of the underserved market and recent acquisitions from both PTC and Autodesk demonstrated that the market is far from being discovered and the potential for adoption is big. The same two companies (Autodesk and PTC) led the transformation to subscription business models. But SaaS/ cloud PLM elements of both company businesses are relatively modest. PTC reported the revenue of Arena PLM during the acquisition time, which was about $50M for the company stayed in business for more than 20 years. The cloud revenue of Windchill remains unknown. On the side of Autodesk, the recent acquisition of Upchain will almost for sure lead to the full transformation of the PDM/PLM portfolio. The existing revenue of Fusion 360 Manage (a new name for PLM360/Fusion Lifecycle) is unknown, but the Autodesk data management business (Vault) was most probably growing modestly for the last decade cloud be in the range of $50-100M (my assessment). Aras announced their Enterprise SaaS very recently and it is not clear what portion of the subscriptions are SaaS. The same can be said about Siemens TeamcenterX.

What is my conclusion?

With the PLM industry growing about $5B every year (based on CIMdata’s 7.8% indicator) and 60% of companies looking how to replace their existing PLM software to cloud PLM alternative, the application portion of the PLM portfolio can become a critical element to drive adoption of new PLM software in multiple segments around cloud MCAD, ECAD, cPDM, Digital Twin, Digital Thread and other initiatives. Cloud services can redefine the boundary of the applications as well as switch business models towards data, IP, and analytics, which was not part of the PLM solutions before. I think, there is a $5B business opportunity in the $50B+ PLM market to develop future SaaS PLM applications. This is something to think about.  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 networksMy opinion can be unintentionally biased.

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The post $5-Billion Cloud PLM Business Opportunity? appeared first on Beyond PLM (Product Lifecycle Management) Blog.

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