Published 12 February 2010
Posted by Al Dean
Jim Heppelmann, President & COO
PTC just held their Annual Media and Analyst day in a rather chilly Boston. It’s something I’ve been hopping over the pond for, for a couple of years and while many of the other press don’t seem to find much value in what they hear, there’s always something of value to bring back and talk about - as well as getting an insight into what’s coming in the next twelve months. So. What was discussed? In short, one thing. PLM. And how PTC seem to be rather annoyed that they’re not being given the credit as the leader of the industry. With the event’s tagline being “Conquering PLM,” I should have expected it, but the force of conviction with which the executives seem more than a little aggrieved was quite surprising
Conquering PLM means “getting credit for being the clear leader” - in Q1 2010, PTC saw 137% license growth in PLM versus last year with 30% growth over the full year as a projection (it should be noted that the previous year saw PTC’s PLM revenues had been down by 25% a year earlier, making for a relatively easy basis of comparison and hence the strong growth).
The key points discussed were that PLM has ‘come of age’ with a greater number of companies looking at building their infrastructure for the future, which has the knock on effect of building up PTC’s license growth. What’s interesting is that the trend appears to be design platform agnostic - there seems to be a lot of companies adopting Windchill-based products that aren’t initially part of the existing PTC user community - As Jim Heppelmann, Chairman and Chief Operating Officer at PTC said at the event “These aren’t existing customers that we sold more stuff to” quoting EADS, Nokia, GE, IKEA. He continued that “People that started with somebody else’s product and switched to ours somewhere along the way. Every time we announce that a big customer switched, it makes it easier to convince the next big customer to switch.” Heppelmann refers to this as the domino effect and keeps this separate from sales into existing customers (citing the John Deere deal).
I also got to sit down briefly with heppelmann and talk through both some of the subjects and product directions discussed at the event and also how he views his competition. There’s one thing to realise with PTC and it’s executives. They rarely ever pull their punches, so here’s a straight transcript of what we discussed. Enjoy. Then we’ll get back to what we discussed with regards PTC’s plans for the year ahead.
I think Dassault has two mistakes and Siemens might have another couple. One mistake that Dassault keeps making is that they keep switching strategies. Every time they switch strategies they piss off customers and start over. They keep starting over and every time they do, we’re years farther ahead. If they’d stayed committed to SmarTeam, they probably would have been more competitive. They put years of development into SmarTeam and they threw that all away. And now they’re picking up MatrixOne and that’s an old tired product and they have to do a lot of development to make that competitive. I’m not even sure they know how to do this.
So the second thing is that Dassault are very arrogant. People used to say PTC was arrogant in the 1990s. I made the joke today, “How do you get rid of a PTC sales rep? Buy something.” But Dassault is very arrogant right now and they’re treating their customers badly at a time when customers are starting to question if Dassault is a worthy partner. So there are a lot of customers that are exasperated with Dassault, they’re saying “Your technology doesn’t work, you make huge promises and never deliver on them and in the meantime, you’re pushing us around.” They’ve forcing them to use V6, use a closed system. Customers don’t like it.
On Siemens PLM
Siemens I think is a better quality company but they to shifted strategy, when they put Metaphase and iMan together they declared it Teamcenter. Our CEO likes to say “On Friday afternoon, it was Metaphase and iMan, on monday morning, it became Teamcenter Enterprise and Teamcenter Engineering” and they pretended for years that this was OK, we used to say to customers “There’s no centre in Teamcenter” and sure enough, they’d look and realise we were right. The name implies there’s a centre and it turns out there isn’t one. Now there is with Teamcenter Unified. Think about that name. A Teamcenter shouldn’t have to be Unified, should it? Think about it.
To call it Unified is to finally admit five years of wrong doing because you said it was one product when it wasn’t - this time they’re saying “Ok. Really. NOW it’s Unified.” So they lost years and now half their customer base is screwed and they’re mad.
The other thing is that it’s not an advantage to be part of Siemens. It’s not an advantage for a PLM software company to be part of a 100 billion dollar german manufacturing company. It sinks. When was the last time you saw a press release? That’s because to get one out, you need to get up the management chain. And the people at the top of the chain don’t want to waste their press release on CAD and PLM deals. They want to talk about winning nuclear power plant contracts. It’s like having one hand behind your back. They don’t want to invest in the business and I’d say the reason they did the acquisition in the first place was bullshit.
Think about it.
Why did Siemens Automation buy UGS? I’ll tell you the theory. The Siemens Automation guys sell Factory Automation, PLC, Controllers, that kind of thing and they said “We’ll be able to link these two things together. If you own Unigraphics CAD PLM, then you’ll want to buy Siemens Factory Automation and vice versa.” The day I heard that, I thought “What are they talking about? It’s ridiculous.” Because in fact what customers what to do is snip that link. They want to design anywhere, build anywhere. They want to be able to move development and production, from in house to outsourcing. They don’t want that at all. And Siemens had this different story that made no sense, so because it made no sense, it hasn’t been working. Have you ever heard of a company that bought Unigraphics because they’re a Siemens Automation customer? Of course not. They paid a lot of money to buy a company on a premise that I thought was absurd to begin with and its proved to be. They’re now in a situation where Siemens doesn’t even know why it bought UGS - they bought it for a reason, the reason proved to be untrue - now they don’t have a lot of passion about it. Does Siemens’ CEO wake up in the morning worrying about PLM and CAE? He’s can’t even remember what it means. At PTC it’s our lifeblood and we worry about this stuff all day long, we’re passionate about it, we’re competing like hell.
On Cloud Computing
Clouds are made of vapour. People have spinned it out of control. It’s just another way to deliver software. If it works they’ll buy it. If it doesn’t work, they won’t buy it. That’s why most people aren’t buying it.Part of it’s emotional, part of its technical but people are saying “It would be great if I didn’t have to install any software or worry about and I was instantly in production but if it means it takes an extra 30 minutes to download an assembly I want nothing to do with it. If it means there’s a chance my data might get compromised by my competitor, I want nothing to do with it.” Those are real problems.
If you’re in a big company and you have 50 applications in your data centre and you put one in the cloud - nothing changes. It’s not like suddenly your whole IT department is super productive, because you’ve got the other 49 applications - can you put those on the cloud? No. Probably not. I just think this whole cloud thing is blow so out of control. It’s like SaaS, SOA - It’s all magic pixie dust to solve all of our problems when it’s really just… tools. Sometimes they work, sometimes they don’t.
On Arbortext and Service Information Solutions
I think we have an opportunity to reinvent how after market service is done and I’m very excited and personally drove this change to start thinking about more efficient ways to create manuals. And to start thinking about more efficient ways to do service processes. We realised that manuals aren’t efficient in the first place. If you develop something to make something more efficient that’s not efficient in the first place, what do you gain?
Note: It’s clear from the event that PTC are working on something new for the technical publications space. The developments centre around taking PTC’s existing Arbotext and Isodraw products and combining them to a web-based delivery mechanism which they’re referring to as Service Information Solutions. Alongside this, there’s also work on a new product that combines the companies expertise in the field with Isodraw (which targets technical illustration) and PTC’s ProductView lightweight visualisation technology into a new product, codenamed Galaxy. I’m guessing that there will be more details at the PTC/User in June.
Last year’s event was all about the release of PTC’s ProductPoint system which takes lessons learned with Windchill, combines it with SharePoint to create a data management and collaboration environment - or to use PTC’s words, Social Product Development. I asked Heppelmann about how ProductPoint was performing in the year since it’s launch.
We had a goal to sell it to 100 companies in the first year. We did 140. Our goal is 300 for this year. In the first quarter of this year we did about a 100, so we’re headed for that goal and probably tracking at 400. So I think it’s doing well and we’re selling it to small and medium sized companies, so the orders are much smaller than with Windchill. So from an activity and pipeline standpoint it’s doing very well. From a revenue standpoint, it’s not yet that important because it tends to be small deals because that’s what we designed it for.So I think it becomes important as we get much bigger volumes and as we penetrate the SolidWorks and Inventor base with it. I think the SolidWorks base would be pretty interested to have a SharePoint-based simple sexy product for doing PLM - as opposed to Dassault telling them they’ve got to use MatrixOne which is a very old technology. V6? It’s like V32. It’s an old product and it’s a failed product.
What about Pro/Engineer?
There was very little discussion of Pro/Engineer. With the Pro/E release cycle now around the 24 month period and last year’s activity around the release of WIldfire 5.0, this was to be expected. I did manage to catch up with Brian Shepherd who heads up the development effort and we quickly discussed the Wildfire 6.0 release. While there will be the usual enhancements, the key feature set that people are interested in comes from the merging of the CoCreate direct modelling technology within Pro/Engineer. While Brian admitted that CoCreate users are a loyal bunch, the team is looking to combine the toolsets to offer them a compelling reason to make the leap. What I also found interesting was his comments about the benefits of using Pro/Engineer geometry kernel as the basis for direct modelling. Products like CoCreate operate within very specific topological limits (ie: it doesn’t handle them well). According to Shepherd Pro/Engineer’s geometry kernel handles topology changes in a much more robust manner - looks interesting and I’m sure we’ll learn more later this year.
Few final thoughts
PLM is a business concept that’s gaining traction. We know this from talking to our readers. Products are increasingly complex, processes are increasingly complex, supply chains are increasingly complex - across all industry sectors. In the last few months PTC has announced some pretty major deals for Windchill that has seen their revenues swell in that sector - I seem to recall that last year’s poorer financial results were the result of delayed orders so they’ve now moved into this financial period (hence the massive growth).
But alongside all of the posturing around PLM, for me, the most interesting news out of the event was the work the company is doing in the technical service information field. Most other vendors seem to ignore it or have point solutions (Dassault/SolidWorks has 3DVia Composer and Autodesk is previewing it’s technical publications technology) that focus on the illustration side of things. But the facts are that the illustration portion is a small component of a very complex process. At the event, a gentleman from Komatsu, a mining and construction equipment manufacturer, went through the result of their transition from FrameMaker based process to an Arbortext and Isodraw-based approach. They’re expecting to save 50% saving in translation costs (bear in mind that the addition of Spanish translations of their manuals cost in excess of $1 million), removing outsourced illustrations (which cost over $120,000 per year) and a reduction in cycle time across the board and repetition of work. That’s a pretty compelling pitch to management to invest in a technology that fits a need, reduces a serious financial outlay and adds value. For me, that’s were the action will be in the coming year. Let’s see what comes of it.