PTC President & CEO Jim Heppelmann explores why we are on the verge of a SaaS tipping point in product development and why Covid-19 has created the ‘urgent need’ for faster adoption.
Covid-19 has ripped up ‘normality’ in devastating style. What we used to take for granted now seems an out-of-reach luxury and we have seen tragic loss of life not seen since the 1940s.
Whilst there have been millions of negatives, the pandemic has subconsciously created some positives and the business world has once again shown its resilience and innovation to adapt the way it works to try to prosper in the ‘new norm’.
Digital transformation has been accelerated beyond all our wildest dreams and companies are now more seriously looking to adopt SaaS technologies for product development processes.
It’s starting at a relatively low point, with this vital engineering discipline lagging behind most other categories of business software, like ERP or CRM, when it comes to adopting Software as a Service (SaaS).
Thinking about when, and indeed if, SaaS will overrun the CAD and PLM industry, you have to start by digging into why it hasn’t been adopted sooner and two main factors spring readily to mind.
Firstly, let’s start with performance. Both CAD and PLM involve lots of data, graphics, and computation. There must be a reason why engineers have, for years, had graphics workstations with plenty of RAM and the fastest CPUs and graphics cards on their desktop.
And then we come on to the perception of IP security. CAD files capture the design intent with such detail and precision that you can manufacture directly from them. If these files are stolen, a competitor could get your complete design and move right into manufacturing, winning that vital race to market. This has led to a belief that companies should keep them on their own local network instead of utilizing the cloud.
In recent years, however, we’ve seen a series of breakthroughs that have shifted the perception of these two barriers to SaaS adoption. For starters, network speeds have increased dramatically and are approaching parity with the local network. Even more importantly, SaaS tools have unlimited computation power thanks to the elastic compute resources of the cloud.
If you have a computer on your desktop, well it is what it is, and it won’t be getting any faster until the next hardware replacement cycle. With SaaS, your ‘computer’ is as big as the job needs it to be – if you need 10X more resources, so be it.
In the case of cybersecurity, the mindset has shifted to where most people now believe that a professionally managed cloud environment is almost always more secure than a typical company’s own local network. The train of thought reflects the cloud vendors’ ability to invest in the latest security measures and talent attraction.
So, we’ve largely mitigated the performance issue, while opening some new advantages for SaaS and reversing our thinking on the security issue. Having removed these barriers, we can focus on benefits, including cost-effectiveness, speed of innovation, collaboration, mobility for a hybrid workforce and elastic compute resources.
The Tipping Point in SaaS Adoption
With traditional issues of security and performance now a distant memory, we’re seeing SaaS adoption reach its tipping point in product development.
We’ve already reached the SaaS tipping point in education, with technologies like Onshape and Google Docs both supporting remote learning during the pandemic.
The ability to work on any device at any time means students can work on CAD designs on a PC or Chromebook in school, or on their phone, or on a MacBook at home – all of the functionality and latest data is always accessible because it was never resident on any of those devices, to begin with.
I see SaaS adoption in education attributed to two main things. Students are open-minded ‘digital natives’, who readily embrace good technology and schools typically aren’t entrenched with legacy requirements that would be a barrier to moving to the cloud.
The workforce of tomorrow (students) is already adopting SaaS methodology and they’ll speed up the acceleration as they bring their experiences into the professional workplace.
SaaS in Small to Medium-Sized companies
As with education, start-ups and small businesses tend to be less entrenched in their incumbent technology and data, meaning they are more willing to try new innovations that might give them a business advantage.
The way it typically works in software is that, after a few years of momentum with smaller companies, the medium-sized firms then get more interested. A few years of momentum in the mid-market tends to attract the attention of large companies and this is exactly what we’re seeing now.
PTC research paints a clear view of the product development market’s perspective on SaaS: the tipping point is here. In a survey of 150 directors who lead the engineering design, manufacturing design and product lifecycle management functions of their companies, 91% indicate they are now considering SaaS for CAD, 90% for SaaS for PLM! There has been a dramatic shift in the favorability of SaaS and the biggest driver has undoubtedly been the onset of the COVID pandemic.
With all signs pointing to the product development market’s readiness to adopt SaaS, it’s not difficult to see why PTC made the decision to acquire Arena, the industry’s leading SaaS PLM solution.
CAD and PLM are like peas in a pod – they always go together. The better CAD works, the more companies need PLM, but of course they need both functionalities to be well integrated. So, if you’re going to have SaaS CAD, you’ll obviously want SaaS PLM, with the perfect answer being a seamless integrated solution.
The Long-term Approach
Over the next ten years, we believe SaaS will become the dominant deployment methodology for engineering and product development software.
We know that our large base of Creo and Windchill customers want to embrace the power of SaaS, but they don’t really want to switch tools, either.
As such, we need to have two different SaaS application suites – one that offers an unrivaled opportunity to innovate and another that offers SaaS benefits underpinning upward-compatible versions of Creo and Windchill.
Our strategy is to deliver the benefits of SaaS with no disruption to the way they use those products today. Forward compatibility will be our competitive advantage and we expect the user experience to be seamless.
So, the tipping point for SaaS is here for product designers across the world. Embrace it, utilize it and bring your products to life faster and smarter than you’ve ever done before.