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Saas: PLM & the Extended Enterprise

Posted on Thursday, Feb 22nd 2007

I have written two pieces already, discussing the Extended Enterprise:

SaaS: Webex and the Extended Enterprise

SaaS: CRM and the Extended Enterprise

In addition, I wrote CAD / PLM Shuffles, discussing the changes in the Product Lifecycle Management marketplace.

In this article, I want to discuss the opportunity for the CAD / PLM industry to reorganize itself around the Extended Enterprise trend.

To comprehend the full magnitude of this opportunity, you have to understand how Globalization and Outsourcing have created a multi-tiered design chain up and down the product lifecycle at almost all industry segments where products get built. Be it Automotive, where this phenomenon is mature, and a multi-tiered supply chain has been in place for decades already, or elsewhere, where the phenomenon is more recent, the fragmentation is only becoming more acute.

To add to the complexity of the product lifecycle, there is a distinct other trend: electronics and mechanical used to be two distinctly separate industries, that are now converging, and Electromechanical designs are becoming more and more ubiquitous. This includes not only Consumer Electronics and Automotive, but also Industrial Manufacturing.

Thus, Collaboration in this fragmented Design / Supply Chain is essential, at the same time, infinitely complicated. Each tier of designers / suppliers have their own individual sets of file / data / document / application / desktop sharing needs, security concerns, compliance requirements, etc. One of the biggest challenges in this picture is the fact that CAD files are inherently large, and CAD applications are heavy.

So far, the existing PLM vendors are still operating in the old model, with disjointed chasms of communication and collaboration between enterprises and their design / supply chains.

On top of this phenomenon, there exists the additional issue of CAD being a desktop software, versus the more contemporary SaaS model.

So, the industry is faced with two major sets of discontinuities: SaaS and the Extended Enterprise.

It is entirely unclear at this point which of the current vendors can respond appropriately to the changes in the marketplace. It is, however, very clear, that whichever one does, has a huge opportunity ahead to leapfrog.

This segment is a part in the series : Saas

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[…] I have written several pieces recently about the Extended Enterprise trend, covering Segments such as Collaboration, CRM and PLM. […]

Sramana Mitra on Strategy » Blog Archive » Enterprise 3.0 = (SaaS + EE) Monday, February 26, 2007 at 7:04 AM PT

I have not seen major PLM players like UGS, PTC take any initiative in deploying SaaS approach to their PLM softwares. Only company a little agressive here seems to be Arena Solution.
Is it that they see the revenue stream in current licensing system more profitable (read juicy)?
Its true that CAD would remain a desktop software but the PLM can be more centralised.

kuvalaya Wednesday, October 10, 2007 at 2:18 PM PT

CAD files are too heavy to do as SaaS. However, sharing viewers and other collaboration / PLM type activities can be done as SaaS.


Sramana Mitra Wednesday, October 10, 2007 at 2:21 PM PT

I agree that Arena Solutions ( is currently the only Saas PLM player, though Agile used to sell a “hosted” version of Advantage (I believe now defunct after the Oracle acquisiton), and SAP has announced wanting to bulk up their SMB offerings through more hosted solutions.

To answer kuvalaya’s comment, The benefits of a SaaS model go beyond being able to milk the revenue stream, there are savings in economies of scale, customer support, and ease of deployment that are passed onto the customer.

I think a hosted solution is also the most appropriate for SMB who don’t want to undertake the overhead of additional servers, IT people, and the armies of consultants it takes to deploy on other enterprise solutions.

christine Friday, July 11, 2008 at 10:37 AM PT

Datastay offers PLM and a variety of other applications on-demand. Please feel free to visit the site at to learn more.


Michael Lieberman Wednesday, February 25, 2009 at 10:42 AM PT

Without question Arena is the lead player in the SaaS PLM marketplace by focusing on the SMB type customers and serving the collaboration needs around BOM and ECO management and staying away from the challenges of large file transfer that CAD/EDA would require. Another adjacent player in the supply chain and planning space to keep an eye on is Kinaxis.

Mark Holman Wednesday, February 25, 2009 at 2:08 PM PT