The IT architecture of industrial / manufacturing applications increasingly boosts the role of cloud and edge. These technologies have become core to Industrial Internet of Things (IIoT) and improved Software as a Service (SaaS).
These recent acquisition news items reflect the acceleration of the trend. One is from Siemens and the other PTC.
Siemens plans acquisition of Edge technology
- Siemens further expands its digitalization portfolio for industry
- Technology basis is the Docker IT standard
- Siemens Industrial Edge ecosystem enables easy and flexible use of Edge apps
Siemens is planning the acquisition of Edge technology from the US company Pixeom. With this action, Siemens is strengthening its Industrial Edge portfolio by adding software components for Edge runtime and for device management. Siemens Industrial Edge provides an ecosystem, which enables the flexible provision and use of apps. This means for example that appropriate apps can analyze data locally at the machine and send relevant data to the higher-level Industrial Edge Management System for global analytics. With this acquisition, Siemens is driving forward the expansion of its Digital Enterprise portfolio and the integration of cutting-edge technologies for the digital transformation of industry.
With the resulting Industrial Edge ecosystem, industrial companies can use production data even more efficiently and react more flexibly to changes in conditions.
Ralf-Michael Franke, CEO of Siemens’ Factory Automation Business Unit, explains: “Cutting edge technologies such as Edge Computing open up new scope for automation. With Siemens Industrial Edge, we are creating an open edge ecosystem which offers benefits for companies of any size.”
Siemens is using Docker standard container technology: the provision of apps in the management system will therefore be just as simple as functional upgrades and updates of Edge devices in the factory from a central point.
Siemens intends to acquire this technology from Pixeom and use it in the Factory Automation Business Unit, which is part of Siemens Digital Industries. Pixeom has sites in San José, California and Udaipur, India and employs 81 people worldwide. Closing of the transaction is planned for the fourth quarter of 2019. Both companies have agreed not to comment on the financial details of the transaction.
PTC Makes SaaS Acquisition
I sat in on the analysts/press conference where PTC president and CEO Jim Heppelmann discussed the reason for this announced acquisition of Onshape, creators of the “first” Software as a Service product development platform. The company had also just released fourth quarter results. PTC has a little more than $1 billion in revenues, with about 45% CAD and 35% PLM. Interestingly, the IoT business contributes just over 10% of revenues.
Onshape’s product development platform unites computer aided design (CAD) with data management and collaboration tools, for approximately $470 million, net of cash acquired. The acquisition is expected to accelerate PTC’s ability to attract new customers with a SaaS-based product offering and position the company to capitalize on the inevitable industry transition to SaaS. Heppelmann believes that that cloud-based SaaS is the future of CAD. Pending regulatory approval and satisfaction of other closing conditions, the transaction is expected to be completed in November 2019.
Located in Cambridge, MA, Onshape was founded in 2012 by CAD pioneers and tech legends, including Jon Hirschtick, John McEleney, and Dave Corcoran, inventors and former executives of SolidWorks. Onshape has secured more than $150 million in funding from leading venture capital firms and has more than 5,000 subscribers around the world. The company’s software offering is delivered in a SaaS model, making it accessible from any connected location or device, eliminating the need for costly hardware and administrative staff to maintain. Distributed and mobile teams of designers, engineers, and others can benefit from the product’s cloud nature, enabling them to improve collaboration and to dramatically reduce the time needed to bring new products to market – while simultaneously staying current with the latest software.
“PTC has earned a reputation for successfully pursuing new innovations that drive corporate growth,” said Heppelmann. “Building on the strong momentum we have with our on-premises CAD and PLM businesses, we look to our future and see a new growth play with SaaS.”
This acquisition is the logical next step in PTC’s overall evolution to a recurring revenue business model, the first step of which was the company’s successful transition to subscription licensing, completed in January 2019. The SaaS model, while nascent in the CAD and PLM market, is rapidly becoming industry best practice across most other software domains.
“Today, we see small and medium-sized CAD customers in the high-growth part of the CAD market shifting their interest toward SaaS delivery models, and we expect interest from larger customers to grow over time,” continued Heppelmann. “The acquisition of Onshape complements our on-premises business with the industry’s only proven, scalable pure SaaS platform, which we expect will open new CAD and PLM growth opportunities while positioning PTC to be the leader as the market transitions toward the SaaS model.”
For customers, the SaaS model enables faster work, improved collaboration and innovation, with lower up-front costs and with no IT infrastructure to administer and maintain. For software providers, the SaaS model has been proven to generate a more stable and predictable revenue stream, increase customer loyalty as customers benefit from earlier adoption of technology innovations, and enable expansions into new segments and geographies.
“At Onshape, we share PTC’s vision for helping organizations transform the way they develop products,” said Jon Hirschtick, CEO and co-founder, Onshape. “We and PTC believe that the product development industry is nearing the ‘tipping point’ for SaaS adoption of CAD and data management tools. We look forward to empowering the customers we serve with the latest innovations to improve their competitive positions.”
Onshape will operate as a business unit within PTC, with current management reporting directly to Heppelmann.