Change Maintenance & Licensing model to better stimulate innovation

[LawrenceS]

Currently, I think that PTC's business model is killing innovation and is a lose-lose situation.  Currently maintenance includes technical support, minor version updates/builds/fixes, and new major versions.  This means that PTC has very little stock in improving its own software.  This hurts both PTC and the customer.

I propose reconsidering this business model by doing the following:

• Split current maintenance cost into 2 categories: Maintenance and new products
• Maintenance cost should only be for maintenance.  More specifically the following:
  • Technical support
  • Patches
  • Builds (including software compatibility updates)
• Why are major upgrades included in the cost of maintenance?  New products should have the mutual incentive to get more capability for the user and more money for the software company (PTC).  If the capability is not with the cost to upgrade, then the user doesn't pay for it.  If the user sees significant improvements, than the user buys the new software.  If PTC doesn't earn the business, they don't get paid.  If they earn the business the get paid.

This would put huge emphasis on PTC adding value to their software, and make sure they get a piece of the cake too.  That way everyone wins.  In order to essentially increase new product cost maintenance cost would have to be proportionally reduced.  Otherwise companies would be very upset at paying the same amount for less value.

Like anything there is a good way to implement this and a bad way.  The bad way would be to lower cost a few buck, remove major releases, charge a lot for major releases, and then major releases mainly contain fixes and software compatibility updates.  The good way is to create an incentive for product innovation so that the CAD industry does not remain "stagnant" towards innovation.  How many areas of Creo have received NO updates in the last 10-15 years yet are in drastic need of even basic updates.  What motivation does PTC have to fix?  They are not going to get new money if they fix these things.  They are just trying to keep people not upset enough to change to a different cad vendor (which they know is extremely difficult/costly so they have a large frustration tolerance).

Please post comments below as this could produce some good helpful discussion.  if you think I am wrong post why and suggest better ideas.  I just think cost to use licensing is killing product innovation and am brainstorming for a better way.

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[TomU]

In my opinion, updates to a product that I already own should be available at no extra charge for the life of the product.  When the product was originally purchased, there was an expectation that it worked correctly.  The later M code builds are simply fixing things that should have been working at the initial release, functionality that I've already paid for once.  I would venture that most non-CAD software companies don't charge you for updates to products you already own.

I do like your idea of separating new releases from maintenance.  This would stop this nonsense today where we stay on maintenance but when a new version comes out we don't get access to all the new features (that our maintenance dollars have been paying to develop).  Think Manikin, Flexible Modeling, etc.

I also wish there was some way the user community at large could have more control over the developers.  The product ideas concept is nice in theory, but there needs to be more accountability to actually do something with them from PTC.  Right now the response varies greatly from area to area and product manager to product manager.  If the user community is calling for something (with hundreds of votes), it should take more than just a product manager to shoot it down, even if it is hard to do or involves deep areas of the code that were written 20 years ago (an no one wants to touch).

[BenLoosli]

Microsoft and Intuit both provide updates to their products at no additional charge. If you want a new version, then you pay for it.

If PTC develops a new module and they include it in a repackaging of their packages, then you should get it for free to maintain the status quo. Not all modules are developed with maintenance dollars, some are funded by the company to increase market share with that module add-on. If a new module requires a separate license code, then we should have to pay for it, but maybe get a reduced price.

Another CAD company sends out a list of submitted enhancement requests with a ranking for easy (2) medium (4), large (6), hard (8) and complex (10) to the effort required to implement that request, each company site is given 50 points for each product module for their votes. If you think the complex one is really beneficial to your company you can give it 1 to 5 votes (50 points total). If you like a lot of different enhancements, select them until you have your 50 points. Send the forms back in, the company totals the points and then ranks them. At the annual user group meeting, they review the results and commit to implement the number 1 in each category. It may not be in the next 1 or 2 releases (due to development cycles) but it does get into the code. They also will tell you which other modules they have committed to work on or have completed.

[LawrenceS]

Agreed Tom Uminn‌!  Quite frankly, I don't really know how much accountability there is, so for me greater visibility would be great.  I do like how PTC comments on these boards and seems to care, but again you mention good parts about heavy voting vs. PTC response (perhaps due to those dark areas of the code).

Also agree and want to reaffirm that build updates should be part of maintenance because those are just fixes.

[LawrenceS]

Ben Loosli‌,. I like the idea that the cad company you mentioned (or rather not mentioned) provides the visibility as to how difficult it is to implement.  That is something that I think we the users have no way of knowing.  I know enough about coding that some things sound simple but are very challenging to implement and that the reverse is also true: sometimes complex sounding stuff is easier to implement than originally though.  All we users can do is vote on how much it matters to us without regard to how difficult it would be to actually implement.

[LawrenceS]

Ben Loosli‌, I agree that it makes sense that MS and Inuit provides updates to fix their product when it is found that it is broken (which is analogous to PTC software builds), but what they don't provide for free is the one on one troubleshooting that PTC tech support provides.

It is also worth noting that PTC has a smaller user base than those companies, yet CAD software is arguably much more complicated.  That would seem to require the cost to increase, or the service to decrease.

[LawrenceS]

Oh, and I think it is unfortunate that MS is going to subscription based service for MS Office, for the very reason that they don't have to work as hard to earn our business.  The use would have to pay for the software, even if it doesn't improve.  The only think that may keep them innovating is that it is easier for the user to switch from MS Office to another program than it is for a company to switch CAD companies.

[LawrenceS]

Ben Loosli‌, So are you for the idea, against it, or undecided?  You sound like you are for it, but it doesn't look like you voted...?

[ChrisPLM]

Hi all,

This is a very hot topic to talk about the business model.

Some company (not only MS etc...) but direct competitor of PTC have decided to enter the PLM market directly with subscription model and it is all on the cloud.

There is no maintenance or upgade for the end user. They just pay for the service. I think this should solve your question/idea Lawrence.

That same company is also moving to have all on the cloud including their CAD solutions. Once can argue that functionalities are limited etc... but it is only the beginning. Cloud tools will be as powerful as desktop based ones.

PTC is also providing Cloud based solutions (not sure for the CAD software though).

I personally think that we need the current model (ie purchase licence and pay for maintenance if you want) and the subscription model.

However, I prefer the current model as the CTO despite what the Cloud advocate are saying is cheaper than subscription over a few years.

For my company, I calculated that after 3,6years subscription is becoming more expensive (I have done the calculation over 10years which included server upgrades (2 upgrades, once every 5years)), software upgrade (every 3 years), growth of number of users etc...)

I therefore prefer the current model.

Regarding the topic, Is that killing innovation ?  I do not think so. what drives the innovation ?.

Windchill and Creo are only tools for me to help me innovate, in other words my users should not even realize they are using Windchill and Creo, They should simply get on with their work. When I drive a car, I do not think to accelarate, break, change gears (for those driving a manual ), I just drive. The same for my users, I want them to just innovate and not think that they need to check in/out etc....   Kind of tools, you do not even know it is their, that you use it but if you take it away, everything fall apart

[LawrenceS]

Thanks for the comment Chris C, as this is not exactly a simple matter and needs good discussion!

This is a good opportunity to clarify, by stimulating innovation, I mean stimulating innovation of PTC software, not the users innovation.  I agree that software is a tool, and as a tool it can be a better tool or worse tool.  There have been some good improvements (along with some destructive ones) to Creo that have made the tool better to work with so users can better focus on the design (Good Inn: Command Search, Replace component using ref table, etc)  (Destructive: restricted selection on drawing, breaking the show/erase, etc). 

Take your car example, there is a lot of innovation in the car industry.  And if we don't think the next gen car is worth it, we won't buy it so they have to work hard to EARN our business.  Car Mfgs have been doing a lot to make driving safer, more efficient, and even easier.  I for one am thankful that cars as a service (renting) has not yet picked up!

When the entire system is in the cloud, there is a lot of service that is being paid for and can really change the dynamics of a company's IT structure.  However, financially tying the service to new products is what I see as a long term recipe for stifling innovation.  My proposal is something like if PTC doesn't provide sufficient new features to justify upgrading, PTC doesn't get money for a new product.  Currently our own companies have this decision to make but PTC is aloof to it.  We have to decide if the cost of upgrade is worth it to our company, but PTC doesn't.  What is their motivation to innovate?  They know their customers cannot easily switch, even if their product gets to be just above horrible.  That also means it breaks their ability to drum up new business or new money, other than more or less licenses.  If they got paid more for people upgrading, the user companies are rewarding (or not rewarding) PTC for their efforts.

Thanks for also sharing the result of your time cost analysis for licenses at your company!

[ChrisPLM]

Hello life is full of coincidence.

I just came back from a meeting with Autodesk who presented their PLM360.

While Autodesk solutions are fragmented and, from my point of view, not yet ready to fully compete with Windchill, There are a lot of good things, very good things.

I think Lawrence, you will call them innovation

I am more than happy to provide some information if this is appropriate to post here.

Best regards

[LawrenceS]

I should think that this is a good spot to deal with anything to do with how they license and innovate.

As for what they innovate and specific details on how they may seem like a good PLM, I should think a good place would be in the following thread, where that discussion is already taking place:

Windchill vs competition

It was started by a Chris C, but it seems there are multiple Chris C's on this forum so not sure if that is you or not...?

Look forward to hearing both aspects from you!

[danderson]

Subscription selling models will hurt everyone in the end, especially when they eliminate standalone software. Think of the cost of moving everything one piece at a time when the costs get out of control and they stop adding features.  They change the file protocols for storage to save space on their side and in order to go to a competitive cad package you have to wait for that software to catch up.  Basically you are stuck paying a subscription and are no better off in the long run.  No control over pricing do to you needing a license in order to continue working or suffer the down time migrating data over to a new system.

Don Anderson  

[LawrenceS]

DON ANDERSON , Don't forget to vote if you agree that they have to change the way they are handling licensing.

I agree in so much as I don't like the idea applied to subscription licensing only.  That being said, it makes more sense for the aspect of system management or drive storage involved.

For example paying $100/yr for Office 365 is ridiculous to me.  However I do understand that subscription for OneDrive type services makes a lot of sense.  Then they blur the line by including cloud storage with licensing cost, which is frustrating!

[ChrisPLM]

Hi Lawrence

I think life is going to become more expensive for end users.

I personally hope that PTC will keep their existing models (buy software and maintain it) but also add in parallel the subscription models.

I see advantages for both depending on your business needs.

A company who has a core business with a core number of people (that is have ~100 engineers year after year) is better off buying the software. However a company who is more project oriented and have resources going up and down very quickly may be better with subscription.

Ideal, I should be able to buy the software as required. Ie buying the software when I know some people will need it for many years but also subscribe on ad-doc basis.

I am learning more and more about Windchill 11 and there is something I clearly do not like.

It seems that PTC is keeping their traditional licencing model for what already exist such as Creo/PDMLink etc… but all the new modules and functionalities what they call the Windchill apps are all on subscription models (including things like Thingsworx).

I see a strategy here where more and more of new functionalities  (modules,. Apps whatever you want to call them) are having only one type of licence ie subscription and in a few years, this will represent most of the portfolio so someone at PTC will say, “You know what 10% of our licences are still on the old model (buy the software), let’s crap that now since all of our customers are now used to subscriptions.

Well, I hope I am wrong. I do not want to be FORCED to subscriptions. We know that it has little benefit to end users. The only benefits is revenue for the manufacturers. A mix of both for the reason explained above is definitively a benefit for end users.

Someone to challenge my view

Best regards

[ChrisPLM]

To be more specific to your comment.

I see no reason why being of the cloud drive to subscription. Private Cloud could be the answer

[BenLoosli]

How do you handle a subscription license when you are not connected to the internet? My production environment has no connectivity to the internet so all web-based license and support models are useless to me.

I have had many discussions with PTC, up to the VP level, on support when PTC is spending their money developing web-based support tools. When I have a problem, I need to talk to someone about it and have them give me solutions. I cannot run some special diagnostic tool that generates reports to be emailed directly to PTC. When PTC wants to see a log file, I have to print it, scan it back in as a PDF and then send them that. No files come off my production system electronically.

[ChrisPLM]

Hi Ben,

fair enough. I guess within their customer's portfolio only a limited number of customers are in your situation.

However, this is what I mentioned, they should continue with the current model and also provide subscription but NOT replacing current model with only subscription.

Best regards

[LawrenceS]

There seems to be some confusion over what Subscription Licensing is and means along with what pros/cons it may have so I started a separate discussion of this on the following page.  I hope that allows more people to be involved in this focused discussion (remember not everyone can see Product Ideas).

Subscription Licensing (w/o Cloud) VS Perpetual Licensing (w/o Cloud)