By Kenneth Wong
At age three, David Hutton decided he wanted to be an inventor. At 13, he began designing a water pump based on what he’d learned in a physics lesson. Dreaming big, he imagined his device would solve the irrigation problems of the Third World.
In November 2011, Siemens PLM introduced Design1, a subscription version of Solid Edge offered to Local Motors project teams. It was the origin of what has become Solid Edge subscription, offered as monthly, quarterly or annual rental.
It wasn’t smooth sailing for the budding engineer, however. “As it turned out, my design was technically impossible,” he recalls. Subsequent research highlighted the flaws of pumps in the developing world, from lack of maintenance to unavailability of replacement parts.”
So he reconsidered his concept. He reasoned that the design would have to be “a very basic irrigation water pump that required little to no maintenance, and that did not need any shop-bought replacement parts.”
Watershed, an entrepreneur-nurturing program, nudged him in the right direction. Today, Hutton’s debut product, Flexipump, is in the hands of farmers in South Africa, Zambia, Zimbabwe and Malawi. The simple pump can transport water from a stream or a well located 6.5 yds. below. It can push water up to nearly 11 yds. in height, or about 109 yds. along the ground. It pumps more than 420 gallons per hour.
Inventors like Hutton are a departure from the automakers and aerospace titans that design software vendors have historically targeted. Driven to tackle what they believe to be socially significant issues, this new breed of activist-inventors form ad-hoc teams scattered around the globe. They come together to solve specific problems — say, lack of clean water in India or portable shelters for cyclone victims in the Philippines — but not necessarily to form permanent, ongoing business alliances. Their teams are often too small to warrant a comprehensive product lifecycle management (PLM) or enterprise resource management (ERP) system.
Some catch the attention of angel investors with the commercial potential of their product ideas; many turn to crowd-funding sites like Indiegogo or Kickstarter for capital. Most of them are not in a position to spend a large sum up front to acquire an expensive suite of software or commit to recurring annual licensing fees. For them, the perpetual ownership of an all-inclusive software package is a burden. Their projects’ comparatively shorter lifespans, along with their priority for cash flow, demand a pick-what-you-want, pay-as-you-go menu.
Bottom line: They’re a growing segment of designers and engineers that software vendors can no longer afford to ignore.
Capturing the Startup Spirit
Last winter, John Fox, VP of marketing for Siemens PLM Software’s Velocity Series, and Karsten Newbury, senior VP and GM of Siemens PLM Software’s mainstream engineering software, checked into the Fairmont San Francisco on Nob Hill. They represent a software giant that counts NASA, Boeing, Volkswagen and Ford among its clients. But they were at the hotel to attend Lean Startup, a conference where entrepreneurs traded war stories and tips related to new ventures.
“One of the reasons we’re here is because we want to apply these startup principles and create value for our customers,” said Newbury. Another reason might be to attract the type of designers and engineers who are involved in these new ventures.
When Hutton began designing the Flexipump, he was using a free student copy of Solid Edge (SE), Siemens PLM Software’s 3D mechanical design program that targets mainstream customers (different from the enterprise customers who usually rely on Siemens NX). Today, Hutton subscribes to SE Foundation.
The introduction of a Solid Edge subscription in September marked Siemens PLM Software’s exploration of a more modular product licensing strategy: SE Design and Drafting ($130 per user per month); SE Foundation ($220 per user per month); SE Classic ($260 per user per month); and SE Premium ($260 per user per month). SE subscription is different from software as a service (SaaS). The software doesn’t run in the cloud or become accessed through a browser. It installs on the user’s local machine, but is controlled by license-verification to remain active.
Unlike previous licensing models — an upfront cost for software acquisition, supplemented by a yearly maintenance fee — the subscription program lets activist-inventors like Hutton adjust the functionalities they use (or discontinue) during different phases of the project. For instance, a subscriber may upgrade from Classic to Premium to get access to simulation functions in the higher-priced edition for a few months, then downgrade to the lower-priced Classic or Foundation edition when the simulation tasks are complete.
“Some companies are using subscriptions to help them more cost effectively manage the ebbs and flows of demand,” Newbury notes. “We see other, smaller companies, like Flexipump, using subscriptions as an easy and affordable way to get access to professional CAD that would otherwise have been out of reach.”
The Dawn of Purpose-Built Simulation Apps?
A similar shift from general-purpose software to function-specific modules is evident in simulation, even if the trend is not as disruptive. One example is Altair’s introduction of HyperWorks Virtual Wind Tunnel, a computational fluid dynamics (CFD) program specifically re-engineered for wind tunnel simulation. Another is Dassault Systemes’ Abaqus Knee Joint Simulator, designed to virtually test and verify artificial knee joints in the biomedical market.
For users who have neither the desire nor the patience to master general-purpose simulation packages, these modules reduce the learning curve and make the solution easier to adopt. They’re also a sign of pressure coming from changing consumer behavior. Instead of figuring out a way to fit a complex piece of software into an existing workflow, consumers expect the software vendors to deliver a custom-tailored product applicable to a task routinely performed in an industry.
The origin of the SE subscription program could be traced back to the launch of SE Design1, a special version of the software the company created for project members of Local Motors, a portal for crowd-sourced automotive design and manufacturing. Priced between $19 to $299 per user per month, based on essential to comprehensive functions, Design1 proved the appeal of multi-tiered software with a pay-as-you-go option.
“Its adoption has shown us that this licensing model has an appeal, and is a way for us to reach new customers by providing a product that was better suited to their needs and budgets,” says Newbury.
Fox and Newbury had learned quite a bit about the way small businesses operate from a survey they recently commissioned. (The survey results were not yet public at press time. Siemens PLM Software plans to release it soon.)
“Sixty percent of the survey participants are purchasing software based on projects. The issue of addressing peak demand — we have customers who are buying subscription seats exactly for that reason,” Fox says. He adds that when the survey respondents were asked whether they could predict their project, and how much visibility they had into future projects, the response was a chorus of “virtually zero.”
“We asked, ‘How far can you see into the horizon?’ For the majority, it’s six months or less,” he reports.
Solutions for the VUCA Era
When Autodesk CTO Jeff Kowalski looked around for a succinct phrase to describe the mood of the times, he found it in an acronym coined by the U.S. Army War College.
“We live in the age of VUCA: volatile, uncertain, complex and ambiguous,” he observed in his December keynote address at the Autodesk University conference.
The design software giant is betting heavily on what it sees as the way of the future: cloud-hosted collaboration, cloud-hosted data management and cloud-augmented desktop software. Several years ago, the company began pouring R&D efforts into product offerings that would later become part of Autodesk 360, its cloud-centric modules. In February 2012, when Autodesk decided to go after the product lifecycle management (PLM) market it once dismissed, it began offering not an all-in-one bundle, but a slew of purpose-built modules. In fact, the program debuted with nearly 140 apps for project management, compliance, cost estimation, supplier management, design review, change order and more. For as little as $25 per month, users can mix and match the modules they need for different projects during different phases.
In September, Autodesk introduced a software rental program, covering popular titles like Autodesk Inventor, Revit, 3ds Max and Maya. (Maya and 3ds Max are available as individual rental title; Revit and Inventor are available for rental only as part of suites.) Under the new licensing model, users get access to the desired titles by paying a monthly, quarterly or annual fee. Monthly cost varies, but could be as low as $50 per month.
Some bundles traditionally sold as suites — like the Design Suite, Building Design Suite or Entertainment Creation Suite — were also offered under the same rental program, in prices ranging from $285 to $395 per month. This is disruptive pricing for classic 3D CAD programs that typically sell for $2,500 to $6,000.
“Now that you can rent Autodesk software, the ownership model has finally caught up to the agility of the product itself,” says Kowalski. “With an access model, you can quickly scale up and then back down, giving all of those new people the tools they need for just as long as the project lasts.”
Charles Bliss, designer of Lightning Motorcycle, a company currently developing an electric motorcycle, is test-driving Autodesk’s rental software program.
“The beauty of pay-as-you-go is, you know what you’re paying for. You’re paying for what you need to use now,” Bliss points out. “If we need to do something like FEA, CFD or multiphysics, being able to buy that for a couple of months for a project, and writing it off to that project makes a lot of sense.”
The Autodesk PLM modules offered under the Autodesk PLM 360 brand are SaaS modules, accessible from standard browsers. The rented Autodesk software, however, consists of desktop-installed programs, similar to Siemens’ rental versions.
Creating New Markets with Creo
The desire to pursue new markets and smaller, nimbler businesses also led PTC, previously known for its all-in-one program Pro/ENGINEER, to switch to a series of modules, branded as Creo apps. Today, PTC offers Creo modules for simulation (PTC Creo Simulate), markup and annotation (PTC Creo View MCAD/ECAD), direct editing (PTC Creo Direct), parametric editing (PTC Creo Parametric), technical illustration (PTC Creo Illustrate), and more.
Brian Thompson, PTC’s VP of Creo product management, estimates that “approximately 40% of PTC’s Pro/ENGINEER-installed base has already transitioned to PTC Creo in production. We expect that more than 75% of the install base will transition by the end or 2014.”
Autodesk now offers its popular titles, including Autodesk Inventor and 3dx Max, under monthly, quarterly, and annual subscriptions. This chart shows the company’s promotion of pay-as-you-go licensing.
When Creo apps were initially introduced, they were expected to let previous Pro/ENGINEER users curtail the design functions to only the ones they needed. But, as Thompson discovered, the new users over time began exploring other Creo apps.
“Over 60% of customers who adopt PTC Creo Parametric 2.0 — the latest parametric modeling successor to Pro/ENGINEER on the PTC Creo platform — purchase either a new PTC Creo app or a new extension that was not available in Pro/ENGINEER,” he reports. “New PTC Creo apps displace competitive niche engineering and design applications. In other cases, new PTC Creo Apps are displacing homegrown or highly customized off-the-shelf software operating throughout our customers’ engineering and design departments.”
PTC currently doesn’t offer on-demand or rental licensing, but the trend has caught the company’s attention. “We have fielded an increasing number of inquiries regarding delivering our PTC Creo apps on a subscription basis, particularly from our indirect sales channel,” Thompson says. “We are actively investigating both the technical requirements and various business aspects associated with supporting this pricing model.”
Inventing used to be a costly adventure, affordable only to those with the budget to design, prototype, test and market. The cost of physical prototyping alone would discourage most average Joes and Jane Does from attempting it. Today, however, online portals like Quirky.com offer homemakers, college students and others with bright ideas the chance to invent without emptying their bank accounts (or pestering friends and families for unsecured loans).
The site does this by allowing virtually anyone to submit his or her ideas publicly. Once the design concept is peer-reviewed online, Quirky’s professional team of designers, engineers and marketers shepherd the accepted design from concept to manufacturing. Quirky’s list of successes includes the Pivot Power, a circular extension cord; Versuer, a four-in-one wine opener; and Thor, a double-edged ice scraper. Quirky’s founder and CEO, Ben Kaufman, has delivered keynote addresses at both Autodesk University (2013) and SolidWorks World (2012), hosted by fierce rivals competing for mechanical CAD software market share.
Once dismissed as the experiments of amateurs, crowd-enabled engineering is now getting the attention of the traditionally reticent corporate world and government institutions. GE, the household appliance titan, is striking a partnership with Quirky.com to develop smart devices, ranging from an egg carton that can detect the freshness of its content to a tabletop dashboard that displays a Twitter feed and personalized weather data. Even Defense Advanced Research Projects Agency (DARPA), an agency of the Department of Defense, adopted a crowd-driven collaborative design environment similar to Local Motors to design a fast, adaptable, next-generation ground vehicle (dubbed FANG).
For design software vendors, the inventors of the VUCA era are a double-edged sword. They represent a segment previously untapped, but they also have different expectations about software — much of it shaped by the low-cost, instant-download approach of Apple’s Mac App Store. They’re consumers who don’t believe in the established rules that define the engineering software industry.
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