In this Supply Chain Matters blog commentary, this supply chain industry analyst shares observations and insights from product lifecycle and service management technology provider PTC’s LiveWorx 2018 conference held in late June.
This year’s annual conference included upwards of 6100 announced attendees with 46 countries represented. The conference main keynotes were delivered in a “in-the-round” 360-degree seating audience format to provide the appearance of the new, more innovative PTC, including plans to relocate corporate offices to Boston’s Seaport Technology District. PTC LiveWorx 2018
Moving forward, it became clear that PTC hopes to leverage key strategic alliances with Microsoft, Rockwell Automation and ANSYS, along with a more focused subscription-based revenue model to drive accelerated growth.
In a prior blog, we highlighted and provided initial insights on one of the most significant announcements made at the conference, namely a strategic partnership among PTC and Rockwell Automation in the factory automation and Industrial Internet of Things technology deployment area. The announced partnership calls for Rockwell Automation to make a $1 billion equity investment in PTC, representing an approximate 8.4 percent ownership interest. PTC intends to use the proceeds from the equity investment to repurchase stock to offset stockholder dilution. The investment transaction is subject to customary closing conditions and regulatory approvals and is expected to close within 60 days. At closing, Rockwell will assume a seat at PTC’s Board of Directors.
The stated goal of this alliance is to boost PTC’s technology presence in the factory automation area, not only in current discrete manufacturing automation needs, but in continuous and batch process manufacturing settings where Rockwell provides deep customer relationships.
In the executive news conference, PTC CEO Jim Heppelmann was asked about the former strategic partnership with General Electric’s GE Digital business unit. He responded that the GE partnership has not been as active and that the Rockwell partnership has far more upside potential for the company.
There were other very noteworthy announcements made at this year’s LiveWorx.
The company announced a global transition to a software subscription-based model effective January 1, 2019. New software licenses for PTC’s core applications and ThingWorx Industrial Innovation Platform will be available only by subscription as opposed to perpetual license. One exception is that PTC’s Kepware product suite will continue to be available with both subscription and perpetual licensing.
PTC’s prior Internet of Things focused technology offering are being renamed ThingWorx Industrial Automation Platform and there a noticeable marked shifting of marketing and sales efforts to message specifically on factory automation needs. Moving forward, PTC Kepware, ThingWorx and Vuforia technology will make-up the product capabilities of this platform. Emphasis was also placed on PTC’s prior January announced strategic partnership with Microsoft. Leveraging the Microsoft Azure Cloud platform as the industrial automation hub.
A new strategic partnership was announced with simulation technology provider ANSYS.  The two companies will plan to deliver ANSYS Discovery Live real-time simulation within the PTC’s Creo CAD product suite. The combined capability will be sold by PTC as part of the Creo product suite, offering customers a unified modeling and simulation environment, removing the boundaries between CAD and simulation, enabling design engineers to gain insight into each of the many design decisions they make throughout the product development process.
In the services and service parts planning process support area, PTC touted added market traction gains in proposing and piloting  IoT enabled service management process with augmented reality-based capabilities. Examples included smart machines that communicate a potential part failure, and where service technicians can visualize the part performance parameters. Service parts than can then be automatically ordered. Presenters additionally noted increased interest in field and partner service training processes enabled by AR technology. At the on-stage opening keynote, medical diagnostics customer Sysmex America indicated how that company is transforming the need for accurate results from various deployed blood analysis diagnostic machines with the ability of expert technicians to be able to virtually calibrate such equipment via the Cloud.
IoT Market Uptake
One particular area that we make a concerted effort to focus in on among our PTC conversations is the current dynamics of customer interest levels in IoT technology deployments. At the press and analyst session, there were specific questions related to the state of IoT deployments. The short answer response is that this technology has yet to make a broader connection toward fulfilling specific customer business objectives.
From the viewpoint of PTC’s executive leadership, there are too many technology and services players in this segment, and they predict a market shakeout. Another area hindering wider adoption are notions of some enterprise technology providers and systems integrators continuing to press customers for adopting a technology platform providing many different options vs. honing-in on addressing a specific business need. In other words, the basics for leading with the what the business requires in process and decision-making capabilities is overridden with the broad notions of attempting to sell digital transformation, Manufacturing 4.0, Edge Computing Platform  or other broad enterprise computing notions that can be very expensive when all is considered.
PTC indicates success with targeting specific business challenges and with direct connections with those closest to responsibility for addressing and solving such problems. An industry analyst / press PTC customer panel reinforced these themes, namely lead with the business use case, adopt a platform that is open, show timely business value and measurable business capabilities and insure you have insight to the customer experience.
From our lens, we continue in the belief that technology providers need to directly address and respond to concerns for information and data security in all facets of an IoT enabled process. And, as we have echoed in prior insight commentary, too many technology and industry business players are still consumed as to achieving ownership and monetization of IoT related data. The market does not seem to learn from prior failed attempts to do so.
We will feature a later Supply Chain Matters blog highlighting a conversation with a specialized IoT system integrator that addresses similar challenges.
Summary Impressions
This year’s LiveWorx provided a different persona for PTC. This is a technology provider that is growing, but at the same time, learning the lessons that you cannot market and sell technology before the market has readiness to adopt such technology. De-emphasizing centralized corporate marketing in favor of product-centric solution marketing has yielded noticeable results. Market messaging is much clearer and more directed toward customer business and process management needs.
After some needed senior executive leadership changes, PTC seems far more focused in product strategy, and is learning where customers seek near-term solutions to product design, product management, manufacturing, quality  and asset management needs. Some areas of solid customer uptake have been uncovered in areas of AR and simulation enabled process capabilities.
The company’s new strategic partnerships are bold, but more work is required in timely product development  to fill-in technology areas.  Moving to a full Cloud-based subscription model presents some risks, especially for customers that will be adamant for a behind-the-firewall management in the support of product design, management and quality information process management needs. For some customers, these areas of data , information and decision-making remain of the perception as mission critical, not to be co-mingled with multi–tenants.
 
Bob Ferrari
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