The SaaS-ification of PTC

Oct. 24, 2019
PTC’s pending acquisition of Onshape will add a cloud-based Software as a Service product development platform to the company’s CAD and PLM portfolio.

PTC has been building out its Internet of Things (IoT) and augmented reality businesses through acquisitions and partnerships that are acting as growth engines for the company’s own digital transformation as well as those of its customers. Now, PTC is applying the same strategy to its computer-aided design (CAD) and product lifecycle management (PLM) businesses.

Today, PTC announced that it has signed a definitive agreement to acquire Onshape, a Boston-based company founded in 2012 by CAD pioneers Jon Hirschtick, John McEleney, and Dave Corcoran, the inventors and former executives of SolidWorks. Onshape is the first software-as-a-service (SaaS) product development platform that unites CAD with data management and collaboration tools.

In the biggest acquisition that PTC has ever done, the company will pay approximately $470 million for Onshape, which will operate as a business unit of PTC pending regulatory approval and satisfaction of other closing conditions. 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.

“What we are doing with Onshape is a long-term strategy coming from a position of strength, as our CAD and PLM businesses are doing well," said PTC president and CEO Jim Heppelmann during a call with press and analysts. He cited the release of PTC's fiscal 2019 numbers that show the CAD business grew 9% and PLM grew 13% this year.

Heppelmann also noted that PTC’s current CAD and PLM products cater to large corporations. But it is the small- and medium-sized businesses that are increasingly interested in CAD, and more specifically SaaS. “We at PTC believe the CAD and PLM markets will go to SaaS. We can’t understand why it won’t happen because there are many compelling drivers pushing it in that direction…PTC itself imagines transitioning to a SaaS model, as most of our software runs on premise at the customer site. We think surely someday that will be in the cloud.”

Heppelmann says he sees Onshape as the growth engine that will enable the “SaaS-ification” of PTC.

For the customer, there is value in lowering the cost of ownership by eliminating the need for server hardware. SaaS software is always on the latest version with no need for administers to implement patches or perform upgrades.

“We founded Onshape based on the customer problems we saw in the world,” said Jon Hirschtick, CEO and co-founder of Onshape. “I would constantly see problems from installed software, [such as having to] copy files from different tools. These are problems that slow them down and make them less innovative, particularly in world where many [companies] want to transform their business to be faster and more agile.”

In addition to the fact that there is no software to install, product development teams—which are more distributed these days—can collaborate and share data in real time to realize the benefit of faster time to market.

“One reason we move so fast is because we don’t have to support old versions of software,” Hirschtick said. “And if there’s a bug, we fix it and it deploys to everyone around the world, which is a huge security advantage and a strategic advantage in the race to supply more value to the customer.” Onshape also provides analytics to provide real time information on what the team is doing.

As a business unit of PTC, Onshape will benefit from its “big brother’s” marketing and distribution to accelerate its path forward. And PTC gains industry-leading technology talent.

But it’s the end users who will win, as well.

“At Onshape, we share PTC's vision for helping organizations transform the way they develop products,” said Hirschtick. “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.”

About the Author

Stephanie Neil | Editor-in-Chief, OEM Magazine

Stephanie Neil has been reporting on business and technology for over 25 years and was named Editor-in-Chief of OEM magazine in 2018. She began her journalism career as a beat reporter for eWeek, a technology newspaper, later joining Managing Automation, a monthly B2B manufacturing magazine, as senior editor. During that time, Neil was also a correspondent for The Boston Globe, covering local news. She joined PMMI Media Group in 2015 as a senior editor for Automation World and continues to write for both AW and OEM, covering manufacturing news, technology trends, and workforce issues.

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