PLM software vendor PTC and factory automation equipment maker Rockwell Automation recently announced a partnership agreement. As reported, Rockwell is making a $1 billion equity investment in PTC to acquire 10.6 million newly-issued PTC shares and will become its third-largest shareholder. Rockwell will also get a seat at PTC’s board of directors.
This partnership is significant and will change the balance among the top-tier PLM and factory automation vendors for years to come.
As the industrial sector continues to transition to pervasive digitalization, the Industrial Internet of Things, and Industry 4.0, the demand for proven capabilities in Internet of Things technology, automation planning and simulation, and manufacturing operations management is growing rapidly. Although PTC was early to market with the highly-publicized acquisitions of IoT technology providers Axeda, ThingWorx, and Kepware, the relative lack of a strong brand and deep expertise in industrial automation tempered market adoption.
PTC’s largest competitors saw better success. Siemens, in particular, recognized the imminent digital transformation of the manufacturing industry and has been moving deliberate and with little fanfare to fulfill the need, building upon its strong brand and deep industrial automation expertise that cover the gamut from industrial automation hardware to advanced planning and simulation.
The newly formed relationship between PTC and Rockwell Automation is a direct answer to Siemens’s dominance in factory automation, Industry 4.0, and smart factory initiatives. It will close important gaps in PTC’s portfolio.
One of the more noticeable gaps in PTC’s portfolio has been in advanced visualization and simulation. At the same time, Dassault Systemes’ 3DEXPERIENCE platform emphasizes simulation and visualization of a fully digital world. Siemens has made several key acquisitions, starting with LMS in 2012, resulting in a robust set of closed-loop simulation tools.
The opportunity to integrate key IoT assets from PTC with Rockwell Automation’s FactoryTalk Analytics and FactoryTalk MES software will give PTC deeper analytics capabilities as well as plant management software. Another announcement that didn’t get as much attention but will further strengthen PTC’s portfolio is a partnership between PTC and ANSYS, which also tosses a much needed lifeline to ANSYS.
With heavyweight players like Siemens and the PTC-Rockwell combination moving to the forefront, and considering the murky future of GE Digital, the PLM and Industrial IoT landscape has changed dramatically.
Although Dassault gained skills and market presence with the acquisition of Apriso, it will now need to work harder to prove automation and manufacturing skills and expertise matching the breadth and depth of experience and skills of Rockwell and Siemens.
SAP, another major contender in the industrial IoT opportunity space, now has an even wider gap to close and more to catch up on, despite massive investments in the Leonardo Intelligent Enterprise platform.
And Autodesk IoT is most likely off the manufacturing stage.
Manufacturing companies in pursuit of the promise of digital transformation should be looking for solution providers that can realize an end-to-end digital thread that connects all product lifecycle activities. This means a PLM software backbone, a digital twin-based architecture, and the ability to plan, simulate, test, and optimize every key aspect of product design, manufacturing, operation, and maintenance.
The implication for industrial automation companies such as ABB, Schneider, and Mitsubishi Electric could be significant. These companies will need to increase their product lifecycle digital IQ beyond industrial automation and excel in the delivery of software tools to support all product lifecycle phases, whether through partnerships or organically, which, for some, might be unstainable.
Product life cycle management in the digital era is changing rapidly and must focus on improving complex multidisciplinary analysis and decision making. The reach of PLM software is changing and growing, and with it the PLM vendor landscape. PLM software vendors that cannot support the entire product lifecycle process digitally will not be able to play a meaningful role and compete effectively in the Industry 4.0 revolution.