December 27, 2020
PTC took another critical step in its strategy to be a leader in cloud-based engineering solutions with its recent acquisition of Arena Solutions, the original Software-as-a-Service (SaaS) player in the PLM market.
PTC doled out $715 million to acquire Arena Solutions, which has carved out a following delivering SaaS-based PLM to more than 1,200 customers in the electronics, high-tech, and medical device industries, including such marquee companies as Peloton, Sonos, and Square. Arena PLM also extends PTC’s presence in the mid-market segment, where SaaS solutions are becoming the standard, accelerated in part by COVID-19, which precipitated a need for cloud-based solutions that can accommodate a remote and distributed workforce as well as facilitate collaboration with far flung partners and customers.
The Arena deal comes on the heels of PTC’s acquisition last year of cloud CAD provider Onshape for $470 million, previously its largest acquisition to date. At the time, PTC CEO Jim Heppelmann described Onshape as a “growth engine” and the foundation for evolving the company’s CAD and PLM offerings to the cloud and being the SaaS leader in industrial software.
“We set that goal for ourselves two years ago because we saw mounting evidence that engineering and product development organizations—which have been laggards to adopt SaaS—were ripe for disruption,” says PTC Chief Strategy Officer Kathleen Mitford. “Our first `down payment’ on that strategy was the acquisition of Onshape. The explosive growth we’ve seen with Onshape over the past year, combined with the tectonic shift towards remote work and collaboration caused by COVID, cemented our belief in the market’s readiness for SaaS.”
Onshape and Arena, in particular, are key to PTC’s cloud strategy because they both are “born as a pure SaaS product, Mitford says. Both offer the benefits of a true multi-tenant SaaS architecture, and the Arena platform adds a layer in the technology stack that is complementary to Onshape—its PLM suite of capabilities augment Onshape’s CAD and PDM features. While it’s still early on and the merger has not yet gotten government approval, Mitford says the technology integration strategy for Onshape and Arena will happen in the cloud, therefore will not require a complex migration path or upgrades and be seamless for customers.
While the combined Arena PLM and Onshape CAD will constitute PTC’s SaaS portfolio, the company will continue to offer its traditional Creo CAD and Windchill PLM offerings and evolve those platforms to the SaaS world in a way that is compatible with how those customers leverage the products today. “It will be similar to the way Microsoft brought its Office suite into the cloud and made it seamless for users,” she says.
Both the Arena and Onshape acquisitions allow PTC to more easily fill the gap for industrial SaaS solutions and take the lead in what company officials fully expect will be the future of engineering software. “Trying to build the equivalent of what Arena and Onshape will deliver together internally would have taken a massive investment of time and resources and could have put us at risk of missing the moment,” Mitford says. “By making these SaaS acquisitions, we’re in a better position to help our customers respond quickly to rapidly changing business needs and priorities.”
Watch this video to hear Jon Hirschtick, founder of Onshape and EVP of SaaS at PTC, discuss the core benefits of a SaaS architecture.
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Beth Stackpole is a contributing editor to Digital Engineering. Send e-mail about this article to [email protected].Follow DE