Does Aras have enough money to win over Enovia, Teamcenter and Windchill?

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Back in 2011, I published my article saying that Aras lines up against Windchill, Enovia and Teamcenter. The question I asked those days was - is it possible to displace large PLM vendors? Aras demonstrated an interesting path by wining some very interesting deals and growing to support very large manufacturing companies. It demonstrated few interesting innovation in business models, community development and, at the same time, continued their technology and platform development.

Earlier today, my attention was caught by Aras announcement about new investment round - Aras Announces $70 Million Investment Led by Goldman Sachs to Accelerate Growth. Combined with the previous round of $40M a year ago,  Aras collected significant amount of financial resources to support their growth.

Press release passages are pretty much standard:

Aras is disrupting the industrial software markets for PLM, maintenance, repair, and overhaul (MRO), and quality management systems (QMS). The company’s open software platform enables the world’s largest manufacturers to digitally transform their enterprise.

“This funding round with Goldman Sachs PCI enables us to move forward rapidly on multiple fronts and deliver the critical capabilities our customers need to innovate and transform their operations. We view this additional capital as another positive step forward for our entire open PLM community so that we can deliver capability faster, on a larger scale.”

It took almost 10 years for Aras to come to the point when investors are giving serious amount of money to Aras to do more things faster. At least this is what I can hear from Peter Schroer's passage.

Aras development is interesting. I wrote about it few times in the past - What is behind Aras momentum?, Aras PLM overlays explained, What is different in Aras PLM? (); Will Aras develop a new way to acquire companies.

So, Aras has a potential to win and money to spend. What is next? In my view there are two unknowns that define future trajectory of Aras PLM - maturity of Aras business model and readiness of market to adopt.

There are very little you can do about two main things in startup and business development - market size and timing. These two factors can basically define what company can do. In case of Aras, market is defined by large manufacturing companies and their PLM related activities.

Think about two lists - World's largest 100 manufacturing companies by revenue and World's Largest 1000 manufacturers. This is more/less Aras market. How many of these manufacturing companies will be ready to spend 1M$ annually on Aras subscription? For how many of them, the timing is right to replace old PLM software or to spend extra $1M dollars to deploy Aras PLM overlay? Can Aras can get 100 companies out of this list? If yes, then how fast? These are kind of questions to ask to understand Aras future trajectory. My hunch technology has very little to do now with future Aras success. It is now about people, organization and strategy capable to sell PLM projects to 100 largest companies in manufacturing world. I guess Goldman Sacks, GE and Silver Lake Kraftwerk got answers on some of these questions.

What is my conclusion? Think about $100M investment as a power jet engine that can propel Aras development for the next few years. Will it be enough to displace enough Teamcenter, Windchill and Enovia installations? If not, will it be enough to displace enough Excels for large manufacturing firms to increase PLM market? Aras has to have $100M ARR (Annual Recurring Revenue) to win the race. Just my thoughts..

Best, Oleg

Disclaimer: I’m co-founder and CEO of OpenBOM developing cloud based bill of materials and inventory management tool for manufacturing companies, hardware startups and supply chain. My opinion can be unintentionally biased