Industry is about to make a breakthrough
PTC on Industrie 4.0
Jack McAvoy, Director of Analyst Relations at PTC, recently met with Ulrich Sendler for a discussion that formed the basis of this article. PTC is a leading provider of software for engineering and product lifecycle management. In recent years, the company has added several business segments through acquisitions that directly address Industrie 4.0 and the Internet of Things (IoT).
PTC, founded in 1985, is headquartered in Needham, near Boston, Massachusetts, USA. Jim Heppelmann, president and CEO of the company, leads ca. 6,000 employees across six continents. PTC, along with more than 750 partners worldwide, serves over 28,000 customers in various sectors of the manufacturing industry and has distributed nearly 2 million active software licenses. In 2013, PTC booked total revenue of ca. 1.3 billion US$, 480 million US$ of which from Europe.
PTC sees Internet of Things (IoT) as the general term that includes all industrial development. The vision is that almost all physical products will be connected via the Internet in the future. PTC understands the term Industrie 4.0 as referring to machinery and production plants or the Smart Factory and therefore views Industrie 4.0 as a subset of IoT. But this subset plays a particularly important role in Germany, due to the strength of its domestic production. PTC software tools will support customers through all aspects of the Internet of Things, connected production, and ‘connected manufacturing operations’.
Every company should have a strategy for IoT
The availability of IPs such as tiny sensors, actuators, and cameras for billions of objects used for almost every conceivable purpose forms the basis for IoT, for connecting almost all products to one another and to humans.
Jack McAvoy views this present state as being just before the point at which the vision turns into reality. "We are not ten years away from it, more like 10-20 months. And every company ought to know, preferably today rather than tomorrow, what kind of innovation it wants to embrace and what its own use cases will be."
PTC believes that IoT contains not only enormous potential for the improvement of products, but also for new products, new functionality, and new business models. In particular, PTC sees entirely new possibilities in the area of service. New service business models will be created by improving existing services such as maintenance and overhaul as well as through entirely new services, which will be made possible by connecting products, machinery and equipment – the goal here is that manufacturing companies will offer customers outcome-based value. Only a fraction of the new possibilities can be perceived today, most will reveal themselves in the next few years. IoT will cause the world to change to a greater extent and more quickly than ever before. This fundamental change will mostly affect PTC’s discrete manufacturing customers.
From CAD tools to an IoT platform
PTC was founded as an innovative provider of 3D CAD software in 1985. The name originally stood for Parametric Technology Corporation, and the parametric approach of the then-introduced product Pro/ENGINEER was its signature feature. At that time, none of the competitors were able to offer such a rigorous modeling method as that which formed the basis of Pro/ENGINEER. The great success of this system led to the acquisition of other CAD vendors and to the integration of their software, in particular Computervision in 1998, and CoCreate, (originally SolidDesigner from Hewlett-Packard), in 2007. Today, PTC’s engineering software is PTC Creo, used to "create, analyze, visualize and reuse product designs in downstream processes using 2D CAD, 3D CAD and parametric and direct modeling" – as stated on the company’s homepage.
The acquisition of Computervision also meant having software in the house that soon became strategically more important than CAD, namely the PDM software Windchill, developed by a wholly-owned subsidiary of Computervision, Windchill Technologies. Through the further development of this software, PTC is now one of the few globally successful suppliers of tools for Product Lifecycle Management (PLM).
All of PTC’ acquisitions follow a clear strategic line that has been largely conceived, strategized, defined, and promoted by CEO Heppelmann. He was the co-founder and Chief Technology Officer of Windchill Technology before the company was acquired by PTC and his life's work has revolved around the management of product data in the manufacturing industry. The recent expansions of PTC’s activities start from the premise that product data will remain the most important asset of the manufacturing industry in the future.
In addition to the geometric modeling of products, a number of other activities play a central role in industrial value creation. The driving force behind most of the additional acquisitions was the intent to support all of these activities as consistently as possible on the basis of Windchill. The most important of these acquisitions were Arbortext for the publication and management of technical documents; ITEDO for 2-D technical documentation; Polyplan for Manufacturing Process Management; MKS for software and systems development, requirements management, and Application Lifecycle Management; Servigistics and Enigma for supporting the service lifecycle. Thus, PTC was able to deliver to its customers an integrated platform spanning from the development to the service of multi-disciplinary products.
ThingWorx Rapid Application Development Platform v5.0 offers server federation capability with options for cloud, on premise and on-device deployments.(source PTC)
Within this past year, PTC added three more companies that support building an infrastructure for the Internet of Things and a manufacturer’s goal of capitalizing on the vast opportunity inherent in the IoT – ThingWorx with a platform for developing almost any IoT application; Atego for model-based system development; and finally Axeda with a platform for machine-to-machine communication and IoT connectivity.
In spring of 2014, PTC joined forces with one of its most important customers, General Electric, to bring to market a solution that helps manufacturers close the loop between product design and production execution on the shop floor. The Manufacturing Execution System GE Proficy is now fully integrated with PTC Windchill. The combined offering, GE Proficy + PTC Windchill Solution, provides a PLM-MES connection that can manage a closed loop of product information between engineering, manufacturing and production.
Jack McAvoy sees PTC as being in a unique position. "None of our competitors can boast such consistency in the support of the value creation process. Particularly in terms of model-based development of advanced systems and the direct support of a presence in IoT, we are extremely well positioned."
Industrie 4.0 and IoT
The German manufacturing industry is one of PTC’s strongest markets worldwide. It is no surprise to the software provider that unique emphasis is placed on IoT here. In recent years, the German manufacturing industry has expanded its lead across the globe. In addition to the automotive and aerospace industries, machine tool manufacturers, machining centers and mechanical engineering, in general, have contributed largely to this success. PTC sees Industrie 4.0 as the use of IoT for production.
"IoT will also have a dramatic impact on this part of the industrial value chain. The networking of machines and equipment and the further automation of production up to the autonomy of individual steps will again speed up production, improve plant-wide efficiency, and increase the quality of results. Furthermore industry will develop entirely new services in connection with the use of their machinery and equipment. Our product portfolio fits perfectly here," observes McAvoy.
"A characteristic of IoT is the transition of business models from the sale of products to the sale of services – e.g. you could purchase cultivated farmland as opposed to purchasing the farm machinery itself." (source PTC)
In the future, manufacturing will be just one of many sectors to undergo major changes through IoT. The transformation from a portfolio of mechanical and mechatronic products to systems connected over the Internet is the basis for everything that follows. The second aspect relates to the expansion of Internet-based services offerings. As well as pure product sales, product-added service and product-based service will become increasingly important.
As an example, Jack McAvoy mentions the change in car buying behavior we are seeing, whereby the Internet services linked with a vehicle, as well as the connectivity-based safety and driver assistance functions, are gaining importance as compared to design and horsepower.
Finally, along with new services, entirely new business models will arise that are inconceivable today. A decisive factor for manufacturers will also be how consistently their industrial value processes are digitalized.
McAvoy cites the example of Rolls-Royce – the manufacturer no longer offers engines, but rather engine hours, so that customers do not have to concern themselves with maintenance. Even Xerox, MAN, Alstom, Caterpillar and small and mid-sized companies are in the process of creating new business models. At the same time the example of Renault makes clear that this link can also be realized in a heterogeneous IT environment: The French car manufacturer uses PTC’s spare part management and a PLM solution from a different provider.
Jack McAvoy sees the industry developing into a world where hardware, software and sensors of all kinds form the foundation; where electronically-structured product data, along with data generated by product sensors and embedded software, deliver material for analysis using Big Data solutions; and where apps and services for the end users gradually become the most important source of revenue for the industry.
One example is the German start-up StreetScooter that develops electric vehicles for urban transport. From the advent of the first pilot vehicles onwards, connectivity via the Internet has been used directly for development. 30 built-in sensors in each vehicle provide information to the manufacturer on consumption data and the behavior of vehicle parts during the pilot phase. The necessary software and network infrastructure was created in just two weeks using the PTC ThingWorx platform. PTC Creo and PTC Windchill provided important tools for the development of the electric vehicles and for the collaboration of the 80 partners involved.
With the help of the ThingWorx Car-to-Cloud-App, sensor data from vehicles is captured nationwide and then used in development, testing and quality or service management. For the developer, the virtual and physical worlds merge when he can compare the design specifications alongside real data. If he sees, for example, that a door is opened 200 times a day, he can calculate the likely wear time and take optimization measures. Data can also be transmitted back to the vehicle fleet to upload a software update.
"The Internet of Things," says Jack McAvoy "is the logical continuation of industrial development over the last 50 years as well as the realization of industrial excellence. We remain true to this industry and provide our customers with the tools they need to undertake their next step."