Acquisition Works: The Acquisition of ThingWorx Establishes a Pattern of Connectivity in PTC’s Global Growth Strategy

On December 30, 2013, when PTC announced that it had acquired ThingWorx, the Exton, Pennsylvania-based creators of an award-winning platform for building and running applications for the Internet of Things (IoT), it should not have been a surprise. However, for those of us who have been covering the global services community for the past several years, what was most surprising was the timing of the acquisition – that is, it was at least a year or so sooner than what we might otherwise have expected!

No two ways about it, though – the acquisition of ThingWorx makes absolute sense for PTC. And, as it turns out, the timing could not have been more appropriate. As stated by PTC president and CEO Jim Heppelmann in the Company’s official press release announcement, “All aspects of our strategy to date have centered on helping manufacturing companies transform how they create and service smart, connected products.” Thus, the three primary keywords from Heppelmann’s introductory quote are: “manufacturing”, “service” and “connected”. And we could not agree more!

Heppelmann went on to elaborate, “With this acquisition, PTC now possesses an innovation platform that will allow us to accelerate how we help our customers capitalize on the market opportunity that the IoT presents.” We agree that this latest move now firmly positions PTC as a major player in the emerging Internet of Things era and, by doing so, allows the Company to continue to expand the overall breadth and depth of its historical Product Lifecycle Management (PLM), Service Lifecycle Management (SLM) and Application Lifecycle Management (ALM) solution portfolios.

PTC’s plan is to use the ThingWorx platform “to speed the creation of high-value IoT applications that support manufacturers’ service strategies, such as predictive maintenance and system monitoring”. This, in turn, would serve as a complement to its existing SLM and extended PLM solution portfolios. As such, the Company would now be able to offer its customers a means to establish “a secure, reliable connection to their products as well as a platform to rapidly develop applications for maintaining and operating them – and ultimately for finding ways to create new value.

In an ideal business world, Product Lifecycle Management (PLM), Service Lifecycle Management (SLM) and Application Lifecycle Management (ALM) would all work in concert with one another, connected in real time, and providing enterprise-wide benefits in a truly synergistic manner. Please forgive my Math background, but the equation that would best represent this ideal scenario would look something like this:

     Lifecycle Management (Product + Service + Application) x Connectivity = Business Lifecycle Management 

– or more simply stated –

LM (P+S+A) x C = BLM

More simply stated, what this basically means is that, long before the acquisition,PTC had already taken a number of proactive steps toward putting most of the individual Lifecycle Management components of the equation in place; however,since the acquisition of ThingWorx, it is now able to integrate the one last remaining piece of the puzzle to deliver a total Business Lifecycle Management (BLM) solution to its customers. This is where IoT meets Lifecycle Management!

The Internet of Things – especially as developed and applied in the way that the ThingWorx solution has evolved – represents the “cement” that can now bond the Company’s highly regarded PLM, SLM and ALM offerings together, especially for those more progressive enterprises that have already recognized the synergies and economies of scales associated with the cross-pollination of these three historically separate disciplines. The IoT also serves as a catalyst for PTC to improve each of its individual major product lines (plus any of its other related enterprise solution offerings), in and of themselves, just by the nature of its newly-acquired ability to leverage state-of-the-art connectivity into all aspects of its global enterprise solutions.

This latest acquisition also puts all of us covering the global services community on notice as to how aggressive PTC is likely to continue to be moving forward with respect to both growing its core (i.e., traditional) businesses, as well as expanding its overarching technology base and global market presence. The Company is widely recognized as being among the market leaders in each of its core businesses; however, its investment in IoT should also serve to expedite and facilitate its ability to deliver.

Throughout his presentation as part of the Company’s January 15, 2014 industry analyst Webcast, Heppelmann used highly descriptive terms and phrases to underscore the rationale behind the benefits of the acquisition including “globalization”, “collaboration”, “take the world to digital products”, “design anywhere; build anywhere”, “personality of products” and “diversity with scale”. These are all areas that PTC had been trying to build upon over the past several years that can now be fully supported and facilitated as a result of the acquisition of ThingWorx.

In his address, Heppelmann further supported the rationale for acquiring ThingWorx by identifying the major forces that PTC believes are driving transformation in the manufacturing sector today; i.e., the forces that have led PTC to make an accelerated move into the IoT era:

  • External forces are reshaping the manufacturing landscape
  • Products are evolving to be smart, connected and global
  • Value is fundamentally shifting from product to service
  • When combined, these forces will transform the industry

Taken together, these forces describe a global manufacturing sector that will begin to look very much different in the next couple or few years than it looks today – that is, a sector predicated on an emerging foundation of the three descriptors Heppelmann had cited earlier in his presentation: i.e., “manufacturing”, “service” and “connected”.

There have been many of us who follow the global services community that have been watching – and, quite frankly, wondering – how PTC would ultimately incorporate its October 2012 acquisition of Servigistics into its overall operations and solution offerings. In fact, over the past 16 months or so, many of us have felt that our (and the market’s) questions have been left largely unanswered. The Company’s July 2013 acquisition of Enigma, a niche developer of software that aggregates and delivers technical content in aftermarket service environments, also contributed to this growing list of unanswered questions. However, the acquisition of ThingWorx has changed everything – apparently, there always was a “method behind the madness” at PTC that was not really mad at all!

It would be incorrect to interpret PTC’s most recent spate of acquisitions as being little more than a series of one-off purchases made by an already established, major PLM industry player that simply wants to add to its global empire. Conversely, these acquisitions have apparently been both long – and well – thought out as part of an overarching strategy that would not only propel PTC to be the single largest provider of global PLM and SLM products and services, but, rather, totally reposition the Company as an Internet of Things leader that has leveraged the latest in state-of-the-art technology into a comprehensive – and completely re-tooled – portfolio of enterprise solutions.

For those of us who have spent most of our careers serving in either the PLM or SLM (or ALM) marketplace, the time for choosing sides (i.e., “we’re either in product management or services management”) is over! Our research has consistently shown that the gap between manufacturing and service management is diminishing, and that the ability to deliver what our customers want, when they want it, and in a consistent and more collaborative fashion will be an even more critical driver for success in the Internet of Things era (i.e., today, and in the foreseeable future).

While many of today’s manufacturing and services managers may still find it too difficult to operate outside of their respective management silos, PTC clearly understands the need for providing a technology platform to support the “new normal” for enterprise-wide collaboration. They have seen the future – and it is a future that will essentially be built around global solutions, powered by the Internet of Things, and supported by a solutions provider that understands how each major component of the enterprise needs to work in concert with the others.

Communications Before, During, and After the Customer Site Visit

Communications before, during, and after the customer site visit are all important – and all essentially the same, just with some variations upon a theme. However, you will find that the common threads that go through all of the communications between you and your customers are typically based on the “Listen, Observe, Think, Speak”, or LOTS, approach (that we previously outlined in one of our earlier blogs). It really does not matter when you are having communications with your customers – what matters is that when you do, you are consistent and responsive. This is where the LOTS approach can truly help.

Communications Before the Customer Site Visit

Of course, the types of communications you have with your customers before, during, and after the on-site visit are likely to differ significantly by content. By content, we mean what you will be speaking to them about, rather than how you will be speaking to them.

For example, prior to an on-site call, there will probably only be a few different types of conversations or exchanges that you will be likely to have with your customers. These may include areas such as scheduling or confirming an appointment, alerting them in advance that you may be late for an appointment, asking them to describe the symptoms of an equipment failure so you will know what you will be dealing with once you arrive, or any other number of informational courtesy-type exchanges.

For most pre-visit conversations that are essentially courtesy-based, much of the “pressure” will be reduced, and it will simply boil down to a matter of confirming dates, times, places, and other pieces of information that will allow you to quickly get to work as soon as you arrive at the customer’s premises. However, as easy as these types of conversations could be, if you do not pay attention to what the customer is saying, or if you let something “slip through the cracks”, you may end up paying dearly for it before too long.

You have probably heard of some cases where a field technician has called the customer from the road to let them know they are on the way to the site; but once he or she arrives, there is nobody there to let them in. After waiting five or 10 minutes, the field technician leaves. However, if they had truly “listened” to the customer during that initial telephone conversation, they would have noted that the customer had asked to call them on their cell phone upon arrival, since they would not be at their own desk at the anticipated time of arrival. The end result of not listening carefully in this case is (1) an incomplete service call that now needs to be rescheduled, (2) a piece of installed equipment that remains unusable, and (3) a customer account that started off frustrated, but now has become angry because the field technician didn’t listen to them.

It is generally understandable – and mostly forgivable – to miss something when the communications are difficult, rushed, complicated, or otherwise out of the ordinary; but, when you let something “slip through the cracks” on an otherwise simple, yet important, item of communication, you have only yourself to blame – and your customer will let you know it! That is why communications prior to the on-site visit are so important, even though they may be so simple. Nonetheless, they set the stage for the entire customer relationship throughout the duration of the service call – and well beyond.

Communications During the On-Site Visit

Different customers are just like different service technicians – some like to talk a lot, and some don’t like to talk much at all. In most cases, you will have to be the judge. However, there are still some guidelines for communications during the on-site visit that may be helpful, as follows.

You must remember that when you are making an on-site visit, it is typically because of a specific reason – and one which is most likely negative, such as an equipment failure, software problem, or another circumstance that is making the equipment unusable. Even a scheduled PM will make the equipment unusable for a brief period of time. While you and your customer may be genuinely happy to see one another and share your thoughts on anything from the weather, to the local sports team results, to the latest stock market report, the primary order of business – and remember, you are both managing portions of your respective company’s businesses – is to get the equipment up and running as soon as possible.

The best types of on-site communications are, again, those based on the “Listen, Observe, Think, Speak”, or LOTS, approach. Keep in mind that as soon as you arrive on-site, this will be the customer’s first opportunity to tell you – sometimes at great length – exactly what they think went wrong, when it happened, what they were doing when it happened, and why it is important that you get it fixed as soon as possible. In many cases, this is nothing more than the customer’s best opportunity to vent to you once you arrive.

Just as a courtesy, you will probably have to listen to most, if not all, of what your customer has to say at this time; however, these introductory communications will also serve to set the stage for where you will need to look, and what you will need to do, in order to perform the fix. If the customer hangs around while you are performing the work (although this is generally not advised), there will be additional time for the two of you to engage in “small talk”.

However, regardless of where the customer “hangs” while you are performing the work, you can count on only one thing – they cannot wait until you have finished the work, and are able to tell them the magic words, “Everything is fixed. The unit works perfectly. You can begin using it immediately.” This will always be your first priority while you are still on-site. But they will also expect you to tell them why the failure occurred, what they may have done differently to have avoided it, and what they can reasonably expect to experience in the future (i.e., in terms of related or anticipated equipment failure, etc.). Accordingly, this may also be a good time to talk to them about possible equipment replacements or upgrades, extended warranty agreements, or the like. These will generally be considered as appropriate types of communications to engage in at this time – even from the customer’s perspective.

Communications After the On-Site Visit

Communications after the on-site visit can oftentimes be categorized into communications following a “good” call, a “bad” call, or an “incomplete” call – but, however you classify them, they are all really the same in terms of what you will ultimately be required to do. Regardless of whether it was a “good” (i.e., the repair went well, and the machine is working again) or “bad” (i.e., the repair did not go well because you did not have the right spare part with you, or you arrived late, etc.) call, the customer will always want to know “what happens next?”

Following a “good” call, the customer will probably expect to hear from you in the next day or so regarding whether the machine is still running as expected, and whether there have been any other problems that they may have encountered since you completed the call. For a repeat service call, the customer may be waiting to hear from you with respect to whether or not a replacement unit or an equipment upgrade would either be required or recommended. As such, this may also represent an excellent opportunity for you to cross-sell or upsell this particular customer.

However, for a “bad” call, all the customer will really want to hear from you – and, as soon as possible – is what are you going to do to resolve the problem. In cases like this, it will be to your advantage to be as proactive as possible, calling your customer with the proposed solution before they feel they have to call you to ask about it.

It always pays to remember that the communications that occur after the most recent on-site visit will pretty much set the stage for the communications that transpire before and during your next on-site visit with that customer. In a classic television commercial for an automotive oil filter, the tagline was something like, “You can either pay me now, or you can pay me later.” When you’re dealing with your customers, believe me, it is always better to pay attention to what you need to do upfront so you do not get caught having to pay for it later – because you will!

Until next time – keep your customers satisfied!

Knowing When It’s Time to Fix – and When It’s Time to Replace

You can probably almost hear Kenny Rogers singing, “You’ve got to know when to hold ‘em, know when to fold ‘em” with respect to the game of poker; well, virtually the same rules apply to the equipment repair “game” as well. Sometimes it will be best for the customer to have the equipment fixed, and sometimes they will be better advised to replace either the entire unit, or just certain components of it. In most cases, however, it will be up to you to provide them with the proper “argument” for doing “the right thing” – and this will not always be easy to do.

We have all likely experienced what is commonly known as “the first car syndrome”. That is, after we have scrimped and saved for years to buy our very first car, we soon learn that every once in a while, we will still need to replace one part or another. First, it may be nothing more than replacing one or more worn-out parts, such as brakes or tires; but then, before we know it, we are spending more money than we could have imagined to replace a thermostat, carburetor, various hoses and, ultimately, even having to pay for a rebuilt transmission.

At some point, undoubtedly, we arrive at the conclusion that had we known we were going to need to replace all of these major components over time, we probably would have traded the car in for a new one – or at least a “new-used” one – months, if not years, earlier.

An ancient Greek riddle goes something like this: “If a ship is built of 10,000 planks, and 1,000 different planks need to be replaced every year for 10 years; after the 10 years, is it still the same ship?” However, a better question to ask would be, “If the ship requires so much maintenance, shouldn’t you really have traded it in for another ship already?”

The same logic also applies to business systems and equipment; however, in today’s highly technical and economically downturned business environment, it may be even more difficult for customers to consider trading in their existing equipment than it would be to consider trading in their aging car – or wooden ship!

Your company’s Sales and Services support teams will usually be in a better position than the customer to determine whether a specific piece of equipment merits repairing, or whether it is truly time to consider replacing it. This is particularly true for your field technicians because they are the primary ones who physically work on the equipment, monitor its performance, evaluate its service history, and (hopefully) understand how the customer uses it on an ongoing basis.

However, while this “experiential learning” may make them more knowledgeable in most cases than the customer, it does not necessarily make it easier for them to convince the customer that now may be the “right” time to consider upgrading or replacement – even armed with increasingly detailed call activity and remote diagnostics reports, etc.

What will make it easier to convince the customer that now is the time to “take the leap” is their ability to match the specific unit’s service history against both the customer’s anticipated usage, and your company’s product and support specs for newer lines of equipment. Perhaps your company has a formal “Return-on-Investment”, or ROI, model for determining the financial and/or economic benefits for either keeping or trading in existing equipment for newer models.

However, even if it does not, the field technician probably already has all of the information he or she needs to make an educated determination as to whether or not it makes sense for the customer to keep the equipment, or upgrade to something else that will ultimately save them money, handle greater capacity or throughput, and reduce equipment downtime in the long run.

Then, of course, there is always the matter of knowing when to cross-sell, and what to upsell. We’ll be talking about that in some of our later blogs.

Until next time – keep your customers satisfied!