PTC Winback Scheme

[biff]

I held my maintenance with PTC for approx 8 years, the expense for 1 licence with ASX & AAX was ridiculous but i kept it going.


I then decided to purchase Solidworks. It seemed that more customers were moving to it & to be honest, from a commercial point of view it was the best decision I have made.


However, I recently got an email concerning PTC winback scheme.


How they tried to sell it was "For example, one expired seat of Pro/E will now cost only

 

[dgs]

You have to watch what they're offering. They want to 'win back' you business, so they are going to offer a better price. What they will do often is offer to renew you at a lower function seat than you had, thus a lower price. Plus, part of the renewal is paying a year of back mainenance, per PTC's policy. So, your

 

[dr_gallup]

We negotiateda license downgrade & consolidation about 10 years ago. Every year PTC maintenance sends a quote for the full package. I have to remind them several times & eventually I get the quote for the maintenance we negotiated. All the old modules continue to show up on our license spreadsheet even though they are inactive and it would cost a fortune to reactivate them. And of course, we get none of the newer functionality that a new customer would get for a lower price than what we paid. Makes me think it would be best to just completely drop maintenance for a few years and buy new licenses all over again.

 

[srieger]

I negotiated an upgrade to the new packages with a multiyear maintenance deal. This brought all the packages up to a naming convention that could be recognized with todays products and dramatically reduced the cost of maintenance.

 

[design-engine]

sounds like negotiations like your buying a used car.....

 

[Erik_Gifford]

These scenarios probably sound familiar to all of us who are responsible for managing all the CAD/CAM/CAE maintenance contracts. We've dropped modules that weren't getting used, repackaged licenses anddone multi-year maintenance contracts to try to realize a reduced price from PTC. The best deal we ever got was on a three-year contract when Rand was our VAR and PTC wasin a legal battle with them. I think Rand knew they weren't going to be a PTC VAR much longer and didn't care if they didn't get the usual cut of the maintenance pie. There have been several times where in hindsight I've questioned the actual value the maintenance contract and wondered if we'd be better off dropping it and rebuying when a major shift occurs (i.e. Creo 2?).


Always interesting to read the transcript of PTC's quarterly meeting with investment bankers. Although PTC has certainly made some recent investments in their product and made improvements, after you read the transcripts you can't help but feel that it's the investment bankers they're worried about keeping happy. Really interesting when you see the numbers and business plans they discuss. PTC isn't willing to give you a discount on buying the software (or winning you back) to be your friend, it's to get you back into the maintenance revenue stream where the margins are huge.


[url]http://seekingalpha.com/article/282237-parametric-technology -s-ceo-discusses-q3-2011-results-earnings-call-transcript?pa rt=qanda[/url]

 

[mgnt8]

Wow dude, thanks for that link. Really telling. They're almost apologizing for selling CAD seats instead of Windchill

"The way the SMB business typically works is we win the CAD business
first, we grow that footprint for a while and then we bring in the PLM
component"

" First, I know it's been average but your Windchill base is roughly 7x as large as your active CAD base...Right now you're probably getting maybe 1/10 as much per seat in PLM
under maintenance as for [indiscernible] average Pro/E seat. Do you see
the possibility for increasing the former for Windchill maintenance?

That's what all this is about. CAD's main function was always to set up sales of Windchill, which is where the real growth is. However, the maintenance revenue is smaller on Windchill so they have to sell many more seats.

That's what they're talking about with the dominoes. They need to reel in the whales to make the big money, and they're hoping to use the carrot (PLM) and the stick (CAD). This is probably a way to keep the sharks off the CAD side of the business. There's blood in the water though, you can see it.

 

[dgs]

It's not surprising to me that before the investment folks tehy'd talk about profits. That's why their investors, after all. If you had a discussion about your personal performance or priorities with your wife and your boss, would they be the same conversations? Nope. Different audiences, different priorities and concerns.

PTC, like any company, has to produce a product that people are willing to pay more for than it costs them to produce it. If people see value in it far and above their costs, good for them, but there's danger there because competitors come in and can undercut you while still making a tidy profit. If customers see their perceived value drop, they'll stop buying. It's business 101.

That's what we did here, the value in keeping maintenance was nil as we had no clients that would be using the new versions and support was of little value. There was very little risk and a lot of potential gain in dropping maintenance, so we did for 2.5 years. Had the maintenance cost been 25%-50% lower, we might not have considered it.

 

[Erik_Gifford]

Good points, Doug.PTC's business model isn't really any different than that of Dassualt, Siemens or any of their other competitors or business in general for that matter. At the very least the transcripts give you a good heads up regarding what to expect your PTC rep to be pitching on their next visit.


Regarding CAD & PLM, above just handful of users I can't imagine using CAD without PLM, so that's a natural. I don't see selling CAD as a devious plot to sneak in PLM later. The fact thatone creates a need for the otherjust happens to begood for PTC's bottom line (what the IBs are interested in)


The margins that maintenance contracts run at are bothersome (especially when they won't bargain much on it) but it all comes back to is it worth the $ to us as customers. I think this isan area where competitors (espeically newer ones) have the opporunity to be disruptive. But, if these companiescan fall in line with what everyone else does and make more $ rather than less, why wouldn't they?

 

[dgs]

Regarding CAD & PLM, above just handful of users I can't imagine using CAD without PLM, so that's a natural.

I've used Pro/E since 1996 and have never touched a PLM system. I've occasionally thought it would be valuable, but I've never felt hamstrung by not having it.

I think this isan area where competitors (espeically newer ones) have the opporunity to be disruptive. But, if these companiescan fall in line with what everyone else does and make more $ rather than less, why wouldn't they?

I'm thinking that PTC customers can be more disruptive here. If more customers started paying maintenance every 3-4 years, I bet we'd see a dramatic reduction in the rates. Many companies, however, get more out of tech support than we do, I suspect, so going without might be tougher.

 

[mgnt8]

I don't see selling CAD as a devious plot to sneak in PLM later. The fact thatone creates a need for the otherjust happens to begood for PTC's bottom line (what the IBs are interested in)

I don't see it as devious. I don't see it as realistic either when you look at their "dominoes", the Creo revolution notwithstanding. It's currently an excuse to keep the wolves asking those questions at bay. CAD and PLM are going in opposite directions. The question is how long can they keep them together.

 

[Erik_Gifford]

It does seem that they (PTC)spin the story to be what those asking the questions want to hear. Also seems that the investorsdon't really understand the whole CAD & PLM software world.


Back to the original topic though, if a company is on maintenance and doesn't see the value in what they get for it, dropping it is definitely an option. You retain the right to run whatever you're currently licensed for (version and # of licenses). As far as the original posters specific topic, I think the "win back" PTC is trying to conduct is to boost the seat sales count and boost thenumber on maintenance just to have better numbers for those quarterly calls. You have to look at the total cost including the required first year's maintenance and value of having "Creo". Let's just be happy Pro/E ...err... Creo isn't still $10k+ for a basic license was when we first bought it.


Like they say: "It's not personal, it's business"

 

[Mindripper]

I see fundamental differences in the business models of SolidWorks and PTC.


SolidWorks sells and supports it's product line almost exclusively through local VARs (value added resellers). My VAR provides local free training sessions on amonthly basis (usually with a free meal), and is very responsive. There are several VARs in this area: they compete for business, which motivates themto please their customers. Also, the annual releases usually offer some meaningful product enhancements. The huge local and global user base helps too: I'm downloading and uploading mdels on 3DContentCentral (it's free) all the time.


PTC doesn't use VARs (there may be a few left, but most seem to have abandoned PTC): they sell and support their product line directly. PTCseems to havelittle interest in providing support: the phone center in India is usually ofno help, and the person on the other end is sometimes difficult to understand (I don't speak Hindi). PTC has never offered me any training for free, much less with a free meal. I can't say much about product enhancements, since we are stuck on WF3 here, but new releases are years apart. The local user base is small and dwindling, and model sharing seems to be quite limited: PTC doesn't appear to support this - and if they do, I'm sure itisn't free.

 

[dgs]

I love how you post this stuff like it's fact. It's not, it's your observation.

PTC doesn't use VARs (there may be a few left, but most seem to have abandoned PTC): they sell and support their product line directly. My VAR provides local free training sessions on amonthly basis (usually
with a free meal), and is very responsive. There are several VARs in
this area: they compete for business, which motivates themto please
their customers. Also, the annual releases usually offer some meaningful
product enhancements. The huge local and global user base helps too:
I'm downloading and uploading mdels on 3DContentCentral (it's free) all
the time.

Unless you're CAT or Deere or Toyota, PTC doesn't want to sell to you direct, they want you to go through VARs. I don't know how many there are, but I can think of 3 off the top of my head - EAC, TriStar and Boundary Systems. I'm sure there are more. I get stuff from them all the time about free hands on workshops, Boundary Systems is doing one next week 1/2 mile from my office.

As far as I know, there's only one SW VAR here locally.

PTCseems to havelittle interest in providing support: the phone center in India is usually ofno help, and the person on the other end is sometimes difficult to understand (I don't speak Hindi). PTC has never offered me any training for free, much less with a free meal.

PTC offers a lot of support for our local user group. Usually pays for lunch at meetings as well as sending 2-3 reps to do demos on specific modules or releases.

As far as support, yeah, the Indian reps are challenging. PTC explained to me at one time that by operating tech support in Asia they can hire more agents and reduce response time dramatically. Also, they operate their own call center, they don't hire it out. That way they keep turnover down and qualifications up. So, they're trying to do Asian tech support right, but it's still not ideal. Would US based reps be better? Sure, but the cost is prohibitive.

I can't say much about product enhancements, since we are stuck on WF3 here, but new releases are years apart. The local user base is small and dwindling, and model sharing seems to be quite limited: PTC doesn't appear to support this - and if they do, I'm sure itisn't free.

Major releases are more like 18 months, but have been as long as 2 years recently. Honestly, keeping up with annual SW releases is a pain for us, especially since folks tend to upgrade more readily in the SW world. Then we've got customers on different releases of SW and having two versions of SW installed at the same time is hard to do, sometimes impossible (couldn't get 2009 and 2010 on Win7 64 bit). With Pro/E, no trouble.

PTC provides a link to 3dmodelspace.com in WF5. As far as I know it's free, but I haven't used it since we've not gotten many projects on WF5 yet. I've never seen a lot of model sharing, though, although MCADcentral used to have a nice sharing portal. They buried it, however, and went with a commercial link instead.

I'd agree that the user base seems to be down, or at least the community activity is.

 

[SRINIVASANIYER1]

the phone center in India is usually of

 

[mgnt8]

It's 2011 man, do you live under a rock? If you're not used to overseas phone supportat this pointyou've got issues. Most everysupport number for anything I ever call is overseas.