An engineering-oriented Web portal earlier this week purchased the intellectual property (IP) of a hosted collaborative design application that it remarkets from BlueSky Solutions LLC, in a deal aimed at gaining better control over the software's development roadmap.
Engineering.com purchased the Alventive engineering collaboration software and related IP from BlueSky Solutions in a stock and cash transaction. Terms of the agreement call for the issuance of 1,686,363 common shares of Engineering.com (value undisclosed) and two promissory notes to BlueSky of $200,000 (US) and $240,000 (US) respectively paid at two intervals over one year.
The pair has worked together for two years, since Engineering.com approached BlueSky to resell a hosted version of the latter's Alventive software under its own moniker, the Engineering.com Collaboration Suite. The hosted version, introduced last October, was such a success that Engineering.com decided to try to take the partnership a step further.
"It quickly became apparent that this is the winning business model," said John Hayes, president of Engineering.com (Toronto, Ontario). "That's why we've come to an agreement to put all our emphasis together behind one approach to the market."
Previously, BlueSky sold a deployed implementation of the software that it will continue to support, but not evolve for existing customers, which includes capabilities for project management, file viewing, Web conferencing, document management and supplier management. The deal makes sense because BlueSky also believes the future for Alventive lies in the hosted applications realm, but it didn't have the resources to market that kind of product on its own. "The first step was to let them offer our product as a hosted solution and once we saw that was a good fit, it made sense to sell them IP and let them run with it," explained Chad Poole, president of BlueSky (Pittsburgh).
The hosted model for enterprise applications is becoming increasingly popular with companies of all sizes, noted Hayes, because of the lowered risk and cost of deployment. Citing the popularity of products like NetSuite's ERP package and Salesforce.com's CRM suite, Hayes said it only made sense to offer an engineering collaboration solution on the same kind of platform.
"We've certainly signed up bigger name customers than we expected," said Hayes, adding Engineering.com has over 100 users, including those at such big-name companies as Celestica, an electronics manufacturing services company, as well as at several top-tier automotive manufacturers. "It seems that PLM is running into problems with extensive implementation times and costs. The low-risk approach seems to be striking a chord."
Engineering.com is not the only player offering hosted PLM. Arena Solutions Inc. (Menlo Park, CA) is the pioneer of hosted PLM, and others including CoCreate Software Inc., PTC, and most recently Agile Software Corp. have PLM components available on a hosted basis.
Hayes cites Collaboration Suite's robust project management capabilities as a clear differentiator as well as its low price tag -- between $75 to $100 per user, per month.
As a result of the agreement, BlueSky developers will continue to evolve the software, this time taking direction from Engineering.com and its customers. "There is only one development direction, which our direction," said Hayes, explaining how the new arrangement will benefit existing customers. "The future functionality that our customers need will be implemented faster, and our customers will be driving future features."
Engineering.com will also take over all marketing and support of the software.
In addition to Collaboration Suite, Engineering.com also offers a range of online resources for engineers, including free calculators, library tables and conversions, as well as directories. The company also has an exclusive arrangement with Dassault Systemes to resell the Catia CAD package to students in North America.
Moving forward, however, the future is all about hosted PLM. Said Hayes: "We're putting more resources into Collaboration Suite than anything else."