Aras Innovator: PLM Done Differently – Part 1

I just got off the phone with Peter Schroer, the Founder and President of Aras, a company that offers an open source PLM system. In short their software is completely free and they earn money from support contracts. We spoke for more than an hour and covered a number of topics.

Aras Innovator is basically an internet application framework based on the Microsoft .NET platform. All you need is a Microsoft Internet Information Services (IIS) server with a database and users can log into the PLM system from a browser. In fact, Aras is working closely with Microsoft to build a PLM system right inside Microsoft SharePoint. This solution is called SharePoint PLM which is also open source. You can get more information about it at the Microsoft Open Source Codeplex community web site here.

I first came across Aras at COFES 2009 where they were sharing a tech suite with Microsoft and had me over for a briefing. One of the things that struck me as really odd was the way the company turned itself upside down overnight. I mean literally overnight. They fired their entire sales force and made their software open source. I asked Peter to enlighten me as to how and why that happened. Here is what had to say:

Here is the thing. For seven years we had a pretty good PLM system but never really figured out the best way to market it. We used to get one or two customers per quarter. And that was it. We needed to get more customers. That was when it struck us that the cost of selling our solution was equal to the cost of developing it. We also realized that the real money lay in the maintenance contracts. So we decided to fire our entire sales force and made our software open source. If you don’t sell software you don’t need sales people, right? With the software costing nothing a great deal more companies began to take a look at it and quite a few implemented it. As expected we started to earn money from support contracts. Back in 2007, when we open sourced our software we got about 30 installs a month. Last month we had over 900. By the end of the year we expect to cross 1000 installs a month. We are growing 60% year on year. In fact, last year during the recession we grew 25%.

I asked Peter, “But you still need to get the message out to people. How do you do that without a dedicated sales force?“. Peter replied, “Well, we are firm believers in the ability of the online community. We believe that users prefer to hear from others users as opposed to some sales person in a suit. We are about fifty people in all. Just three in marketing, one in accounts and the rest are in development, which, by the way, includes me. I think I am probably the only Founder and President of a PLM vendor who still does programming.

Part 2 >>