Software Rental as a New Option for Small Businesses and Startups

John Fox, Siemens PLM‘s VP of marketing for mainstream engineering software, met me in the lobby of the Fairmont Hotel, right next to a giant gingerbread house and an indoor Christmas tree poking at the ceiling. Fox and his colleague Karsten Newbury, Siemens PLM’s senior VP and GM of mainstream engineering software, were in town for the Lean Startup Conference. They wanted to better understand the mentality of the entrepreneurs assembled at the event.

Siemens PLM’s NX and Teamcenter software products are the driving forces of design and data management in established manufacturing houses like NASA and Ford. But Fox and Newbury focus on a different segment, more closely associated with the type of startups driven by social missions, operating with crowd-funded budgets. Unlike automotive and aerospace titans, these lean startups may be better served by Siemens PLM’s Solid Edge software, a mechanical 3D CAD program known for ease of use and direct-editing functions.

Recently, Fox and Newbury commissioned a survey from Kelton Global, a market research firm. In Fox’s own words, they wanted to “take the pulse of” discrete manufacturing companies with less than $100 million in annual revenue. “The majority reported they were unable to make effective predictions or plans regarding workloads beyond 6 months,” Fox revealed. “Yet, when projects do get underway, rapid response is critical—meeting deadlines and responding quickly are by far the top operational concerns.”

One of the startups Fox and Newbury had closely followed was Flexipump. In fact, they knew Flexipump before it was a company but just an idea in the founder David Hutton’s head. Hutton began designing a water pump with a free copy of Solid Edge Student Edition. The young inventor wanted to develop a device that would address the Third-World’s irrigation problem.

After graduating, Hutton began building and selling early versions of his Flexipump in Zambia, out of the back of a truck. That gave him further insights into the challenges of small farmers in the developing regions. They couldn’t easily find replacement parts when the device broke. So he went back to the drawing board to design a simple “pump that required little to no maintenance and that did not need any shop-bought replacement parts,” he explained, in the case study he authored for Watershed.

It’s difficult to know if Hutton might have ever managed to purchase a commercial license of Solid Edge the traditional way. But Hutton is today a subscriber of Solid Edge, paying around $220 a month for the Foundation edition (includes 3D part and assembly design, weld, and sheet metal). The rental program introduced by Siemens PLM in September allows people to subscribe—or gain access—to the company’s MCAD software for as little as $130 a month. The multi-tiered structure allows subscribers to upgrade from Design and Drafting (basic 3D, $130 per month) to Classic (includes photo-realistic rendering, $260 per month) or Premium (includes simulation, $350 per month). The software is installed and run locally, but controlled by a license-validation mechanism to remain active during subscription periods.

Fox said, “Some companies are using subscriptions to help them more cost-effectively manage the ebbs and flows of demand.  We see other, smaller companies, like Flexipump, using subscriptions as an easy and affordable way to get access to professional CAD that would otherwise have been out of reach.”

Describing the pump’s performance, Flexipump states the device can pump up to 1,600 liters an hour, draw water from a well or stream six meters below, push water to 10 meters’ height, and distribute water up to 100 meters along the ground. Fox wrote, “David [Hutton] reports that it’s possible for a farmer to increase his or her income by as much as 600% using his invention.”

Startups and activist-inventors like David Hutton are a new segment of CAD and CAE (computer-aided engineering) software users. The unlikely designer or engineer may be a housewife with a practical kitchen solution or a high school dropout with a bright idea, supported by Indiegogo, Kickstarter, or Quirky.com. Design software vendors haven’t done a good job accommodating them or attracting them with existing licensing schemes, but the emerging software rental programs may be opening new doors, both for the software vendors and the inventors.

(For more, also read about the software rental program recently introduced by Autodesk.)