PTC, host of the recent LiveWorx Technology Conference, held last month in Boston, is all about investing in a channel-led strategy as the company transitions from its CAD, PLM (project life-cycle management) and SLM (service life-cycle management) roots to Internet of Things (IoT) and augmented reality (AR).

PTC’s Kerry Grimes

We caught up with Kerry Grimes, senior vice president, worldwide channel sales at PTC, to get some insight on PTC’s channel strategy. PTC has about 400 partners. Grimes is a channel veteran who, prior to his current four-year stint at PTC, worked in channel sales at Siemens UGS PLM Software for eight years and also, among some other career moves, cut his teeth in the channel as director, channel operations, at IBM Software Group for 13 years.

Grimes was also recently assigned to grow PTC’s channel presence in China.

Channel Partners: Kerry, how about you tell us bit about your mission at PTC?

Kerry Grimes: When I started at PTC, several years ago, what I saw was that the company was de-emphasizing [its] channel plans because it had grown to be such a large piece of the business.

… What I saw at PTC were two things: one, a company that had not done a lot with the channel … since I’ve been here we’ve taken our channel bookings from 25 percent license revenue to one-third of the company’s license revenue now. So we’ve already made a lot of business in the last four years.

But what I really like about PTC is the vision that you saw at Liveworx. That’s how we can take IoT technologies to both help connect products so that you can better service products as well as keep that information so that you can better design them; and also enter new markets such as manufacturing with smart connected operations.

So the combination of these two things, taking IoT technologies to make what I’ll call a tired old PLM and CAD company to reinvigorate its sales, really excites me.

CP: How does PTC’s vision tie in with partners?

KG: Taking that vision and strategy to grow with partners — knowing that we needed to make a very large partner ecosystem in order to properly service what we’re doing with Internet of Things. We’re steadily growing our partner ecosystem, and not just with Thingworx, but also our CAD and PLM products.

CP: PTC has quite a history, more than 25 years — tell about the company’s key markets now.

KG: The company now has the vision and forethought in two key markets, two key technology waves that are coming at us: IoT and VR/AR – both pieces. We play in both those [VR/AR] markets. We see the AR market first, and that’s where we using things like digital twin to tie the physical world with the digital world together. We’re working on VR technologies, which now actually allow you to overlay CAD data while you’re looking at the physical world.

CP: So, talk about PTC’s channel today.

KG: We’re taking a partner program that’s been there for CAD and PLM — what was a bunch of CAD VARs, and helping them with their businesses to transform, to lead with services, develop solutions for their customers and then drag in software.

So rather than lead with software, we’re positioning partners for a consultative solution; we’re helping partners transform from being a VAR to being a strategic service provider.

On top of that, we’re adding additional strategic service providers in other fields that we haven’t been in, such as manufacturing and smart connected operations – as one of the largest settings that we anticipate IoT technologies being in – to connect all the manufacturing equipment on the floor so that someone can monitor it as to how it’s doing. And, we have software to monitor not just how it’s doing but to predict how it will do given certain parameters using predictive analytics.

We’re now dealing with a lot of large manufacturing integrators that PTC has never dealt with before. And, when we acquired Kepware, a sensor company [the deal closed in January 2016], they had a lot of manufacturing integrators, so we acquired a set of partners that are learning how to sell and service Thingworx. This allows us to expand into the manufacturing market space, where we haven’t been before.

CP: What about PTC’s traditional partners? Where do they fit?

KG: So, we’ve taken a tired old CAD company and reinvigorated it, and we’re now taking the channel partners that we had, reinvigorating them and taking a whole second set of resellers that are in the manufacturing space. That allows us to double down and have some pretty strong growth.

When I started with PTC, our bookings were $80 million, and three-and-a-half years later its $120 million; that’s 50 percent growth.

When you think through where we’re heading – IoT – you’ve got to sell the solution and craft a solution for a customer, and the best proposition for us is to develop a partner network that can build and scale a solution that they will replicate for many customers.

We’re trying to build a network of partners in various settings that can create solutions that are aimed at a particular business problem. PTC has about 25,000-30,000 customers, about 5,000 that we may service directly and about 20,000 or more that we’ll service with our partners.

We expect the majority of our partners to stick around through the transformation. We spoke about this at our Advisory Council after the Global Partner Summit [ahead of Liveworx] and that is, the future of strategic service providers in the ecosystem that we’re building out.

We’re absolutely taking all of our traditional CAD partners along for the ride because they’re experts in CAD and as we just talked about using VR and AR, the source of that is what you do with CAD files and how you present those CAD files.

So, it’s not like we’re in a totally new market, we’re transforming the market we’re already in. Those partners are extremely interested in what we’re doing and it makes PTC very relevant because it’s no longer single-digit CAD growth but multiple digits of IoT growth.

CP: So how is the partner transformation going for PTC and what’s the company doing to help partners transform?

KG: It’s going well but we’re still in the early days of it … there’s a lot of enthusiasm about where this is headed. It’s not quite nascent, but maybe a little bit beyond that. If you look at this in terms of a product life-cycle curve, we’re very much at the front end of this and have a lot of work to do to help our partners lift this.

What I like about where we and our partners are going … there’s a compelling value proposition for the customer, there’s a reason for them to go and do it, and a lot of market excitement about where IoT is going.

We’re working with partners to understand that they’re going from a project-based environment to a recurring-services and recurring-software model. So part of this is transforming to get to a subscription-based annuity model and to lead with services versus lead with products.

We’re holding business-planning seminars with them, and in Europe we’re going to be working with a third-party partner to actually come in and help our partners learn how to transform their business[es].

We’re also maintaining our perpetual margins with our subscription offering because we want to help our partners through this transition. We realize the only way that we’re going to be successful is if we have a set of partners that at the end of this will also be successful — and will want to make this transition with us.