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2005 Executive Meeting Review
Software Quality, Revenue Growth Figure into PTC’s Future
by Rick Snider, Executive Director of PTC/USER
 Bitter Boston cold and a looming snowstorm could not chill the optimism and spirit of renewal that marked January’s PTC Executive Meeting with the PTC/USER Board of Directors. This event was preceded by an enthusiastic and exceptional turnout at the Winter Technical Committee meetings. Getting together with PTC’s senior management each year gives the Board an opportunity to monitor progress on outstanding issues while bringing attention to the latest and most pressing concerns of the user community. It also allows exploration of how PTC and the Board can work together better for the benefit of everyone.
By the Numbers
PTC/USER Board members reviewed financial information presented by CEO Dick Harrison and CFO Neil Moses. Through spending discipline, PTC recorded a profitable year in fiscal 2004. Net income was about $35 million, up from a $98 million loss in fiscal 2003. Revenue in both the MCAD and Windchill areas showed modest gains, with strong growth in PTC maintenance. This, coupled with licensing trends, seems to confirm continued customer interest in Pro/ENGINEER® Wildfire™. License revenue from the reseller channel also grew robustly.
PTC’s heavy investment in core technology rather than acquisitions has therefore begun to pay off. PTC has made significant progress in reducing its cost structure and its cash position increased to nearly $300 million at the end of fiscal 2004. The first-quarter 2005 results show a continued upward trend that exceeds even corporate revenue targets.
After several years of bleak earnings reports, this is welcome news for those PTC/USER members who may have been concerned about PTC’s viability. Clearly, PTC has put its financial house in order and is poised to harness the strength of its homogeneous product line.
 Seeing the Future
PTC has promoted the Product Development System (PDS) as the center of its efforts to offer solutions that work together seamlessly. Chief Product Officer Jim Heppelmann and Senior Vice President of Technical Marketing Brian Shepherd joined the meeting to outline some of the key strategies that are driving realization of the PDS vision. These include:
- Simplify usage. PTC has invested millions of dollars to modernize and improve the user interface of its products to increase productivity.
- Connect to the rest of the customer environment. Customers need connections from Windchill to MCAD, ECAD and other software tools commonly found in the end-user environment. This includes tight integration from Windchill to ERP and other enterprise systems.
- Drive the footprint and architecture from vertical customer processes. Through careful process analysis, it is possible to define the capability footprint so as to reduce the need for customization. Part of this strategy is to consolidate multiple architectures and databases where they interface with process flow.
- Deliver higher quality. PTC will offer higher-quality applications by implementing tougher release criteria and better quality assurance (QA), and by introducing a culture of defect prevention and root cause analysis.
PTC’s product suite has made progress toward fulfilling the PDS vision with each major release. For example, Windchill 7.0 launched with support for PDMLink and ProjectLink, and version 8.0 will also support PartsLink, Pro/INTRALINK and SupplyLink. Release of Windchill 8.0 and Pro/ENGINEER Wildfire 3.0 is expected in the second half of 2005.
Quality First
PTC has made great strides in improving the quality of software releases. Underperformance in this area not only affects customers dealing with the consequences of software defects but also PTC development, which must divert resources to resolve bugs instead of focusing on software enhancements. Rich Butler, Senior Vice President-Operations for Research & Development, and John Vreeland, Vice President of Quality Assurance, discussed some of the accomplishments PTC has made in improving quality, as well as new goals set for 2005.
Over the past several years, PTC has sought to foster a culture of continuous improvement within its developer community. PTC has established a Quality Management System that includes a formal Software Engineering Process (SEP). The SEP has a description of process phases and governance. Details are contained in Standard Operating Procedures (SOPs) that provide formal instructions for inputs, outputs, team processes, tools and approvals. All of this is now documented in a handbook and is web-accessible for development staff. Finally, a Quality Steering Committee meets every eight weeks to propose and track target process improvements. This committee is accountable to executive management and to PTC’s Board of Directors.
While PTC has successfully and steadily reduced defects at first customer shipment (FCS), problems still exist with intermediate builds, software versions occurring between major releases. PTC is taking steps to reduce the number of regressions via increased manual test coverage and an upgrade of the automated test suite, encompassing more than 15,000 automated tests at present. Software Development is also considering reducing the number of releases to two per quarter, while maintaining the same number of SPRs processed in total. PTC will improve its processes by introducing more root cause analysis and additional metrics such as mean time to crash and mean time to serious defect.
Both the MCAD and Windchill teams have set out several ambitious goals this year related to SEI Level 2 and Level 3 appraisals, which will result ultimately in further process improvements. With over 15 million lines of code to be tested for each major release and intermediate build, consistent delivery of excellence requires a thoughtful and systematic approach to software quality. PTC plans to standardize the test automation infrastructure and reporting systems across both the MCAD and Windchill development organizations. This includes using standard documents and test name categorization. Furthermore, they are setting a goal to significantly reduce change requests by deploying a standard requirements template for all MCAD and Windchill projects. According to Rich Butler, this will be needed to achieve SEI Level 3 certification.
A Growing Partnership
From the earliest days of Pro/ENGINEER, PTC/USER has enjoyed a cordial and cooperative relationship with PTC. Maintaining our independence while coordinating our efforts with PTC executives and staff allows us to serve the best interests of our members. For the final portion of the meeting, PTC/USER Board members met with Jim Heppelmann, along with Rob Gremley, Senior Vice President of Corporate Marketing, and Scott Brazina, Vice President of Global Marketing, to review common areas of interest and explore opportunities to expand our relationship for mutual benefit.
Perhaps the shining example of our current partnership is the PTC/USER Technical Committee organization. Staffed by volunteers from member companies along with a PTC product manager, these committees prioritize and direct the development of software to ensure that changes meet customer needs. Currently, there are 18 committees organized around functional groups covering modeling, simulation, Windchill solutions, and the rest of the PTC product line.
Regional User Groups (RUGs) represent another area of cooperation with PTC. These groups operate with the support of PTC/USER in communities around the world. The RUGs bring the benefits of PTC/USER to the local level with events that include technical presentations, partner exhibits, contests and more. PTC provides supplemental resources such as technical speakers and meeting sites.
Looking ahead, PTC executives and PTC/USER Board members discussed ways to build on this progress—for example, by reaching more potential PTC/USER members through the PTC sales force, and expanding the opportunities for users to participate in the World Events and the PTC/USER organization. Promoting more Technical Committee participation in both Europe and Asia-Pacific is also a priority. Most importantly, PTC/USER wants to consistently expand its value to PTC product users around the world.
(See Evan Caille’s article for more on our relationship with PTC.)
All in all, the 2005 Executive Meeting demonstrated that our partnership with PTC is stronger than ever, and that PTC is moving forward on multiple fronts. With reinvigorated revenue growth and steady technological advances, PTC has removed any lingering uncertainty that it will be around for the long haul. For companies that rely on PTC technology, these developments provide important reassurance for the future. 
Rick Snider is Executive Director of PTC/USER. He can be reached via email at rick@ptcuser.org.
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