CIMdata Reports PLM Market Continues Growth.
ANN ARBOR, Mich.--(BUSINESS WIRE)--April 4, 2002
According to figures released today from consulting and research firm CIMdata, Inc., the worldwide collaborative Product Definition management (cPDm) portion of the Product Lifecycle Management (PLM) market grew 25% to reach $3.6 billion during 2001.
Investments in software (including software maintenance) increased to more than $1.6 billion, while services revenues exceeded $1.9 billion.
PLM is a strategic business approach that applies a consistent set of business solutions in support of the collaborative creation, management, dissemination, and use of product definition information across the extended enterprise from concept to end of life -- integrating people, processes, and information. PLM forms the product information backbone for a company and its extended enterprise. It is composed of multiple elements including: foundation technologies and standards (e.g., XML, visualization, collaboration, and enterprise application integration), information authoring tools (e.g., MCAD, ECAD and technical publishing), core functions (e.g., data vaults, document and content management, workflow and program management), and functional applications (e.g., configuration management), and business solutions built on the other elements.
cPDm encompasses all of PLM except for information authoring tools such as mechanical and electronic computer-aided design (MCAD and ECAD), computer-aided software engineering (CASE), and technical publishing. cPDm is focused on collaboration, management and sharing of product related information.
CIMdata forecasts overall PLM investments to continue growing at a strong pace over the next five years. The firm predicts the cPDm portion of the PLM market will exceed $4.8 billion in 2002 and increase at a compound annual growth rate of 25% through 2006, when they expect the market size to exceed $11 billion.
"In the face of the general economic turndown, solid industry growth in 2001 is an indication that companies clearly recognize PLM as fundamental to their ability to operate more successfully in increasingly competitive global markets. Significant investments in software licenses were made in the first half of 2001, following a very strong ramp-up of implementation programs during 2000. Companies continued to deploy PLM solutions during the third and fourth quarters of 2001, though market growth was not as strong during the last half of the year as in the first two quarters," says Ed Miller, President of CIMdata.
According to Miller, companies primarily focused on operational efficiency in the 90's, leading to significant expenditure for ERP deployments. Later into the decade and into the new millennium, companies are focusing more on business performance and are therefore devoting increased funding and resources to initiatives such as customer relationship management, supply change management, and PLM.
"There is executive-level recognition that PLM is critical to business success," explains Miller. "Managing and leveraging product information across the extended enterprise, PLM enhances business performance of the enterprise by supporting initiatives such as supply chain management, concurrent engineering, integrated product development, design collaboration, and globalization: initiatives that can make or break a company. Because it enables businesses to bring innovative and profitable products to market effectively, PLM and the collaborative capabilities it provides are rapidly transitioning from a competitive advantage to competitive necessity. With so much at stake, companies are implementing PLM solutions in record numbers." According to Miller, there is a growing awareness in industry that product innovation is a critical element of business success built upon tools that enable truly collaborative work processes involving widely distributed teams of people throughout an extended enterprise. "This awareness at the executive level is fueling investments in collaborative product innovation-focused initiatives, at the heart of which is cPDm, a primary enabler for PLM." Miller says that because of these business drivers, the cPDm core market is experiencing tremendous expansion as PLM programs become mainstream and are targeted as enterprise-wide initiatives. Additionally, the continually expanding and overlapping scope of related technologies offers companies a broader range of capabilities to address their problems. Deployment of PLM solutions also involves integration with multiple internal and external business systems, further continuing to fuel expenditures for PLM products and services over the next several years.
Diverse Market Sectors
"A wide range of companies supply PLM-related software, applications and services," explains Ken Amann, CIMdata Director of Research. The overall market has three primary sub-segments: comprehensive technology suppliers, system integrators-resellers-VARs, and focused application suppliers including visualization and collaboration, component supplier management and content management. Comprehensive suppliers (e.g., EDS, PTC, MatrixOne, SAP, IBM/Dassault, etc.) comprise 54% of the cPDm segment of the PLM market, up from 48% in 2000. "Increased investments were driven by the broadening scope of enterprise-wide implementations, expansion into new areas such as in-service support, packaged solutions, and integration with other business initiatives such as customer relationship management," explained Amann. "The growth of supplier developed "packaged solutions" focused on specific industry problems enabled sales and implementations to be completed at a much faster pace." New suppliers such as bom.com and Fullscope began offering hosted delivery of PLM functionality and ASP services for design collaboration. The leading comprehensive PLM technology suppliers provide all of the basic functional capabilities, and include visualization and collaboration tools and solutions within their product suites. However, some independent applications suppliers provide similar tools that focus only on design collaboration and visualization.
Independent systems integrators, resellers, and VARs (e.g., Accenture, PricewaterhouseCoopers, Deloitte Consulting, etc.) comprised 26% of market investments in 2001 and experienced continued growth as both the scope and pace of implementations expanded dramatically. While this segment showed significant increases in revenues, its overall share of industry investments decreased from 30% in 2000. The drop is somewhat misleading, since the decrease is primarily attributable to consolidation in the cPDm industry and services revenue being transferred to PLM lines of business within companies that are also comprehensive suppliers, e.g., EDS or IBM. Further, other business units within companies such as EDS and IBM had PLM SI services revenues not allocated to the PLM line of business. This included revenues related to a company's own products and technologies and as well as the products of other technology suppliers with whom they have partnerships and relationships. The major comprehensive technology suppliers continued expanding their direct service delivery programs and developing partnerships with leading SIs. "The SIs are establishing business programs that complement their supply chain management, collaboration and other business initiatives and are teaming with one or more of the comprehensive technology suppliers to enable them to respond to diverse client situations," stated Amann.
Focused application suppliers comprised 20% of the cPDm segment of the PLM market. This segment includes suppliers such as i2, Documentum, FileNET and Cimage NovaSoft as well as third party visualization and collaboration suppliers. Independent suppliers of visualization/collaboration applications e.g., Centric, CoCreate, Cimmetry, etc.) continued to grow in 2001 as those technologies continued to become a core part of PLM solutions, providing access to product information to new groups of users. The number of suppliers of independent visualization and collaboration tools continues to change as that market segment is still maturing. Importantly, a number of other suppliers began to offer new capabilities that expand the scope and effectivity of core PLM solutions. Companies such as Sopheon, MS2, and Intersect Software provide tools and solutions for full program management, knowledge and expertise management and automated capture of intellectual capital. Also growing the industry is the continued development of more extensive solutions focused on manufacturing planning and simulation, which has been driven by independent companies such as Tecnomatix along with some of the comprehensive technology suppliers such as Dassault Systemes and EDS.
According to CIMdata revenue statistics compiled for 2001, the market revenue leader among the top global comprehensive PLM technology suppliers is EDS PLM Solutions followed by SAP, IBM PLM Solutions/Dassault, PTC, MatrixOne, Agile, Intergraph, and Eigner.
Many of the comprehensive suppliers provide products and services through their own field sales and support organizations -- this is their core or direct revenue. Most also leverage system integrators, resellers, and other partners for additional sales and services -- their partner revenues. The combined core and partner revenues can greatly expand the visibility and impact of a supplier on the industry, generating a significant market presence or footprint. Based on these combined revenues, CIMdata's analysis indicates that the global comprehensive technology supplier with the greatest market presence in the cPDm segment of the PLM market is EDS, followed by SAP, MatrixOne, Dassault, PTC, Agile, Eigner, and Intergraph. Dassault's market presence encompasses IBM PLM Solutions and other suppliers for which Dassault Systemes is the technology provider.
Activities of the Major Players
Leading suppliers maintain their strong market positions through numerous continuing efforts and strategies that are quite different for each company. EDS (NYSE:EDS) achieved the top spot in large part, as the result of the largest industry buyout and merger to date. During 2001, EDS purchased SDRC and bought the remaining outstanding shares of UGS. These two groups and the e-Vis line of products were merged into a single business unit, EDS PLM Solutions. This merging of the third and fifth largest comprehensive suppliers from 2000 along with one of the industry's biggest systems integration firms, established EDS as the single largest PLM organization. As part of this merger, EDS transferred a portion of its PLM related SI services to the new business unit. However, other EDS business units also had significant SI services revenues related to EDS PLM products and technologies and to the products of other technology suppliers. The combined product lines and technologies give EDS one of the most comprehensive portfolios of PLM offerings in the industry. The new organization has a strong market position in collaborative product offerings for the key automotive and aerospace industries.
SAP (NYSE:SAP) established PLM as one of its five lines of business and continued to broaden and develop its PLM product suite including new recipe management offerings for the process industry and others. SAP also transferred additional elements of their overall product suite to the PLM line of business, the primary one being Asset Management to extend their PLM offering to service and maintenance management. These changes and additions added significantly to their PLM revenues during 2001 compared with 2000. They continued to expand their partnerships with SIs such as IBM Global Services and PwC Consulting.
Dassault Systemes continued to develop its family of products, creating one of the broadest and deepest PLM offerings in the industry. Dassault combined ENOVIA and SmarTeam (formally Smart Solutions), products that had been separately developed and marketed, into an integrated offering that provides PLM solutions from small to medium size companies to global enterprises. ENOVIA's and SmarTeam's strong market performances during 2001 made Dassault Systemes product family one of the market leaders in both growth and market presence. Dassault continued to leverage its relationship with IBM, with IBM PLM Solutions providing sales and marketing of PLM products and IGS providing global systems integration services for Dassault's product suite.
IBM (NYSE:IBM) established PLM Solutions as a line of business to leverage the full suite of offerings from Dassault Systemes, and put increased focus on PLM across the entire IBM enterprise. The ENOVIA product suite's strong revenue growth made IBM one of the market leaders during 2001 as Dassault expanded ENOVIA, adding new functionality and business focused application solutions. IBM PLM Solutions continued to leverage their large and growing CAD/CAM customer base. SmarTeam, which also had excellent growth in both revenues and market presence during 2001, was added to IBM PLM Solutions product suite -- enabling IBM to provide complete solutions spanning from small to medium size companies to global enterprises. Further, IBM Corporation is one of the largest suppliers of services among the comprehensive suppliers, and other business units within IBM, notably IGS, provided PLM services based on the Dassault family of products and on those of other suppliers to meet specific client requirements.
PTC (Nasdaq:PMTC) continued to grow their Windchill program and began to release focused business solutions during 2001. They continued to develop and expand a robust partner program and have established relationships with many leading SIs and other suppliers. These activities helped PTC continue expanding their overall program and their market presence. PTC continued to leverage its installed Pro/Engineer customer base and provided products and services to enable those customers to begin using collaborative design environments.
MatrixOne (Nasdaq:MONE) had solid direct revenue growth during 2001 but more impressive was the continued growth within their partners. The strength of their partner program moved them from fifth in direct revenue to third in market presence. They continue to effectively leverage partners and systems integrators and have created a substantial economy built on their technologies and business solutions. MatrixOne has over 100 partners globally with several of those delivering significant levels of services and re-sales with the result that MatrixOne's impact on the market certainly exceeds the level of their direct revenue.
Agile continued to expand their focus to a broader market. Their initial focus on a primary market sector enabled them to differentiate themselves and expand their business significantly and they are applying the same techniques to new industries, most notable is in medical devices.
Eigner reorganized as a US-based company and moved its global headquarters to the Boston area during 2001. While their revenues were flat with 2000, they invested heavily in re-positioning their organization for growth beginning in 2002.
Intergraph continues to be the leading supplier to the process industries and holds a dominant position in the process and plant sectors. Among the global comprehensive technologies suppliers worldwide, they are the only one to totally focus on the process industries.
Learn More About PLM
Additional information on the PLM market is available through CIMdata's Market Service covering the latest trends, events, and issues surrounding the rapidly changing industry. Subscribers receive periodic reports analyzing PLM market events and trends, a weekly industry news compilation, daily late-breaking industry news, a comprehensive Market Opportunities Analysis with revenue and sales statistics, access to teleconferences discussing issues and events relevant to the market, and a level of telephone support.
CIMdata will hold its annual US conference on PLM April 29th -- May 1st, 2002, at Disney's Contemporary in Orlando, Florida. The conference provides practical, relevant information on the latest trends, innovations and best practices people can take back to their companies and put into action immediately. User presentations sharing implementation experiences are scheduled to include companies such as Procter and Gamble, General Dynamics, Lockheed Martin, and Siemens Automotive. The program will also include interactive sessions with industry leaders; panel discussions with senior executives of product lifecycle solution and service suppliers. Cost is $1,395 for the three-day conference. Exhibits only and group rates are available. CIMdata's annual European conference on PLM is scheduled for October 22nd to 24 th in Berlin, Germany.
CIMdata sponsors vendor forums for PLM software and service suppliers. These forums focus on evolution of the PLM market, where it is going during the next four to five years, and how applications of technologies and solutions will be used to address new or expanded business issues and opportunities. The performance of the market in 2001 will be discussed in depth including supplier rankings, growth statistics, geographic and industry views, and major trends impacting the market. The US Vendor Forum will be held on April 11th, 2002, at the Marriott Hotel in Romulus, MI. The European Vendor Forum will be held on May 22 nd, 2002, in Paris, France.
CIMdata provides worldwide strategic consulting and program support, in-depth research, and education for both industrial organizations and suppliers of technologies and services seeking competitive advantage in the global economy, and within a constantly evolving e-business world.
CIMdata helps industrial organizations establish an effective PLM strategy, assists in the selection and deployment of PLM technologies and products, and helps organizations optimize their operational structure and processes to implement solutions that manage the entire product or plant definition lifecycle. For PLM suppliers, CIMdata helps define business and market strategies, delivers worldwide market information and analyses, provides education and support for internal sales and marketing teams, as well as overall support at all stages of business and product programs to make them optimally effective in their markets.
CIMdata provides world-class knowledge, expertise and best practice methods on PLM solutions that incorporate business processes, product information and configuration management, visualization, collaboration, as well as expertise in related technologies such as CAD/CAM and NC.
In addition to consulting, CIMdata provides industry education through international conferences in the US, Europe, and Japan that focus on product or plant definition lifecycle management. The company also conducts research, provides PLM focused subscription services, and produces several commercial publications. CIMdata serves clients worldwide from locations in North America, Europe, and Asia Pacific. For more information, contact CIMdata at 3909 Research Park Drive, Ann Arbor, MI 48108, U.S.A. Tel: +1(734) 668-9922. Fax: +1(734) 668-1957. Or visit the CIMdata website: www.CIMdata.com.
Note to Editors: There should be an accent above the first "e" in "Systemes." This was omitted for transmission purposes.