PLM This Week: Big Business for Dassault Systèmes as P&G Chooses 3DEXPERIENCE
Felix Nilsson posted on May 08, 2017 |
Also: Arena claims big growth, PTC enjoys subscription uptick, and Siemens is busy digesting acquisi...

Big Business for Dassault Systèmes as P&G Chooses 3DEXPERIENCE

PLM developer Dassault Systèmes recently announced a big PLM deal with Procter & Gamble (P&G), one of the world's largest consumer goods manufacturers. P&G has chosen to upgrade its existing Dassault PLM implementation to the company's 3DEXPERIENCE platform.

More specifically, the company is implementing the "Perfect Product" and "Perfect Package" industry solutions that work within the framework of the 3DEXPERIENCE platform to connect thousands of P&G users to data, employees and consumers, aiming to improve company packaging and product design, requirements management and application management.

P&G operates in 80 countries, with more than 105,000 employees, and manufactures everything from detergents and shampoo to cough medicine and razors. The group has previously used Dassault Systèmes’ design, development and simulation applications, such as CATIA and Enovia, but with the rollout of the 3DEXPERIENCE platform, P&G will have an end-to-end solution that covers 18,000 users in research and development, product quality, and other disciplines related to design and product development.

"The decision to upgrade our former PLM system from Dassault Systèmes to the 3DEXPERIENCE platform is part of our work to transform our business so that our entire workflow is covered by the digital transformation and brings added value to all stages. It facilitates integration of all innovation within the company, as well as an improved user experience for our technical team," said Jean-Louis Hospitel, IT Manager at P&G.

One of the guiding principles is to eliminate the information silos that exist between P&G’s departments, creating a digital environment for global collaboration where data can easily be tracked, shared and reused.

This would allow users to quickly access more consistent and accurate packaging and product specifications, while a “single source of truth” in terms of product information would also reduce time-consuming rework. In addition to this, Dassault claims that the system makes it easy to share data with consumers to gain better insight into trends, needs and how the end product is used.

“The 3DEXPERIENCE platform and our industry solutions for consumer goods connect people, processes and systems. As a result, companies can reduce the development time of a product by up to 20 percent," said Philippe Loeb, vice president of consumer packaged goods and retail at Dassault Systèmes.

He further claims that this time gain is particularly important in an industry with shortening cycle times, where demand fluctuates dramatically depending on consumer needs and buying behavior.

Large Enterprise Wins Drives Strong Quarter for Arena

Arena Solutions, a developer of cloud-based platform for PLM, application lifecycle management and quality management, is doing quite well. While the company's solutions might not have the reach of the incumbent market leaders, it is clear that these PLM industry pioneers in cloud technology are on the rise globally. Even though the company’s press material is sparse, with anything but percentage-based growth figures, the pace is undeniably impressive.

“Our customers are all innovating and producing higher quality products faster and at a lower cost than ever using our cloud-based solution,” said Mike Etheridge, Arena’s vice president of finance. “It is rewarding to see the past and ongoing investments we have made in new products, functionality, and interoperability validated in the marketplace, both by new customers and existing customers who continue to expand usage at a record pace.”

Still, here are the figures published by Arena after the first quarter of the year:

  • The value of new customer subscriptions not only increased by 86 percent compared to the same period last year, it was better than every quarter in 2016.
  • The number of new customers in a quarter also went up, with an increase of 59 percent compared with 2016, a record number. Arena points out that this was due to an unusually high number of “large enterprise customers.”

Arena also claims that its recorded growth rate of more than 30 percent in terms of total number of bookings, sends a clear signal about the market's rapidly growing willingness to invest in the company's PLM solution. 

Arena Solutions has a special strength in the field of high tech, consumer electronics and medical technology. Even the Internet of Things (IoT) has proven to be a profitable area, and many of the company’s new customers can be found in this space. The reason for this, according to Arena, is that their solutions help organize the work for electrical, electronics, mechanics, hardware and software engineers.

New customers that Arena added during the first quarter of 2017 include:

  • Advanced ION Beam Technology, Inc.
  • Biopsy
  • Dedicated Computing
  • Digi International
  • Fontem US
  • Proterra
  • TearScience, Inc.
  • Tile
  • Vapotherm

PTC All-In on Subscriptions

PTC reported a net loss of $1 million on a total revenue of $280 million in the second quarter of its fiscal year 2017. Despite this, president and CEO Jim Heppelmann claimed, “We hit this one of out the park” in a conference call with investors.

This might require a bit of clarification. Unless you’re an avid watcher of the CAD and PLM space, you might not know that PTC is in the middle of a business transformation. The company is moving from a traditional CAD and PLM sales model with expensive perpetual software licenses to a more “modern” cloud-focused subscription-based revenue model. Much like what happened with its competitor, Autodesk, this transformation has impacted the income statement of the Massachusetts-based tech company over the last couple of years.

The good news for PTC is that the subscription model seems to be gaining traction — and therein lies the source of Heppelmann’s enthusiasm.

"We are very pleased with our second fiscal quarter performance," he said. "Bookings of $95 million and a subscription mix of 71 percent both exceeded the high end of our guidance for the quarter. Bookings growth of 11 percent year-over-year was driven by another strong quarter in IoT, with new bookings growing faster than the estimated 40 percent market growth rate, as well as solid bookings results in CAD and core PLM, which both grew at or above the estimated market growth rates."

Note the use of bookings, instead of revenue, as the measure of success. This is very much in line with the new model, since much of the revenue will come in over time, instead of in a big lump sum of money as with the perpetual license model. What we can say here is that PTC’s big acquisitions in IoT keep growing at a quick and steady pace, while the CAD and PLM parts, which are still the real earners of the company, hover around the industry standard of 5-6 percent growth.

These results were good enough to prompt Heppelmann to reveal a more comprehensive strategy regarding the subscriptions:

“Due to the success of this transition, we have separately announced today a plan to accelerate our transition by offering our core solutions products and ThingWorx platform only by subscription in the Americas and Western Europe beginning January 1, 2018."

This is not an unexpected move, and is one that is sure to please Wall Street, which is very eager to get a return on investment on the hundreds of millions of dollars that PTC has invested in its new IoT business. For customers, it means that products like Creo and Windchill will only be offered on a subscription basis for new customers; however, it’s still unclear how existing customers will be affected.

Strong Business Momentum for Siemens’ Digital Factory

Another company which just released its financials is industry conglomerate Siemens. While this giant has many different divisions, not all related to PLM, there was some interesting information to be gleaned from an investor call that was made earlier this week.

Siemens CFO Ralf Thomas said that the company saw a 5 percent organic growth across all industry divisions, with digital factory, building technologies and energy management performing better than the rest.

The Digital Factory division, which encompasses Siemens PLM software solutions, automation software as well as factory related hardware, delivered great results and gained market share. Thomas also noted that the business achieved double-digit growth in all major countries - with China growing the most at 29 percent - while the U.S., Germany and Italy grew by 10, 11 and 14 percent respectively.

Touching on the specifics of the PLM sales, Thomas said that they were pleased with the fact that the PLM software license business grew by “low double digits,” adding that this was an especially good achievement in light of the performance of the industry in general.

The main growth drivers in the PLM portfolio were Manufacturing Process Management solution (MPM) Tecnomatix and PLM backbone Teamcenter. But at the same time, revenues from system integration activities were weaker than expected, leading to overall moderate revenue growth in the PLM business.

Finally, Thomas stated that while profitability increased significantly in certain areas, investments in the IoT platform Mindsphere, as well as transactional costs related to the acquisition of EDA software developer Mentor Graphics, brought the profitability down to the “single-digit area.” He also emphasized that the integration of Mentor (which cost Siemens $4.5 billion to acquire) is fully underway, and that they are building on experiences from CAE software developer CD-adapco (acquired last year for $970 million) on how to “cross sell” software to their existing PLM customer base.

If you want to learn more about Siemens PLM and their vision surrounding the digital factory and Industry 4.0, don’t miss the interview with the company’s new CEO, Tony Hemmelgarn, recently published on this site. 

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