COVID-19 Hasn’t Crippled PLM Business Everywhere: Investment Fund Bought One of Europe’s Major PTC Partners
Verdi Ogewell posted on April 01, 2020 |
CapMan acquires a majority stake in PDSVISION, one of PTC’s major European channel partners.

The COVID-19 coronavirus crisis has had a crippling effect on the global business community overall, but this doesn’t mean that business is resting everywhere. Today saw the close of a major deal in Europe, the result of which is the investment fund CapMan Buyout XI buying the majority of PDSVISION, one of PTC’s major European channel partners.

With this deal CapMan acquires a majority stake in PDSVISION, which is one of the larger PLM players in the Nordic region.

It’s clear that key people in the PDSVISION organization retain significant shares in the company, which has a turnover of just over SEK 300 million per year. However, with the company's operations and customer structure including several enterprises that have global operations, in principle the entire world is now a working field for this PTC partner.

“PDSVISION group has grown significantly in recent years and moved from being a Nordic focused organization to now working on a global stage,” CEO Johan Klingvall comments on today’s agreement. He continues: “Together with the CapMan Buyout, we will speed up our journey and expand the services and solutions we provide to customers, partners and society."

But why are PLM and beyond technologies growing areas of superior attraction power? Does the COVID-19 crisis have anything to do with it? Could the effects of COVID-19 even support a more general growth of cloud PLM capabilities? I have looked at today’s deal from these angles, as well as a couple of other more general financial and technological aspects.

A SURPRISING DEAL. Johan Pålsson (left), co-managing partner at CapMan Buyout, and PDSVISION's CEO, Johan Klingvall, sign the document that makes the investment fund's 11th fund the principal owner of the PTC partner. PDSVISION is one of PTC’s largest European channel partners on the PLM side.
A SURPRISING DEAL. Johan Pålsson (left), co-managing partner at CapMan Buyout, and PDSVISION's CEO, Johan Klingvall, sign the document that makes the investment fund's 11th fund the principal owner of the PTC partner. PDSVISION is one of PTC’s largest European channel partners on the PLM side.

Today’s deal is a clear indication of a growing interest in PLM being shown by global capital investors. Engineering.com has previously reported on, for example, Goldman Sachs investing $70 million in Aras PLM. Few things are more appreciated at an investment bank like Goldman Sachs’ than companies which are growing strongly, but need money to be able to exploit their momentum.

New technologies are in the spotlight, such as additive manufacturing, IoT, AR/VR and more. Digitalization and new attractive business models that highlight these technologies roles appear to have a bright future with PLM developers. Therefore, we are seeing investment in places where the scent of a good—and hopefully fast—return on invested money is evident. Right now, the PLM area shows some indications of being hyped; not only at Goldman Sachs, but also generally among groups of venture capital companies.

Onshape, Arena PLM and Propel PLM are examples of other PLM players who have received investment money over the past few years from companies such as Silverlake, JMI Equity and Northwest Ventures.

A Good Market Reputation

Specifically, why is an investment in PDSVISION relevant in this context?

First a bit of background. PDSVISION was founded in 2008, and with Johan Klingvall at the forefront, has since taken an increasing share of the regional market pie in the PLM area. As mentioned, PDSVISION builds the bulk of its operations on a reseller agreement with PLM developer PTC, with software in its portfolio such as the PLM suite Windchill, CAD software Creo, IoT solution ThingWorx and the AR/VR platform Vuforia. But PDSVISION, like PTC, is also active in the Simulation & Analysis field, and have a cooperation agreement with ANSYS.

Parallel to its PLM software sales, PDSVISION has developed deep knowledge and experience of the implementation, integration and operation of PLM software. It also has a very good reputation in the market, which is evident in the online TV report that I recently published on engineering.com: Why VARs Can Be the Difference Between a PLM Success or Fiasco: Meet PTC’s Partner PDSVISION – TV Report.

Under CEO Johan Klingvall, PDSVISION has made an impressive journey in the PLM area, and is virtually growing through the roof. This growth is in the light of a number of successful PLM projects with companies such as the brake and suspension developer in automotive, Haldex, forklift manufacturer UniCarriers (formerly Atlet trucks), the food processing company JBT and the world class developer of agricultural machines, Väderstad, to name a few.

In the TV report, we have taken a closer look at these projects and the role that PDSVISION played in this context. I have spoken with representatives of the company's customers and with PTC's top managers, such as CEO Jim Heppelmann and PLM responsible Kevin Wrenn.

“Yes, things have gone well,” says Klingvall. “Today, we in PTC's retail channel account for just over 30 percent of the company's total revenue. This is a considerable increase, which has meant that we have grown from 15 to 20 per cent a few years ago to today's much larger proportion.”

During 2017, the automotive subcontractor Haldex, which develops brakes and suspensions for heavy transport vehicles, decided to bet on PTC’s PLM suite Windchill to improve their change management process. The company’s R&D director, Charlotte Wall, used PDSVISION as a partner in developing these solutions. “Magician,” is how she characterized the PTC VAR’s consultant, Karl Wennerholm.
During 2017, the automotive subcontractor Haldex, which develops brakes and suspensions for heavy transport vehicles, decided to bet on PTC’s PLM suite Windchill to improve their change management process. The company’s R&D director, Charlotte Wall, used PDSVISION as a partner in developing these solutions. “Magician,” is how she characterized the PTC VAR’s consultant, Karl Wennerholm.

In What Way Does PDSVISION Play an Important Role in PLM?

But why do the players in PTC's channel of resellers play such an important role? The answer to that is also an important part of the answer to why an investment fund such as CapMan Buyout invested heavily in PDSVISION.

Here's how it is: PLM platforms, no matter where they come from, can be seen as a structural set of tools for product realization—and these days, even for the end-user operation of the products being developed. But these solutions must be implemented, integrated and operated with the companies' existing solutions. Furthermore, education of the staff, development of best-practice methods and so on, are other success-critical aspects of PLM and beyond platforms. It is in this that Value Added Resellers (VAR's) and other ecosystem partners play such an important role.

“Exactly,” says Johan Klingvall. “New technologies and the development of new business models based on, for example, IoT, Augmented Reality, digital twins and digital threads are exciting areas. But before going there, many of our customers want to make sure their existing CAD and other processes are in top condition. We are therefore included on both these fronts of our customers.”

Ideas Supported by PTC’s Kevin Wrenn

PTC's PLM chief, Kevin Wrenn, supports these ideas. An experienced PLM man at PTC, Wrenn says, just like Klingvall, that it is quite clear the interest in the new exists, but when you do the deeper analyses and start the background work on these new technologies, you often realize that it contains a journey to be done—a trip that can take three, seven or up to 10 years, depending on what you’re aiming for.

“Before embarking on a journey in unknown waters, the proactive companies want to make sure you have order and find out about CAD and other traditional domains in their digital house,” said Wrenn. “They say, ‘Let's first also look at what the really valuable applications are,’ pointing to the value of making sure they work flawlessly before moving on to IoT, IIoT, AR, digital twins and wires.”

Kevin Wrenn, divisional GM for PTC’s PLM suite Windchill.
Kevin Wrenn, divisional GM for PTC’s PLM suite Windchill.

Why Simulation and Analysis Play a Key Role in the Brave New Digital World

Another value of modern development power is the expanded role that simulation is about to take on. In fact, simulation has evolved to become among the most important fields in the new digital world we’re all moving towards. Simulation and analysis have grown into one of PLM’s most valuable and fastest growing disciplines in recent years. According to PLM analyst CIMdata, S&A has become one of PLM’s most brilliant stars, growing at an annual plus 10 percent growth. What are the reasons?

In the sharp spotlight of digitalization, virtualized products must be able to be simulated in order to be functionally secured, verified and validated as digital prototypes in a world where the physical equivalents decrease in importance—while the virtual ones are about to take over the stage.

But it doesn’t stop there. Equally important is that simulation is about to become part of all stages of product life cycles:

  • In manufacturing, where the trend is pointing towards a digital twin of the actual factory simulating the whole process before the products get into the real physical handling. The simulation can show how, or even if, the intended manufacturing process will work or how it should be optimized without costing and arm and a leg.
  • On the aftermarket side, where simulation can become part of the marketing artillery.
  • In the hands of the end user who can simulate, for example, flows in a pumping plant to optimize the operation.

Within this lies another development trend that plays well in the hands of PLM consultants. PDSVISION has already jumped on this train, which aside from capturing deeper area knowledge, includes a separate cooperation agreement with ANSYS. However, simulation may take a while to achieve a broad public breakthrough, even though the development trend is crystal clear and will undoubtedly be one of the major development trends in digitalization in the 2020s.

A BRIGHT FUTURE. Simulation has a very bright future in the digitization of the product development work that is now taking place. PDSVISION has positioned itself at the forefront of this through its agreement with the market leader ANSYS.
A BRIGHT FUTURE. Simulation has a very bright future in the digitization of the product development work that is now taking place. PDSVISION has positioned itself at the forefront of this through its agreement with the market leader ANSYS.

Bringing Success-Determining Resources to the Table

My conclusion is that it will take some time before all customers with the potential to step up on state-of-the-art PLM platforms will reach the point where these investments can be materialized. In addition to large parts of the technology being new, it also requires that the new technology is optimally accessible and used by organizations, subcontractors and other ecosystem partners which form a product lifecycle network around product delivery. Also important is that you can develop and implement the new business models needed to be able to exploit the new paths in product realization and the creation of profitability.

In this way, proactive market players will be able to benefit greatly from the resources that CapMan Buyout and similar investors can bring to the table; for example, excellent contact areas vis-à-vis new customer potentials, the financial resources needed in the development work and so on.

Investing in a Market with Great Growth Potential

The PDSVISION investment is an excellent example of situations where technically proactive and offensive investment funds can become heavy factors in the catalysis, and support even faster growth and expansion in those companies with the right initial values.

The CapMan Buyout team consists of 12 investors working in Helsinki, Finland and Stockholm, Sweden. The funds managed by CapMan Buyout invest in medium-sized, unlisted companies in the Northern European region. The investment in PDSVISION is made by the CapMan Buyout XI Fund, which was founded as late as 2019; PDSVISION is the funds' first investment. The transaction is expected to be completed within a few weeks.

“We are enthusiastic about PDSVISION, as our first investment in our eleventh fund. The company operates in a high growth market and has an impressive track record of growth of 20% CAGR over the past ten years. For several months, we have built a strong partnership with the founders and key people of PDSVISION, and CapMan has committed to supporting the company's global growth going forward by acting on attractive organic growth opportunities and completing acquisitions. While we see the effects of the COVID-19 pandemic around us, PDSVISION stands strong with a high degree of recurring software revenue, remote delivery of many services and businesses that support its customers with business-critical solutions,” says Johan Pålsson, co-manager and partner at CapMan Buyout.

CLOUD-BASED WORK. Remote accessibility has many positive characteristics; for example, at least theoretically, working on a cloud-based PLM or Product Innovation Platform has advantages in terms of product development. PTC’s solutions are examples of this.
CLOUD-BASED WORK. Remote accessibility has many positive characteristics; for example, at least theoretically, working on a cloud-based PLM or Product Innovation Platform has advantages in terms of product development. PTC’s solutions are examples of this.

The Value of Remote Accessibility

There are many different and valuable experiences that can come out of epidemic crises such as that of COVID-19. One important experience has been putting the spotlight on the value of having capabilities to work anywhere, anytime, with any data and on any device. Remote accessibility has many positive characteristics; for example, at least theoretically, working on a cloud-based PLM or Product Innovation Platform has advantages in terms of product development. PTC’s solutions are examples of this, since they fill the requirement of the growing need for technologies that can support distance and working from home as alternatives.

This is hardly unique to PTC. It is something that all developers take advantage of, and the cloud is not a bad basis for anyone who wants to invest in the kind of flexibility that this can result in.

Data is always available and the infrastructure is in the cloud—no VPN is needed. At the same time, the users have access to broad and modern product development platforms. In fact, this aspect can pave the way for huge steps towards the digitalization that we have been talking so intensively about in recent years.

PDSVISION and PTC are some of the most advanced travelers in this journey, and they can help to realize, improve and maintain these solutions. The CapMan Buyout investment can further improve PDSVISION’s technology offer and sustainability.  Furthermore, it can help make the company grow even faster.

In the dark shadows of the current health crisis, this may not be the first thing to think about; but COVID-19 will be defeated and when that happens, the experiences of the crisis will be important to remember—and to act upon. Those who thought about it before it happened have undoubtedly benefitted from this forethought.

“I am very pleased to welcome CapMan Buyout on board to work with us as we embark on the next step of our journey,” added Johan Klingvall in a comment to the deal. “As mentioned, we have been working with CapMan Buyout for several months and it is important that we share the view of the core values ​​that are needed to build a strong and sustainable company. Throughout this process, CapMan Buyout has proven to provide the support needed by a growing brand to succeed and improve our operations on a global stage.”

The Coronavirus Crisis and its Effect on Jobs

Finally, a few words about the general development and effects that the COVID-19 coronavirus crisis can have on product realization-related jobs, which can lead to a situation where companies such as PDSVISION can benefit from their competence when it comes to supporting modernization processes on the product development and manufacturing side.

How will the jobs in these areas be affected? If you lost a job, can you apply to the same job when the crisis is over? Or will some types of jobs be lost forever, such as what happened in the aftermath of the Lehman Brothers bank crash back in 2008?

This kind of questioning is not only relevant now, but will probably be even more important in what happens a little later when, according to experienced analysts, we will see unemployment figures rising to historically high levels—perhaps as high as 15 to 20 per cent. This is a realistic outcome that will most likely follow in the footsteps of drops in the GDP figures; for example, economic analysts project Germany to fall between minus 2.8 to minus 4.5 percent. The same figures apply to the estimates of GDP’s in the Nordics.

Experts I spoke with say “both yes and no” to the question of certain jobs disappearing forever as an effect of the COVID-19 crisis. Certainly most jobs will remain, as this crisis is not a structural one such as the the low economy following the Lehman Brothers bankruptcy in 2008. Instead, it is a crisis that is mainly related to the epidemic, and not a technically structural change. The world will still need bartenders, conference hostesses and hotel employees. Yet, there are jobs that will disappear forever, as well, partly because companies went bankrupt and partly because some will accelerate the introduction of new technologies reflecting the experiences of the coronavirus crisis. In Europe, for example we’ve already seen a rush to the cloud and platforms that can make use of cloud technology as a result of the current situation.

PLM players who have bet on cloud and solutions that can match the needs that come with remote processes and distributed real-time collaboration support in product realization will be well positioned to meet what’s coming.

PTC is on that track.


Recommended For You