current trends in the plm market

Current Trends in the PLM Market

Thursday, April 12, 2007Penn Club, New York

Alan Mendel, Managing Partner, Focus 20, LLC

Copyright © 2007 by Focus 20, LLC© 2007 Gerson Lehrman Group Inc., All Rights Reserved

Council Member Biography

Alan Mendel, Managing Partner at Focus 20, LLC, is a seasoned international business professional with nearly two decades of experience working with small to large fortune 1000 companies. Mr. Mendel is a recognized worldwide authority on methodologies and technology solutions for product lifecycle management (PLM) throughout the extended enterprise and supply chain. Mr. Mendel has consulted internationally with organizations from many industries and solution/technology suppliers on the development, use, implementation, and market for solutions to address the product lifecycle. He has worked with PLM suppliers to define their product and service offerings, business and marketing plans, establish distribution channels and partnerships, and identified potential acquisitions and merger opportunities. Prior to founding Focus 20 in 2001, Mr. Mendel spent eight years as an industry analyst and consultant establishing the internationally recognized PLM consulting firm, CIMdata, Inc.


Table of Contents

► What is the future of the PLM market?

► What are the key customer market drivers?

► How are the major players positioning themselves?

► Can we expect more consolidation/partnerships in the near future?

April 12, 2007 Copyright © 2007 by Focus 20, LLC 4F ocus 20

Evolution of PLM MarketEvolution of PLM Market

Product Data

Image/DocumentManagement

View &Markup

PLM

Simulation& Mock up

EnterpriseApplicationIntegration

Web Portals

Product Realization

Project Mgmt

RequirementsTraceabilityManagement (RTM)

1985+1990+

2000+

1995+

Data MgmtFile Vaulting

Basic WorkflowMulti-CAD

BOMChange Mgmt

Configuration MgmtProduct Structure Mgmt

Process MgmtWeb Architectures

EAI ToolsApplications

Solutions &DMU Env

2005+

NDPI

Portfolio MgmtInnovationMgmt

Analytics

Mechatronics

EAI = Enterprise Application Integration

EDMPDM

CPC


PLM Market ComparisonPLM Market Comparison

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

2004 2005 2006 2007 2008 2009

Mil

lio

ns

Customer Mgmt

Human Capital Mgmt / HR

Procurement

Core ERP

CAD

PLM

Supply Chain Mgmt

Source: Data from AMR Research, 2005 PLM - $7.3 billion market by 2009PLM - $7.3 billion market by 2009


Enterprise Application 5yr CAGREnterprise Application 5yr CAGR

SCM5%

PLM13%

CAD5%

ERP3%

Procurement9%

HR7%

CRM6%

Source: 2004-2009, Data from AMR Research, 2005 * CAGR: Compound Annual Growth Rate


PLM Major MessagingPLM Major Messaging

CollaborationCollaboration

Product Portfolio ManagementProduct Portfolio Management

Program/Project ManagementProgram/Project Management

MechatronicsMechatronics

ComplianceCompliance

New Product Introduction (NPI)New Product Introduction (NPI)

Product InnovationProduct Innovation

Digital ManufacturingDigital Manufacturing


PLM Future DirectionsPLM Future Directions

Process InnovationProcess Innovation

Business Innovation (PLM-ERP-SCM…)Business Innovation (PLM-ERP-SCM…)

Mechatronics (expanded)Mechatronics (expanded)

Process PLMProcess PLM

Industry Specific PLMIndustry Specific PLM

Digital Manufacturing (expanded - Factory)Digital Manufacturing (expanded - Factory)

Business Application ExpansionBusiness Application Expansion

PLM CostingPLM Costing


PLM Market Forecast PLM Market Forecast (non-tools)(non-tools)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

Mil

lio

ns

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Adapted from CIMdata, Inc. PLM Market Press Release, April 2006 cPDm Market subsection of CIMdata’s PLM Market (includes Tools) cPDm equivalent to AMR Research PLM non-CAD Market


PLM Mid-MarketPLM Mid-Market

Represents 49% of PLM software market in 2005 ($786M)Represents 49% of PLM software market in 2005 ($786M)11

PLM mid-market adoption driversPLM mid-market adoption drivers22

Demand for shorter product lifecycles (49%)Demand for shorter product lifecycles (49%)Globalization of markets and/or supply chains (43%)Globalization of markets and/or supply chains (43%)More complex design or distributed design environment More complex design or distributed design environment (34%)(34%)More complex products (31%)More complex products (31%)

Top strategic actions for SMEs to improve product developmentTop strategic actions for SMEs to improve product development22

Improved product data management (40%)Improved product data management (40%)Improved project/program/product development execution Improved project/program/product development execution (39%)(39%)Collaborative design (35%)Collaborative design (35%)Project Collaboration (29%)Project Collaboration (29%)

1 Source: AMR Research, 20062 Source: AberdeenGroup, March 2006SME = Small & Mid-Sized Enterprise


AgendaAgenda

PLM Market Past and FuturePLM Market Past and Future

Key PLM Market DriversKey PLM Market Drivers

Major Market Players & PositioningMajor Market Players & Positioning

Market Dynamics Moving ForwardMarket Dynamics Moving Forward


Executive Interest in PLM GrowsExecutive Interest in PLM Grows

Business Environment Business Environment Economic challenges, changing global security, globalizationEconomic challenges, changing global security, globalizationIncreased competition, limited capital funding, product Increased competition, limited capital funding, product customizationcustomizationOutsourcing scope widening, consolidation, and market Outsourcing scope widening, consolidation, and market shakeoutshakeout

Enterprise ObjectivesEnterprise ObjectivesDrive short-term profitability and cash reservesDrive short-term profitability and cash reservesIncrease market share and product demandIncrease market share and product demandStrengthen customer satisfaction and loyaltyStrengthen customer satisfaction and loyaltyIncrease quality, reduce costs, and speed time to marketIncrease quality, reduce costs, and speed time to marketManage increased product complexityManage increased product complexityOptimize disparate supply chainsOptimize disparate supply chainsDesign, build, and maintain anywhere and anytimeDesign, build, and maintain anywhere and anytimeBuild end-to-end processes and systemsBuild end-to-end processes and systems


PLM Business FocusPLM Business Focus

Drives, facilitates, and captures innovationDrives, facilitates, and captures innovationFacilitate innovation through process enablement and Facilitate innovation through process enablement and reduction in non-value-added activitiesreduction in non-value-added activities

Manages complete product lifecycle Manages complete product lifecycle Captures and maintains corporate intellectual assetsCaptures and maintains corporate intellectual assetsEstablishes product collaborative teams across the Establishes product collaborative teams across the enterprise and throughout supply chainsenterprise and throughout supply chainsEstablishes a common integrated product definition and Establishes a common integrated product definition and change management environment – “single version ofchange management environment – “single version ofthe truth”the truth”Integrates with value applications and enterprise systemsIntegrates with value applications and enterprise systems

Accelerates New Product Introduction (NPI) processAccelerates New Product Introduction (NPI) processBrings together information, processes, and peopleBrings together information, processes, and peoplePlan, manage, and execute programs and resources more Plan, manage, and execute programs and resources more efficiently and effectivelyefficiently and effectively


Major PLM Market DriversMajor PLM Market Drivers

Increased focus on innovation (products, processes and business)Increased focus on innovation (products, processes and business)

Collaborative distributed teams and disparate applicationsCollaborative distributed teams and disparate applications

Process consolidation across development teams / supply chainProcess consolidation across development teams / supply chain

Intellectual asset management, leverage digital assets (CAx), MRO…Intellectual asset management, leverage digital assets (CAx), MRO…

Project, program and portfolio managementProject, program and portfolio management

Global quality & compliance standards (e.g., ISO 9001, RoHS, Tread Global quality & compliance standards (e.g., ISO 9001, RoHS, Tread Act, WEEE ELV, and RoHS)Act, WEEE ELV, and RoHS)

New Product Development and Introduction (NPDI)New Product Development and Introduction (NPDI)

Integration with enterprise applications (ERP, CRM, SCM, Financial …)Integration with enterprise applications (ERP, CRM, SCM, Financial …)

Best of Breed verses ERP integrated PLM solutionsBest of Breed verses ERP integrated PLM solutions

Mechatronics (mechanical, electronics, and software)Mechatronics (mechanical, electronics, and software)

Mid-market PLM opportunities, Open Source entries, on Demand/SaaSMid-market PLM opportunities, Open Source entries, on Demand/SaaS

Industry specific PLM applications (apparel, MRO, Automotive, A&D…)Industry specific PLM applications (apparel, MRO, Automotive, A&D…)

Transportation Recall Enhancement, Accountability, and Documentation (TREAD) Act, End-of-Life vehicles (ELV) for automotive, Waste Electrical and Electronic Equipment (WEEE), Restriction of Hazardous Substances (RoHS), Maintenance Repair & Overhaul (MRO), Aerospace & Defense (A&D), Software as a Service (SaaS), Computer Aided applications (CAx)


AgendaAgenda






PLM Vendor Positions, 2006PLM Vendor Positions, 2006

Source: Data from AMR Research, 2006

Other48%

UGS11%

SAP9%

Dassault9%

PTC6%

Telelogic4%

MSC Software3%

Agile Software3%MatrixOne

3%Geber

Technology2%

LectraSystems

2%


PLM Tier 1 SuppliersPLM Tier 1 Suppliers

UGSUGSCAD/CAE/CAM/DMU/PLM solution providerCAD/CAE/CAM/DMU/PLM solution provider

Dassault Systémes/IBM (including recently acquired MatrixOne)Dassault Systémes/IBM (including recently acquired MatrixOne)CAD/CAE/CAM/DMU/PLM solution providerCAD/CAE/CAM/DMU/PLM solution provider

PTCPTCCAD/CAE/CAM/DMU/TechPub/PLM solution providerCAD/CAE/CAM/DMU/TechPub/PLM solution provider

Agile SoftwareAgile SoftwareDMU/PLM solution providerDMU/PLM solution provider

SAPSAPIntegrated enterprise solution providerIntegrated enterprise solution provider

IFS (International Fiber Systems)IFS (International Fiber Systems)Integrated enterprise solution providerIntegrated enterprise solution provider

OracleOracleIntegrated enterprise solution providerIntegrated enterprise solution provider

NECNECSystems developer and integrator (Japan-focused)Systems developer and integrator (Japan-focused)

Digital Mock up (DMU), Computer Aided Design (CAD), Computer Aided Engineering (CAE), Computer Aided Manufacturing (CAM), Technical Publications (TechPub)


PLM “Best-of-Breed”PLM “Best-of-Breed”

UGSUGSDassault SystémesDassault Systémes& IBM (incl. MatrixOne)& IBM (incl. MatrixOne)

PTCPTCAgile SoftwareAgile SoftwareSAPSAPIFSIFSOracleOracleNECNEC

Typically thought of as Typically thought of as “best-of-breed” PLM suppliers “best-of-breed” PLM suppliers

based on their focus on based on their focus on engineering, product engineering, product

development applications, and development applications, and processes – Major Suppliersprocesses – Major Suppliers


PLM Integrated Enterprise PLM Integrated Enterprise SolutionsSolutions

UGSUGSDassault Systémes/IBM (includes MatrixOne)Dassault Systémes/IBM (includes MatrixOne)PTCPTCAgile SoftwareAgile SoftwareSAPSAPIFSIFSOracleOracleNECNEC

Typically thought of as “Integrated Typically thought of as “Integrated Enterprise Solutions” suppliers, Enterprise Solutions” suppliers,

including PLM, based on their common including PLM, based on their common platform, data, and applicationsplatform, data, and applications


PLM Implementation OptionsPLM Implementation Options

PLM from an independent PLM supplierPLM from an independent PLM supplier

PLM from your enterprise solutions supplierPLM from your enterprise solutions supplier

PLM hybrid approachPLM hybrid approach


AgendaAgenda






PLM Market ConsolidationPLM Market Consolidation

UGS UGS (Acquired by Siemens AG, 2007)(Acquired by Siemens AG, 2007)

Acquired SDRC, EAI, Slate…Acquired SDRC, EAI, Slate…

Dassault SystémesDassault Systémes

Acquired MatrixOne 2006Acquired MatrixOne 2006

AxonAxon

Acquires ZytalisAcquires Zytalis

TataTata

Acquires INCATAcquires INCAT


PLM Functional OverlapPLM Functional Overlap

ERPCRM

SCM

SRM

PLM


PLM Overlapping TrendPLM Overlapping Trend

Business focusBusiness focus

Share many common Share many common business objectives and business objectives and benefitsbenefits

Synchronization and Synchronization and integration are important integration are important to achieve benefitsto achieve benefits

ProcessesProcesses

Some overlap, some butt, Some overlap, some butt, some must climb walls, some must climb walls, some are duplicated, etc.some are duplicated, etc.

DataData

Much is in commonMuch is in common

Much gets duplicatedMuch gets duplicated

Much gets manually Much gets manually reenteredreentered

TechnologyTechnology

Software technology Software technology commoncommon

Architectures grow more Architectures grow more similarsimilar

Functional components Functional components similar/duplicatesimilar/duplicate


Consolidation Trend for PLMConsolidation Trend for PLM

PLM business objectives, benefits, focus, and PLM business objectives, benefits, focus, and applications overlap more with other enterprise applications overlap more with other enterprise application domainsapplication domains

Suppliers of enterprise applications have naturally Suppliers of enterprise applications have naturally expand their scope to incorporate the domain of PLMexpand their scope to incorporate the domain of PLM

Analysts also see and recognize this trend and have Analysts also see and recognize this trend and have adjusted their positioning and vision for PLM as they adjusted their positioning and vision for PLM as they look into the futurelook into the future

For example, Gartner, AMR Research, and IDCFor example, Gartner, AMR Research, and IDC


PLM Market SummaryPLM Market Summary

PLM market & investments continue to growPLM market & investments continue to growConsolidation expected to continue for Consolidation expected to continue for products and servicesproducts and servicesContinued business focus for PLM Continued business focus for PLM (innovation, NPI, quality, compliance…)(innovation, NPI, quality, compliance…)Overlapping capabilities with enterprise Overlapping capabilities with enterprise solutions yields continued market challengessolutions yields continued market challengesBest of Breed verses Integrated Solution Best of Breed verses Integrated Solution battle continues battle continues

ERP vendors business to lose?ERP vendors business to lose?


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current trends in the plm market

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