Dassault Systemes acquires IBM PLM business

I participated in a conference call with Bernard Charles, CEO of Dassault Systemes (DS), this morning.

Basically, for $600 million cash, DS is acquiring the IBM sales and sales support organization supporting 1000+ large and very large customers, along with all the assets (700 people, customer relationship, customer revenue). The annual revenue is estimated at $550 million USD, looks to be very profitable. All of this is recurring license revenue!

DS / IBM will maintain a relationship, but a very loose one, focused on cloud computing, middleware, consulting from IBM Global Svcs, and with IBM financing.

My assessment: It looks like a great opportunity for DS and should finally unify sales to all size customers. Large customers like a direct relationship with the software developer and this eliminates one step. For a profit and ongoing revenue it looks like a good deal for everyone – reasonable payment for IBM for building the channel and great revenue and profit opportunity and possible expansion for DS by dealing directly with the very large customers.

Risks to DS include: integrating the 700 people and not taking their eye off the ball by only engaging with large customers.

IBM PLM customers should be happy with this new arrangement.

The press release can be found at http://www.cad-portal.com/articles/pr_details.php?ID=104

Simulia’s DesignSight Structure explored

Earlier this week we had a chance to check out Dassault Systemes’ DesignSight Structure (DSS) offering from Simulia via a WebEx demo. DSS, aimed at designers rather than analysis specialists, provides a menu guided (flow based) approach to structural analysis for parts. Users follow the menu guidance to apply materials, boundary conditions and loads, achieving simulation results without even viewing a mesh of the part. DSS uses the Abaqus solver, providing for linear, non-linear solutions and large geometry effects, all hidden from the user.

We found the software easy to use, particularly within the V6, 3DLive-like user environment. Parts were easy to search for, with an easy way to break assemblies into their component parts, all visually displayed on the “turntable.” Supporting this UI is a requirement to use the underlying PDM software structure of Enovia V6. Thus, V6 rests on an Enovia base.

DSS is now Simulia’s only V6 native simulation offering for V6. Users creating models and desiring advanced simulation within V6 need to use the standalone Simulia software. Eventually, V6 expert FEA users will eventually have available a portfolio of Simulia software. No dates were given.

The example we looked at involved a plastic shell that, after the first analysis, needed additional support to eliminate too much flexibility for the simulated stress, while also keeping its weight down. Ribs were added using Catia plastic feature functions, then re-simulated. A cycle we repeated once more until we were satisfied with the results. No inherent design optimization exists yet. With the recent Engineous Software acquisition, we expect such optimization will soon be accomplished using Isight. For more information on Isight, see http://www.simulia.com/products/sim_opt.html.

In all, a very impressive and well thought out offering.

Timberland Reduces Product Development Time by 33 Percent with Z Corporation 3D Printing Technology

Timberland Reduces Product Development Time by 33 Percent with Z Corporation 3D Printing Technology

New AIA Course on 3D Printing Helps Architects, Engineers and Contractors Improve Project Speed, Affordability and Quality

New AIA Course on 3D Printing Helps Architects, Engineers and Contractors Improve Project Speed, Affordability and Quality

Wow, I found this interesting. I guess all those miniature artists that build scale models will no longer be needed. My old friend Olimpio DeMarco is in charge of AEC business development there. Knowing Olimpio’s skills, in no time this will be the industry standard methodology for AEC projects. Just one more reason for the AEC 2Ders to move to 3D.

Are MSC Software executives giving the company away?

In today’s letter to customers, MSC management announced that the Board had approved a merger with an affiliate of Symphony Technology Group. But the company provided no information as to why this might be a good deal for stockholders, other than stating that “It is Symphony’s mission to partner in helping to build great companies and in enabling growth through innovation.” Isn’t that what MSC management is paid to do? Does Symphony have some knowledge about simulation software? Does Symphony have some knowledge about the engineering analysis marketplace? What are the specifics of how Symphony will improve the company operations? In fact, MSC goes on to say that “We plan no changes to our current product direction or deliverables.” Weird, eh? Further, what does “This new ownership structure will streamline certain business processes that historically constrained MSC.” How is that for obfuscation? Why cannot MSC change their own business practices? After all, the old management left only a few months ago. What a perfect opportunity to change anything amiss.

After looking at some of the financials, we came to the conclusion that this appears to be a great deal for Symphony, and a crappy deal for the stockholders since that will have no way to participate in any upside potential for MSC Software.

While I do not claim to be a sophisticated financial analyst, here are some glaring items about the planned acquisition:

• With 45.2 million shares outstanding, the offer of $7.63 per share yields a net price of $344 million, only 1.35 times gross revenue, an extremely low price for a high tech company with a large recurring revenue.

• At year end 2008, the company had net revenue of $206 million, much of this recurring revenue. Recurring revenue requires less sales and admin overhead than new revenue.

• Yet their ratio of Selling and G&A Expense to R&D was almost 3:1. Compare this to PTC’s 2 to 1, Autodesk’s 2 to 1, Ansys 1.9 to 1 and Dassault Systemes 1.5 to 1. Taking these bloated expenses down could immediately result in an extra $50 million direct to the bottom line!

• On top of this, again at year end 2008, MSC’s current assets exceeded current liabilities by just over $100 million, with virtually no long term debt. This cash is immediately available.

• In spite of spending more than $50 million per year on research and development, MSC has a reputation for being a non-innovator in the industry.

With the cash and improved expenses, in two or three years, Symphony could have all of their investment returned! This appears to be a massive bargain for them. Clearly the company needs to be reworked, but why not manage it instead of selling it? And why give it away?

—-

Disclaimer: None needed – Ray has no financial interest in MSC Software.

ITI TranscenData “imports” Proficiency

In the last week or so, ITI TranscenData announced that it had acquired Proficiency, one of the early entries into the “art” of translating feature based models between CAD systems. I was particularly interested in this announcement because I recalled that Proficiency was the beneficiary of a large venture capital investment. I recalled at least one paper claiming that the CAD migration market was in the billions of dollars. Longview Advisor President David Prawel said, “[their] study showed the CAD migration market of software and services is about $5.7 billion this year [2008].”

To explore what had transpired, earlier today I spoke with Don Hemmelgarn, ITI TranscenData’s president.

Apparently, Proficiency, with a capital investment in excess of $40 million was unable to gain enough market share or revenue to satisfy its investors, who refused to invest more in the company. Hemmelgarn expects Proficiency to add about 20% of ITI TranscenData’s expected revenue of $15 million in the next fiscal year, or about $3 million in revenue, a mere pittance in a $5 billion plus market.

Hemmelgarn is excited about bringing the Proficiency technology into his company, thus adding feature based translation and a 450 man-year investment to their technology. ITI TranscenData specializes in working with large OEM’s with a continuing need for data exchange between unlike systems, counting among their clients the major automotive and aerospace companies. Most important for this clientele is the ability to automate translations and to verify that the translation was successful and accurate. ITI TranscenData software seems to do just that and the company seems to be on a steady upward path in terms of revenue, with year over year growth in the last five years, better than many CAD software companies can claim.

Dassault Systemes cuts Israel SmarTeam development

SmarTeam, a PDM system that originated and was developed in Israel in the mid to late 90’s, was specially configured as an add-on PDM solution for SolidWorks, which at the time had only a limited PDM capability.

In about 1999, Dassault Systemes acquired a 75 percent interest in Smart Solutions, the Israeli company that developed and marketed SmarTeam. Dave Weisberg in his book entitled The Engineering Design Revolution noted that “This package was particularly well suited to users of SolidWorks although the two Dassault subsidiaries operated independently of each other. The SolidWorks version of SmarTeam was called SmartWorks.”

With the interest in and the growth in PDM (PLM), SmarTeam over the years migrated from an independent company with its own sales force, to one falling under the sales umbrella of SolidWorks, to a multi-CAD software organization, and finally, with DS’s multifarious PLM offerings, has now been submerged into Enovia.

From recent press announcements we infer that most development within Israel for the newest versions of SmarTeam has been eliminated. V6 development (the new technology) moved out of Israel to Paris and Boston. Israel continues V5 ENOVIA SmarTeam (the old version) development.

The ENOVIA SMB version, of which SmarTeam is a part, is called ENOVIA Express in V6 R2010, the most recent announcement.

Alas, SmarTeam suffered the fate of so many products. It became so popular that it became bloated trying to support higher and higher end accounts. Its simplicity was lost, and over time its technology became outdated.

GE’s Immelt says U.S. economy needs industrial renewal

We just read an article quoting GE’s CEO Jeff Immelt, who said on Friday, 26 June, that the United States needs to refocus its economy on manufacturing and exporting if it wishes to recover from a brutal recession. He went on to say “The world’s largest economy can no longer count on consumer spending to drive demand, nor can it rely on Wall Street financial wizardry if it wants its population to continue to enjoy a high standard of living. Our competitive edge has slipped away and this has hit the middle class hard.” He goes on to state that “manufacturing should represent about 20 percent of employment.” Which is about 10 percent now. Immelt agrees with what has been obvious to many of us in the CAD industry for years – that many U.S. companies have turned too many core technological procedures over to outside contractors and foreign operations.

The United States needs to increase its reliance on manufacturing and reduce its reliance on financial services and consumer spending to drive economic growth. GE shares have lost 58 percent of their value over the past year, largely the result of falling profit at its GE Capital finance unit [thus too heavy a reliance on its financial sector].

PTC’s new Windchill RequirementsLink application looks very promising

During the PTC/USER meeting in Florida, week before last, PTC announced a new Windchill application – Windchill RequirementsLink.

As one of my key interests is Systems Engineering, and the press info was a bit sketchy, I had a follow on interview with Michael Distler, Director, PTC Windchill Solutions Marketing.

Basically, this application uses a document or input to the requirements, typically a Word doc. A user interacts with the application to “slice up” the document into individual requirements. Each requirement become a separate requirement and then can be “connected to” the part, assembly, or BOM which acts in fulfilling that requirement, almost seeming like a requirements BOM. Interestingly, additional data can be input that provides verification specifications also.

Reports generated from RequirementsLink allow users to check for traceability (which parts or assemblies are related to a requirement), for satisfaction of that requirement and whether any related verification tests have been performed and approved.

My reaction: This is a terrific capability for all engineers, one that is sorely needed by designers, managers, and quality personnel for sharing and collaborating on how requirements are met. Similar capabilities are also available with Siemens PLM Teamcenter and Dassault Systemes SmarTeam (soon to be part of Enovia). RequirementsLink provides a free viewer; the authoring version costs about $2000 per named user. PDMLink is a prerequisite.

None of the mentioned requirements software are yet technologically advanced enough to actually connect requirements to specification driven design. Nor can any actually examine the connected part automatically to determine whether the requirement has been satisfied. This may be a distant goal for future CAD systems.

Contact: www.ptc.com

Teamcenter to operate within IBM’s PDIF (Product Development Integration Framework)

June 18, 2009: Lately we have been reviewing Windchill ProductPoint, a terrific solution based on SharePoint for small users. This announcement focuses on the other end – LARGE customers. We find this particularly interesting because it’s the first deployment on PDIF of a tightly integrated PLM application.

What makes PDIF so interesting? Because it’s an excellent example of IBM using its prowess in services, global clout, and middleware (software enablers) to aim at solutions for large, complex issues, one of which is integrating the multitude of engineering and other disciplines involved in bringing out new products.

IBM’s PDIF has been in the works for several years and under many executives. It finally looks like the technologies to accomplish this have finally enabled their vision to be able to be realized.

As for today’s announcement, Siemens PLM Software announced that it will use IBM’s Product Development Integration Framework (PDIF) as a development platform and integration environment, for a soon to be delivered ready-to-use solutions built on its Teamcenter PLM software portfolio and integrating tightly with IBM WebSphere and Information Management (DB2). PDIF also enables a richer integration between Siemens Teamcenter and Rational Software’s software development platform.

“Siemens PLM Software’s Teamcenter is the industry’s first PDIF-ready platform to deliver tightly integrated IBM middleware offerings that reduce PLM software acquisition and lifecycle costs,” said Michael Wheeler, vice president, IBM PLM and Supply Chain Solutions. “By using a flexible software environment, companies have a framework for marrying key PLM business processes to technology initiatives that offer a structured approach to managing the life of a product,” added Wheeler.

On the call today, Chuck Grindstaff, Siemens PLM EVP and Wheeler discussed the implications to potential customers. Wheeler extolled the virtues of Teamcenter working on their “blue stack”, adapting their SOA solution to PDIF, and altering Teamcenter so it now uses DB2. Grindstaff, in turn, was particularly complimentary of IBM’s DB2, Tivoli for secure controls and backups, and the overall performance. All they would say on pricing is that that the combination looks to be a good value for customers. Wow, when they pack on all the IBM middleware and TC I expect it may be a good value if you can get a lot of users on each system!