Artizone to maintain and develop Dassault Systemes’ SmarTeam

1 Dec 2009: Rockaway, NJ. Yesterday we spoke with John Squire, Dassault Systemes VP of Industry Marketing for Enovia. Squire reports to Mitch Tellier, CEO of Enovia. We spoke about the future of SmarTeam and the reason and logic behind creating the Israeli based artizone company. The answers and our assessment follow.

To understand artizone, you first need to understand the direction of SmarTeam V5. To put it bluntly, SmarTeam has no place in DS V6! At least not in its current state. The logic being that with the new architecture of Enovia V6, all of the functions performed by SmarTeam are, or soon will be, incorporated in Enovia V6. Further, V6 relies on a single architecture and environment, thus there seems no place for a standalone PLM system.

To ease the transition, DS offers, or will soon do so, migration tools to support moving to either V6 PLM Express or directly to Enovia V6. V6 PLM Express is the pre-packaged tool for SMBs. It includes pre-defined roles, data types, and typical data flows. Today, Enovia V6 can be configured to appear very similar to SmarTeam V5. In the future, Squire promised auto-mapping tools to convert SmarTeam even more easily to V6 PLM Express. No prices were forthcoming about what such an upgrade might cost.

Thus, a careful reader can see that there is NO future for SmarTeam within V6 as an external database system. One might wonder why DS dismissed modern tools for synchronizing databases such as XML?

Given that there is no future for SmarTeam in V6, the question arises as how best to support their 8,000 existing customers, some 60% of them using CATIA as their primary CAD system, 20-25% used by SolidWorks and multi-CAD customers, the balance being used by enterprise users, BOM management, and ERP integration.

Earlier this year DS began to consolidate V6 development into fewer sites, closing down 3 or 4 former development sites, one of which is DS-Israel, the primary developers and maintainers of SmarTeam. Apparently few were willing to transfer out of the country and DS felt that to maintain a DS site in Israel solely for the maintenance and future support of SmarTeam V5 would risk losing the best and brightest developers. Thus was hatched the idea to form an Israel based, independent company (artizone) that would have an exclusive contract with DS to maintain and develop the product in the future. DS maintains all contacts with customers for sales, revenue, and maintenance support.

Rather than maintaining the outmoded SmarTeam software as a portion of DS, Artizone employees would have now an ownership stake in the company and could also begin to develop non-competitive (with DS) software. Several press releases suggested that one new area for artizone would be retail shopping software, however, any other areas that are non competitive with DS are possible growth opportunities.

So, artizone starts life with about 75 ex-DS highly skilled database employees, some funding from DS (the amount was not divulged nor was the DS ownership portion, if any), a long term contract with DS loaded with strict performance measurements, skilled executives from DS, and on-going good will from DS.

I asked Squire what message he would like me to tell you. Here is what he said:

• The future of SmarTeam is secure
• SmarTeam is not a dead product
• SmarTeam is still a DS product
• SmarTeam has an enhancement plan
• DS will support it far into the future (not defined as to how far)
• When the time is right there will be a smooth migration to V6.

Are there risks for SmarTeam users? You bet. Artizone software developers might soon discover that their future is in new products, not maintaining a system set for extinction. Future enhancement plans for SmarTeam were not discussed, however, one might assume that DS will spend most of its efforts on enhancing V6. Squire would not discuss whether there are or might be any revenue sharing plans between DS and artizone; such plans might greatly affect artizone development plans.

At least, in the short term, SmarTeam customers will see little difference in sales or support for the product. However, SmarTeam customers would be wise to soon begin planning a migration from SmarTeam, especially if new function is desired. CATIA customers should not delay; other customers should evaluate all options for moving to either Enovia V6 or to another PLM system. Why wait, even though, there appears no reason to worry about short-term disruptions.

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Autodesk Analyst Meeting Highlights Breadth and Future Reach of Autodesk Inventor

On November 3, 2009 I had the opportunity to attend a one day meeting for industry analysts at Autodesk’s Manufacturing Industry Group headquarters in Lake Oswego, Oregon.

The themes for the meeting were loud and clear:

• With Autodesk’s 9 million users, and 1900 channel partners, the company offers global solutions and has enormous financial strength.
• Autodesk’s manufacturing group’s revenue comes, surprisingly enough, mostly from medium and large customers.
• With its recent technology acquisitions and their well thought out and executed integration into the product line, the manufacturing group now has a wide breadth of solutions for digital prototyping. These span the range from concept design through design and manufacturing.
• Different than many of its competitors, Autodesk likes to sell “boxed” products, not solutions and consulting to make more incomplete solutions work.
• During the meeting Autodesk broke down their manufacturing design automation into four major areas: digital concept creation (Alias), digital engineering (Inventor, AutoCAD), digital simulation (Inventor Simulation, Moldflow, Algor), and a new digital factory offering based on NavisWorks.
• An open environment, able to read from most many CAD vendors directly and most standards formats.
• Autodesk also stressed its technology leadership, focusing on Autodesk Fusion, direct model editing capability that “unites direct and parametric workflows,” better use of screen real estate, Showcase for amazing visualization, a factory offering, and the upcoming release of Inventor Publisher.

• We hope to soon spend some in-depth hands-on with Fusion and will let you know our opinion as to exactly how integrated the direct modeling and parametric workflows are. Some of our questions are exactly how much of the direct modeling changes are captured in the history tree and whether all direct changes can be captured. More in a future blog.

Carl Bass, the Autodesk CEO, spoke about how Autodesk caused and continues to cause “low end disruption” in the engineering and design marketplace because Autodesk shipments outstrips its competitors by wide margins. He expects such disruptions to continue in modeling and simulation. Bass also speculated on the possible impact of cloud computing, both to vendors and users. Business model changes will be needed to both, including pricing for the interactive and compute intensive portions.

Our conclusions

For engineering, Inventor is very well positioned, and offers terrific value for about $7K USD. So far, many of the Autodesk acquisitions have automatically been added to the Inventor Professional version at no additional charge. Industry leading positions are evident in sheet metal design, plastic part design and analysis, mold tooling, mechatronic control systems design tools, high value simulation (once Algor is fully integrated), and rules based design (with Intent and iLogic).

In digital concept design, Alias leads the way, especially in automotive and consumer design, and is well integrated with Inventor. Recently, Autodesk introduced the first CAD/design application for the iPhone – SketchBook Mobile, costing a mere $2.99.

In simulation, with its recent acquisitions of PlassoTech, Moldflow, and Algor, Autodesk aims to have its engineering customers engage earlier in the design process and appears well on its way to doing so. Algor’s former CEO, Teresa Anania, heads up this effort, knows the customers needs, and is aggressively moving these products into the mainstream.

For the factory, Autodesk brings together AutoCAD (widely used today for plant layout, Inventor for equipement and tooling design, Revit for facility design and BIM (building information management), and Navisworks for visualization and simulation. This offering is expected to challenge the price points of competitive offerings of Dassault Systemes’ Delmia and Siemens PLM Software’s Tecnomatix.

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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?

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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].