Clarity on PLM

I had the chance to talk with … the leadership at PTC and their customers at the recent PlanetPTC conference. PTC took full advantage of the opportunity to update their customers on their progress and future PLM plans at the customer meeting in Las Vegas. As analysts we also had some behind the scenes discussions and a Q&A with a panel of PTC execs.

Most of the press and analysts I know were clamoring for an update and some insight into the much anticipated launch of the Creo design apps. They got that, but also a full helping of news on PTC’s PLM offerings – or what PTC calls their “Product Development System.” For the first time, I felt that PTC was giving equal weight to product development and PLM as they do to design and authoring. Pretty important shift, and one that shows PTC is in touch with the market and their customers.

Let’s Talk Creo – but not Just Creo

OK, Creo got deserved attention. After all, the Creo suite is a major change to PTC’s offerings, and one that PTC made a big bet on. The “Lightning” launch which resulted in Creo was a big move for PTC and this was the coming out party. To me, time will tell whether the launch is a big win or just proof that they are delivering. I am not a CAD expert and will defer to other analysts (and perhaps more importantly customers) on whether Creo meets the hype. But at a minimum the product is released and it looks like they are off to a good start.

But the discussion on the main stage did not start with Creo. PTC had three major focus areas:

• Creo
• Windchill  10 Updates
• The Acquisition of MKS

These updates received a significant amount of attention, and show that PTC gets data management and business process – and not just for engineers. I mentioned my observation that PTC is delivering solutions across the enterprise in a way that reminds me of my “four dimensions of PLM expansion” in a hallway chat with CEO Jim Heppelmann. He confirmed that PTC will focus on delivering value where they can find unsolved problems in the enterprise, but only when they can bring something unique and highly value-added to the solution. Jim is not playing catch-up or feature wars with his competition, he is willing to develop a strategy that provides business value where his customers have problems. That sounds trivial, but I believe it is a fundamental statement on PTC’s changed view of customers. Customers are being listened to and embraced. In fact, Jim’s entire keynote started talking about conversations with customers in different roles in the manufacturing enterprise.

Enter … Enthusiasm

Another key takeaway from the conference is enthusiasm at the conference. I have not seen PTC employees – let alone their customers – with this level of excitement since…. OK, never. People are proud to be PTC right now, and that shows in the progress they are making. I will try to follow up with more detail on the Windchill, MKS, and the newly announced Service Information Systems updates shortly – after all – I am an “enterprise and product development guy” and not a CAD guy. But the thing I wanted to get across is that PTC is innovating across the lifecycle, focusing on customers, and excited about it. Sounds like a winning combination to me. Last year’s user conference was interesting, this meeting was actually exciting. I welcome opposing opinions, as usual, but you have to admit PTC has been busy!

So that’s what I hear from PTC, I hope you found it useful. What do you think? What else should I have asked them? What else should PTC be focusing on?

I had the chance to talk with … Dassault Systemes recently about acquiring process PLM vendor Enginuity PLM, see the announcement here. As soon as I saw my friend Dr. John Sottery‘s name on the webcast along with Enovia CEO Mich Tellier, I had a pretty good guess about what they were going to tell me. DS made an investment in taking their PLM solution for recipe-based industries like CPG, food & beverage, personal care and pharmaceutical to the next level. This move combines strength on strength, because Enovia and Enginuity PLM serve very different roles in the R&D and product development process.

What did they do Before the Acquisition?

CPG, recipes, and formulas are not new to Dassault Systemes. DS acquired MatrixOne in 2006, and the MatrixOne platform is now the architecture behind Enovia V6. MatrixOne enjoyed some significant success in the CPG industry, and include specification management capabilities that are running in a number of CPG companies, most notably P&G. As an interesting note, P&G is also an Enginuity customer so they have already been running both solutions. DS was already competitive in the CPG industry, and frankly didn’t have much to offer in the way of formulation or recipe design. This acquisition changes that.

Now what do they Offer?

When a big company like Dassault Systems buys a smaller company like Enginuity, there is typically instant synergy. That is true in this case because:

• Enginuity provides deep domain expertise to DS.
• DS provides scale and market access that Enginuity could not achieve.

That is a typical scenario that happens when a suite provider like DS buys a specialist like Enginuity. But the synergy here is even more pronounced because:

• Enovia brings specification management, collaboration, and other PLM capabilities.
• Enginuity brings R&D tools to the chemists, and was built to fit into a broader PLM environment.

As a bonus, other DS brands have a lot to offer to the CPG industry as well. This includes 3DVIA with their shopper solutions and CATIA and SolidWorks for packaging design. I believe this provides a pretty unique and compelling offer.

So Where Does Enginuity Fit in DS?

One of the interesting implications of the acquisition is considering what type of solution Enginuity really is. DS is adding Enginuity to the Enovia brand, which makes sense. I know Enginuity has been labeled a PLM system. But I have known Enginuity for years, and I will be the first to tell you that I believe Enginuity is much stronger as a design tool than a PLM system. In fact, I would go so far as to say it is more like “CATIA for chemists.” But that is good news, because Enovia already has the PLM capabilities and Enginuity fills the design gap. Not to mention that Enginuity adds compliance capabilities to help formulators develop products that not only match product performance specifications but also meet regulatory needs as well. Read more about how compliance puts a “hidden tax” on innovation in the process industries here, in fact I interviewed a number of Enginuity customers for this research.

Why is it important to look at Enginuity as a design tool? Partially because it makes it clear that it is a complementary solution, but more importantly because it opens up the possibility that they will build even more advanced tools for formulators . Enginuity already handles more complex design functions than any other formulation system I have seen. On the phone, Dr. Sottery mentioned simulation and predictive modeling as well. Those kinds of sophisticated design tools are more like a specialty design solution in CATIA than what PLM can already offer (collaboration, change management, IP protection, etc.). With the resources of DS, Enginuity has the opportunity to explore those potential capabilities more deeply.

The key that makes this acquisition a good move is that the Enginuity solution is built based on strong formulation knowledge, and helps chemists develop the recipe in the first place. That is the part that has been missing from the major PLM systems. PLM can manage the specs well enough, but provided little value to the innovators at the bench level. Enginuity changes that. So I agree with DS for including the offering in Enovia, but for clarification I think that it is much more of a design tool that now fits in well with the existing specification management / PLM capabilities already in Enovia (again, from MatrixOne). To me, this adds to the synergy that DS and Enginuity gain from being a part of the same business.

Implications for Manufacturers

Some of you may know I spent quite a bit of time working with software for the formula-based industries, so this is an area that is near and dear to my heart. I have long been a proponent that recipe-based manufacturing (processing, dare I say) requires different solutions than discrete PLM offers. This move by DS opens up the opportunity for those that produce from a recipe or formula to arm their chemists and formulators with tools they need to innovate along with the PLM solution to support the enterprise in bringing the product to market. This is what we had the vision for ten years ago when I was with Sequencia (sold a decade ago), and I am happy to see that the solution is available from a major PLM brand.

So that’s what I hear from Dassault Systemes and Enginuity, I hope you found it useful. What do you think? What else should I have asked them?

I had the chance to talk with … Dassault Systemes and IBM today about Dassault’s announced acquisition of parts of IBM’s PLM business. For many, this is the dissolution of a long-standing marriage that they are comfortable with and makes sense. They may mourn the loss. To me, this is just the final correction to a legacy relationship that has served its time and purpose. Dassault Systemes (DS) and IBM have been great partners – and still will be. But this move will allow IBM and DS to focus on their core competencies and allow DS to continue pursuing their PLM vision.

Dassault Systems Acquires IBM PLM

A Market Correction, a Return to Core Competencies

The relationship has evolved over time. What made sense when the relationship started has changed based on the maturity of the PLM market. DS PLM software is being used by a lot of major companies, and they have their own choices for their systems integrators and consultants. So over time, DS has developed relationships with other leading systems integrators. In the same way, IBM customers may be using DS solutions, or they could be using software from Siemens, PTC, or others. So IBM has developed relationships with these PLM companies. This is just the natural way of things in a multi-vendor market, and it is probably the most beneficial relationship for DS and IBM customers.

To me, this is the natural course of things and it allows each company to focus on their strengths:

• IBM can now focus on systems integration, business consulting, and infrastructure like middleware/SOA/business intelligence/cloud computing in a multi-vendor world. IBM is not out of the PLM business. In fact, PLM is still very strategic to IBM. But directly selling and servicing PLM software from one vendor no longer makes sense. IBM will transition their sales and support teams, but retain their PLM Centers of Excellence, domain expertise, and consulting resources. IBM will still be in PLM in a big way and can focus on their significant PLM opportunities, but in a way that makes more sense for IBM.
• Dassault Systemes can now focus on selling software and servicing their customers. This move strengthens the DS team, and gives them more control of their sales and support business because it is now fully a part of DS, and working with their other PLM partners. DS can now focus on being a software vendor without worrying which customers are direct customers and which are IBM customers. DS benefited greatly from the IBM relationship over the years, but has been ready to move on for some time. And they made a bold market move to make it happen.

This move, although significant, is simply a matter of core competencies and focus. The legacy relationship just didn’t continue to make sense at this point, and it has evolved in this direction over the last several years.

Impact on the PLM Market

This is good for the PLM market, and I don’t think it will be a huge surprise that these two PLM leaders have returned to more focused roles. The way that it happened (as an acquisition) accelerated a needed change, so that might be a surprise. I think this is good for everybody. DS partners with lots of consulting firms and IBM partners with lots of software vendors. Now, none of them have to be concerned that IBM and DS are unnaturally tied together. This is a correction of a legacy issue in the PLM ecosystem, in my opinion. Now, all is right with the universe.

This had to happen, and the IBM-DS relationship has been evolving in this direction over the last several years. The real question that was outstanding in my mind was how DS and IBM could take the final step to return to more focused roles. The end result of an acquisition is probably the cleanest way for this to happen, and one that I think should work well for both businesses. I would not have predicted an acquisition, but now that it is done I think it was a great resolution. It is a win-win for both companies.

One last piece to consider is that Dassault works with IBM, but also works with Microsoft and others from an infrastructure point of view. Having IBM and DS play more focused roles in the PLM ecosystem also makes those relationships more straightforward.

Impact on Manufacturers
The net impact on the manufacturing industry? As much as this change means to the market (and to IBM and Dassault) I think that customers will see little difference. The same people that were supporting them before will continue to support them, although they will have a different logo on their business card. IBM is still strongly in the PLM business, so those IBMers that stay in IBM will still be available as well.

So that’s what I hear from DS and IBM, I hope you found it useful. What do you think? What else should I have asked them?