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Are You Changing CAD Tools?

Are You Changing CAD Tools? What You Should Know shares survey results exploring the motivating factors behind changing CAD tools as well what companies can expect when making a change. The research examines the experiences of companies who have gone through a CAD change. It reveals key metrics such as … [ read more ]

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The CPG Digital Thread

The The CPG Digital Thread ebook shares how consumer packaged goods (CPG) companies can streamline their product innovation and commercialization practices by innovating along the digital thread. It shares how companies can simultaneously enable R&D to innovate more efficiently while capturing the resulting … [ read more ]

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Solving the PLM Impasse for Midsize Manufacturers – Guest Post on Dassault Systemes

Jim Brown contributed a guest post to the Dassault Systèmes blog sharing some research on PLM for midsize manufacturing companies. The post explains how these smaller companies sometimes feel stuck between the need for a full featured PLM system to get their engineering and product development processes under … [ read more ]

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SaaS-O-Matic Spoof and Interview on True Cloud PLM with Excellims

How do you tell true cloud PLM software versus other SaaS options and why is it important? We start this episode by poking some fun at old software disguised as cloud. Then, Jim Brown interviews Excellims Corporation's VP of Engineering Mark Osgood who shares his experience outgrowing spreadsheets for managing … [ read more ]

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IoT Makes As Good as the Day I Bought It a Thing of the Past Guest Post on PTC’s Product Lifecycle Report

Jim Brown penned a post on evergreen design for PTC's Product Lifecycle Report Blog. The report, IoT Makes "As Good as the Day I Bought It" a Thing of the Past, shares the exciting potential available from smart, connected products that can be updated in the field to correct issues, improve performance, or add … [ read more ]

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Research Rap: Impact of Economy on Smaller PLM Vendors

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A quick peek into some research on … how the economy has impacted smaller companies in the engineering software market. This is a follow up to last my post on the impact of the economy on the engineering software market as a whole, with the detail I promised on smaller vendors. Last week I tipped my hand by saying that  smaller companies believe they will weather the storm, and some feel they will come out stronger on the other end. That generated some interesting discussion, so I thought I should hurry to post some detail, so here it is…

Research Background
My presentation at COFES indicated that the engineering software market is staying positive in challenging times. The research, conducted jointly by with Tech-Clarity, Cyon Research, and Design Insight, was presented at the annual “Congress for the Future of Engineering Software” and was the result of 1,000 survey responses. As I stated last week, the research was not intended to be an economic forecast, but instead an indication of the sentiment of the industry. The study was designed to guage respondents’ opinions about the market, and should be take as such.

Research Results – Smaller Vendors
The survey allowed respondents to classify themselves as customers (those that use engineering software), vendors, or channel (among others). Vendors were then broken down into the following two major categories:

  • Broad Vendor – (broad suite) – a software company that offers a broad range of solutions
  • Targeted Vendor – (targeted solutions) – a software company that offers one (or a few) best of breed tools

I was particularly interested in how the smaller vendors were weathering the financial storm. These smaller vendors play an important role in the PLM ecosystem, frequently pushing the boundaries of current functionally (I call these companies “innovators”) or serving a niche solution or population (I call these “specialty vendors”). These companies typically provide deeper capabilities for a specific industry, user population, or process that the larger vendors don’t support as well. These companies help to fill in the gaps for manufacturers while they wait for the larger vendors to address these needs (of which, some will probably remain unmet).

Impact of Economy on Smaller Vendors

So what is happening to these vendors? The chart above shows that 75% felt that these companies would struggle, but survive. Given how drastic and unpredictable this economic downturn has been, I find that a surprising level of confidence. Still, 32% of respondents believed that smaller companies would go out of business, and 28% believed they would get acquired. Note that while this was supposed to be the “most likely” outcome, respondents could pick multiple outcomes. I believe this data is showing that respondents believe that some smaller companies will survive, and others will be acquired or go out of business. This is not an “either-or” situation, the scenario will be unique for each of the smaller vendors.These results are far away from the “doom and gloom” that are prevalent in some other industries.

My favorite view into this subject can be seen in the table below. When you analyze the opinions of what will happen to the smaller vendors based on who is commenting, you find a few interesting things:

  • Targeted vendors don’t think they are going away
  • Bigger vendors think they will be acquired (by them, I assume?)
  • Bigger vendors are the most pessimistic about specialists, but interestingly the customers disagree

Economic Impact on Smaller Vendors

So the view from the smaller vendors’ perspective is not as bleak as some might thing. On the other hand, few believe it’s “business as usual.” These are tough times, and there have already been corporate casualties.

My Thoughts
What does all this mean? My opinion is that the engineering software market – as a whole – will struggle but survive.The smaller vendors, who are more nimble but also more vulnerable, believe they will stand the test of time. This is good for all of us, as they typically push the limits of the current solutions and help bring more innovation to the software market.

Implications for Manufacturers
For manufacturers, you should make sure to know how healthy your vendor is, but don’t panic. I don’t believe that a “rip and replace” strategy to save on software and maintenance costs will be easy to justify as a short-term reaction. Stick with your strategy, but update it based on the economic realities. If you are in the position to take advantage of it, this might even be a pretty good time to look for some deals from your vendors.

So that was a quick peek into some recent research on the impact of the economy on smaller vendors, I hope you found it interesting. Does the research reflect reality? Do you see it differently? Let us know what it looks like from your perspective.