Engineering Software Market Predictions from the COFES Crystal Ball


For the past four years, Tech-Clarity and Cyon Research have conducted a short market survey of the participants in the engineering software market. Each year we have presented the results at COFES and had some interesting discussions based on the data. This year, we turn the “crystal ball” towards the future as the economy takes second stage to growth strategies. What do we, as a software engineering market, predict for 2012 and beyond? Take a look.

Note: Insert disclaimer here that Tech-Clarity doesn’t make market predictions and does not, in fact, own a crystal ball of any kind. In fact, I am not sure we have anything crystal at all. Instead, we try to ask the people that already know the answer – those that are developing and acting on the 2012 strategies. What I am sharing here is what they have to say.

It’s (No Longer) The Economy, Stupid

When we started our work on this with Peter Marks from Design Insight in 2009 we asked what people wanted to know from their peers in the engineering software market. What we heard back was clear. People wanted to know what everyone else was doing in those turbulent economic conditions. Now that we are in recovery, talking about the economy is boring. Instead, we are having fun talking about how to best take advantage of the recovering economy. To gain some historical perspective, you can start with the summary post from 2011 here and follow some links backward. Or, keep reading and learn what is coming next.

To quickly touch on the economy as a backdrop, however, the respondents (including customers, software vendors, hardware vendors, channels, service companies, and others) indicated the following:

  • About ½ said they expect to see continued recovery in the engineering software market
  • About ¼ said the market would either accelerate or hit a plateau and level out

Pretty clear, right? What was also interesting is that we had much better alignment between what the vendors believed and those that were signing the checks (the customers). In the past, the vendors were optimistic. This year, the opinions are relatively similar (see chart).

 OK, Then Now What?

In 2011 the top strategies were clearly growth-oriented. So in 2012 we decided to ask those selling into the market where they expect to see this growth. The results surprised me. Almost one-half (45%) said they expect to sell to companies that don’t have a solution in place or have a “home-grown” solution – also known as “greenfield” sites. That was a shock to me. Are there really that many companies that don’t have solutions? In PLM, which is one of my main focus areas, I know that to be true. There are other places companies expect to grow as well. Other sources of growth are to sell more software seats to existing customers (expand usage, 42%) and sell new products to existing customers (35%). These aren’t surprises, existing customers are typically much better sales prospects than brand new customers. This is a very optimistic view, and one that indicates sustained growth in engineering software markets. Looking at the vendors’ market results, their optimism seems to be well founded.

What Will Impact Us?

We also asked what market trends would impact their companies the most. We asked companies to tell us what they are paying attention to (on our radar), what they are currently implementing at clients (implementing), and what they are updating products for (acting). There was a lot of overlap, thankfully, but a few things did stand out.

  • People are paying attention to delivery models (such as cloud, SaaS) – but fewer companies are acting on it
  • Integration is getting a lot of attention in the market and in practice (including integration of design tools and integrating design with business)
  • Systems Engineering has sprung up as a top initiative
  • Companies are taking advantage of new devices and hardware

What Else? Why the Cloud of Course!

OK, we couldn’t let the opportunity pass to ask what people thought the market would do in response to new, cloud-based PLM and BIM solutions. It would be hard to ignore the fact that Autodesk entered the PLM market with a bang this year. They are not the only cloud solution, of course, but a real potential market disruptor. So what does the market think will happen? Almost 1/2 (38% + 10%) say the overall market for the solutions will increase. And before you say that will only be for smaller companies, the 10% were the companies that said it would increase for smaller companies only. If the survey is right, the impact of cloud will be real and significant. And by the way, the customers were the most optimistic about growth, meaning they are really giving it some thought.

Those are the highlights, I hope you found them interesting. Please feel free to look around the website to check out our research and read our Clarity on PLM blog.