CIMdata's Vice President, Stan Przybylinski, recently virtually sat down with Vincent Frerebeau, Worldwide Cloud Sales Director for Dassault Systèmes, to learn more about the company's cloud strategy.
Let's find out!
The conversation was edited for length and clarity.
How important are cloud-based solutions to the strategy of Dassault Systèmes?
For us, the cloud is critical to our overall strategy. At our Capital Markets Day last week (November 17, 2020 - Ed.) our management discussed several topics related to the cloud. During the event, they stated the importance of the cloud to our strategy very clearly. In the next 4-5 years cloud will account for about one-third of our total revenues, which we estimate will be $2 billion at that time. In their remarks, our management emphasized our intent to grow our cloud business. Of course, our Medidata acquisition contributes to this number, but it also includes significant growth from our existing solutions delivered on the cloud.
Our strategic intent should be clear from its impacts on our product development process. For the first time, in 2020, Dassault Systèmes released our entire 2021x portfolio on the cloud six months before it was available on-premise. Our development process is cloud-first, and our full industrialization process is focused there first. Our cloud offerings on the 3DEXPERIENCE platform continue to expand to include new roles and capabilities.
Please describe the ecosystem of infrastructure, applications, and partners that are part of your offerings?
As you know, in 2017 Dassault Systèmes acquired a majority stake in Outscale, a French company that provides enterprise-class cloud computing infrastructure services (IaaS) to customers through its ten data centers in Europe, North America, and Asia. Today that business unit is branded 3DS Outscale, and it is our default primary cloud infrastructure.
In addition, Dassault Systèmes has a strong partnership with Amazon Web Service (AWS), which is our IaaS provider for big data, our BIOVIA solutions, DELMIA solutions, and some legacy applications. We are currently working to make these offerings available on 3DS Outscale.
In mainland China, we rely on partnerships with AWS and with Huawei to deliver our offerings securely in the China market. These represent our infrastructure bets for the long term.
When it comes to our applications and other offerings, we released our 3DEXPERIENCE Marketplace and are growing the content and services part of that offering. The Make and Part Supply parts of the Marketplace have been available for some time. We are now expanding the Marketplace to include engineering services partners that can publish information on their portfolio of services.
We will continue to add new kinds of offerings to the Marketplace in 2021. We expect to have some new applications related to the enterprise integration framework that we recently released. Now some of our partners are able to develop integrations with enterprise systems. Today our Marketplace runs on 3DS Outscale.
How does your solution and its go-to-market address the issues raised by your customers and prospects (e.g., packaging, licensing, deployment options)?
Our Resellers are a big part of our business, and we continue to interact with them, empowering them to sell the cloud and on-premise offerings. Of course, we also help them evolve their services capabilities, a somewhat different relationship than before, different than the implementation services many of them delivered. With Dassault Systèmes delivering the software directly to the customer, many of our Resellers are looking to add vertical software and services on top of the 3DEXPERIENCE platform and solutions. We are working with our channel to have them offer more services than they have in the past. This is something that we really started discussing with them in the middle of last year to get them to think more about vertical offerings and to use our platform to deliver them. This helps them learn the experiences that they can develop and deliver to their customers. We have maintained a similar distribution agreement and framework for all of our resellers. It focuses on skill development around the many roles (products) in our solutions as the total number of roles is growing very fast.
While some providers moving to the cloud have decided to disband their existing channel and to create a new one, Dassault Systèmes is taking a different path, helping our channel partners to build new skills, new services, and offerings of their own based on our platform.
How would you describe your primary target customers (e.g., startups, small-to-medium-sized enterprises, anyone)?
The overall strategy is to have all of the 3DEXPERIENCE platform offerings on the cloud. Given that statement, there is no real distinction in customer size between small and large customers. We started with small businesses because we wanted to diversify our customer base to promote the 3DEXPERIENCE platform to companies of all sizes, and in new domains and segments. This helped us validate our concept and functional scope.
Now, after five years on the market, customers of all sizes are benefiting from our approach. In 2020 we have close to 5,000 customers with one user and other customers with 5,000 users, a very large spectrum of “typical” customers in a range of industries. For example, we have customers in the construction industry, such as SNCF. Thales, a large French defense contractor, is using the 3DEXPERIENCE platform on the cloud. Hundreds of startups are relying on the system daily. There is no distinction in terms of sizing; our cloud offerings scale very well.
We continue to use cloud to support our diversification strategy. Every time we enter a new domain, a new market, a new kind of customer, we always position “cloud-first.” Step by step we are addressing our installed base. We want to have the proper tools to migrate our customers. These are not only technical tools but also from the pricing side as the model has changed from licensing a piece of software to subscribing to a solution that we are able to scale. We are looking at our installed base and at moving them to the cloud. 2020 was a pivotal year in this approach, especially for our customers that were forced to maintain digital connectivity across a more disconnected and disperse team of employees working from home. Many of our customers are looking at the migration to cloud, our “Road to Cloud” programs.
We introduced the Store capability in mid-July. When you go on the 3ds.com website, you can buy cloud software on your own; you do not need a salesperson to do this. This change is really showing that we are addressing customers and prospects of all sizes.
For our traditional desktop applications, such as CATIA, we are running the desktop version in the cloud, but we also have a large set of Web-based complimentary applications. We are currently developing fully web-based applications for design, simulation, and rendering. We are also leveraging high-performance computing (HPC) resources directly in the data center. Users will just buy tokens for the use of these cloud-based offerings based on their consumption.
Given that we are working with several infrastructure partners, we have to make sure that these technologies are available from all of them so that we can consistently use this technology to deliver our portfolio to our customers around the globe.
Can you provide any information on your installed base that are in production: how many customers, their industries, etc.? How well has it been growing recently and what do you expect over the next 2-5 years?
During the Capital Markets Day, we confirmed a number we shared months ago: about 20 million cloud users. This is consistent with our cloud revenue growth targets of $2 billion in cloud revenues in 4-5 years. Medidata will provide about half of this figure, and if you look at the cloud growth from the rest of our portfolio, it will be about 100% YoY growth to get there.
How are your offerings going to evolve in the short to medium term (1-3 years) – what are the primary themes/strategy on your roadmap?
Today, all of our legacy products are not yet on the cloud. Only a small part of GEOVIA’s offerings are on the cloud today, same with BIOVIA. But all brands have some applications, roles, and processes available on the cloud today. CATIA is 100%. SIMULIA is almost 100%. Not all solutions are at the same level of maturity, but the overall strategy is the same.
We are writing the applications to ensure that they are cloud-first, which means a high level of maturity, security, and a high level of upgradeability. We rewrite the applications when it is necessary. One of the key characteristics when we do rewrite the applications is to ensure they comply with cloud standards. You have to consider how best to leverage the data center capacity versus the client. For example, with CATIA, for each and every new application, we think about how to reduce the hardware pre-requisites on the client-side so that everything can be run on a tablet, an iPhone, or whatever smartphone.
More and more, we are developing what we call xApplications (xApps), which are pure Web-based applications, e.g., xDesign. At each and every functional delivery, we are adding more and more roles. For example, recently, we added one related to marketing media. Prior to that, we added a CATIA application for 3D printers. This is a key element of our product strategy and roadmap.
Then we have two other key elements beyond developing applications and roles. One important attribute is the openness of the 3DEXPERIENCE platform so that our partners can easily create services and content. This is related to our previous discussion of the Marketplace, expanding it to a marketplace of services and content. We also want our partners to develop Business Experiences, which we use to describe development, data analytics, and decision tools for the entire organization.
This blog post is part of a collaborative research program on adoption and use of cloud/SaaS PLM solutions. CIMdata is looking for industrial respondents for a survey that CIMdata is running on this topic: [Take the Survey]
I look forward to hearing your comments and hope you are able to take the survey!
Stan
