CIMdata Reports Continuing Strong PLM Market Growth

CIMdata PLM Industry Summary Online Archive

13 April 2005

CIMdata News

CIMdata Reports Continuing Strong PLM Market Growth

According to figures released from consulting and research firm CIMdata, Inc., the worldwide Product Lifecycle Management (PLM) market overall growth approached 10% to reach $16.9 billion during 2004. This performance reflects strength in the global economy and confidence in PLM as a business imperative by industrial companies. CIMdata forecasts overall PLM investments will continue growing at a solid pace over the next five years reaching almost $25 billion by 2009 (as shown in Figure 1) , for a compound growth rate of approximately 8%.

Figure 1. Overall PLM Market Growth History and Forecast
(Estimated for 2005 to 2009)

CIMdata defines the PLM market as comprised of two major segments - authoring and analysis tools (such as CAD/CAM, MDA, EDA, CASE, etc.) and collaborative Product Definition management (cPDm). (see the definitions at the end of this press release). According to CIMdata, PLM growth was higher in the cPDm segment, which reached $5.4 billion in 2004 – an increase of approximately 17% over 2003. All cPDm sectors recorded solid growth during 2004.

CIMdata predicts the cPDm portion of the PLM market will exceed $6 billion in 2005 and reach almost $11 billion by 2009 for a compound annual growth rate (CAGR) of 15% (as shown in Figure 2). The tools portion of the PLM market is estimated to grow at a CAGR of 4.5% over the next 5 years to reach $14 billion by 2009.

Figure 2. cPDm Market Growth History and Forecast
(Estimated for 2005 to 2009)

“Increased levels of investment in both new and expanded PLM solutions, affirms that companies clearly recognize PLM as fundamental for improving their top and bottom line performance. More companies are committing to PLM while current users are continuing to expand their PLM solutions,” said CIMdata President Ed Miller.

According to Miller, “companies around the world are recognizing the critical role that both product and process innovation is critical to business success. This executive-level awareness is fueling investments in collaborative initiatives that are at the heart of PLM.”

“Senior-level executives now recognize that PLM is critical to business success,” explained Miller. “PLM supports innovation-oriented initiatives such as integrated product development, design collaboration, intellectual supply chain management, and global resource utilization: initiatives that can make or break a company.” Miller added, “PLM enables businesses to transform their processes so that they can operate more innovatively and bring innovative and profitable products to market effectively -- it is truly a competitive necessity for companies that want to succeed in their markets. With so much at stake, companies are implementing PLM solutions in increasing numbers.”

Strong Growth in All Sectors

“A wide range of companies supply PLM-related software, applications, and services,” explained Ken Amann, CIMdata Director of Research. Overall, PLM market leaders include companies from many sectors with some focused on specific technologies or industries such as MDA, EDA, CASE, or analysis, while others are focused on providing broad management systems that provide a backbone for overall PLM initiatives. Some PLM solution suppliers are partners of multiple technology suppliers, combining technologies from multiple suppliers to deliver enterprise PLM solutions. Because of their diversity, many are not competitors, but complementary, with each providing components of an overall PLM solution.

Mr. Amann further stated, “cPDm growth was solid in all industry sectors and in the three major geographic regions – the Americas, EMEA (Europe, Mid-East and Africa), and Asia-Pacific. Automotive and High-Tech continue be the largest cPDm adopters, but all major sectors experienced growth during 2004.”

The Americas grew by 20% while both EMEA and Asia-Pacific had growth rates over 16%. The revenue gap between the Americas and EMEA continued to narrow and Asia-Pacific continued its increase in both market share and overall revenues (see Figure 3).

Figure 3. cPDm Geographic Distribution – 2004
(Distribution based on CIMdata revenue estimates)

Figure 4 presents the industry segment cPDm investment distributions.

Figure 4. cPDm Industry Segment Distribution – 2004
(Distribution based on CIMdata revenue estimates)

Comprehensive technology suppliers (e.g., Agile, IBM/Dassault, MatrixOne, PTC, SAP, UGS, etc.) represent the foundation of cPDm and are expanding their product suites in response to market requirements. “Increased investments were driven by the broadening scope of enterprise-wide implementations, expansion into new areas such as digital manufacturing, portfolio management, industry-focused packaged solutions, and integration with other business initiatives such as customer relationship management,” explained Amann. Comprehensive PLM technology suppliers are packaging their products into solutions that focus on, and support the practices of specific industries. “The growth of supplier-developed ‘packaged solutions’ significantly enables small- and medium-sized businesses to adopt PLM solutions,” according to Mr. Amann. “The mid-market (companies with less than $1 billion in revenues) continued its rapid growth. PLM solution providers are fine-tuning their product suites and pricing models to better meet mid-market requirements for PLM adoption.”

Independent consultancies, systems integrators (SIs), resellers, and VARs (e.g., Accenture, Deloitte Consulting, INCAT, T-Systems, etc.) experienced continued solid growth as both the scope and pace of implementations expanded. Major comprehensive technology suppliers also expanded their direct service delivery programs and development of alliances with SIs and resellers. “Consultancies and SIs with growing PLM business programs are teaming with one or more of the comprehensive technology suppliers to enable them to respond to diverse client situations,” stated Amann.

Focused application suppliers are those suppliers concentrating on specific technologies and functions that are part of overall PLM strategies. Suppliers such as RuleStream, Product Sight, and Eurostep are examples of companies that are adding extended capabilities and value to PLM implementations. Major areas of growth include digital manufacturing, portfolio and program management, service-after-sales, and materials compliance solutions. These solutions are emerging as an important part of a PLM strategy as new and improved capabilities are being offered by leading comprehensive PLM technology suppliers and many focused application suppliers.

Supplier Rankings

As described earlier, there is a wide range of companies providing PLM-related technologies and services. Many of these companies generate substantial revenues while focusing on specific niches within the broad PLM market. A few companies however, have distinguished themselves as PLM mindshare leaders frequently considered to be leading the market through either revenue generation or thought leadership. These PLM mindshare leaders are suppliers with broad-based capabilities that support a full product lifecycle-focused solution. This group includes Agile, IBM/Dassault Systèmes, MatrixOne, PTC, SAP, and UGS. Full PLM-based revenues from these mindshare leaders are shown in Figure 5. As can be seen, the revenues for some members of this group are still dominated by revenues generated from the tools portion of their product suites (i.e., their MDA offerings), but their cPDm revenues are growing and becoming a larger portion of their overall business.

Figure 5. PLM Mindshare Leaders’ Revenues – 2004
(Revenue information represents CIMdata’s estimates)

Note 1: IBM+DS includes IBM’s Dassault-related revenues + IBM’s non-Dassault-related PLM revenues + Dassault Systèmes direct revenues not derived through IBM

Note 2: The blue arrow represents Dassault Systèmes direct PLM revenues

Note 3: Matrix1+Synchro includes all revenues for MatrixOne, plus revenues for Synchronicity in 2004 prior to acquisition by MatrixOne in August of 2004

Note 4: Agile, MatrixOne, and SAP do not develop Authoring and Analysis Tools

All of the mindshare-leading PLM suppliers provide some or all of their products and services through their own field sales and support organizations – this is their core or direct revenue. Most also leverage consultancies, SIs, resellers, and other partners for additional sales and services – their partners’ revenues. The combined core and partner revenues can greatly expand the visibility and impact of a supplier in the industry, generating a significant market presence or footprint. Based on these combined revenues, global PLM market presence for the PLM mindshare leaders is shown in Figure 6. It is important to recognize the market presence of these companies in order to understand their overall impact or footprint on the PLM market.

Figure 6. PLM Mindshare Leaders’ Presence – 2004
(Market presence information represents CIMdata’s estimates)

Note 1: See Figure 5 notes for the definition of Matrix1+Synchro direct revenue components

Note 2: Dassault Systèmes partner revenue includes DS-based cPDm revenue from IBM plus other partners

When looking at the cPDm portion of the overall PLM market (refer to the definition at the end of this press release), a somewhat different perspective emerges. According to CIMdata’s revenue estimates for 2004, the top seven market revenue leaders among the comprehensive cPDm technology suppliers, shown in Figure 7, represent the leading global suppliers.

Figure 7. cPDm Revenue Leaders – 2004
(Comprehensive Technology Suppliers Only)
(Revenue information represents CIMdata’s estimates)

Note 1: See Figure 5 notes for the definition of IBM+DS and Matrix1+Synchro direct revenue components

Note 2: The blue arrow represents Dassault Systèmes direct PLM revenues

As can be seen, some of these leading organizations generate a substantial portion of their revenues through services. IBM+DS benefits significantly from IBM’s large service organizations, which have delivered PLM and cPDm services for many years. Although most of IBM’s cPDm services revenues are primarily based on Dassault Systèmes’ products suite, IBM also provides services built around other cPDm technology suppliers.

Market presence as an indicator of a supplier’s overall impact on the market was described previously. Based on these combined revenues, CIMdata’s analysis of cPDm market presence for the overall PLM mindshare leaders is shown in Figure 8 and illustrates the impact that partner revenue has on a supplier’s PLM footprint.

Figure 8. cPDm Market Presence Leaders – 2004
(Comprehensive Technology Suppliers Only)
(Market presence information represents CIMdata’s estimates)

Note 1: See Figure 5 notes for the definition of Matrix1+Synchro direct revenue components

Note 2: Dassault Systèmes partner revenue includes DS-based cPDm revenue from IBM plus other partners

Definitions

CIMdata defines PLM as a strategic business approach that applies a consistent set of business solutions in support of the collaborative creation, management, dissemination, and use of product definition information across the extended enterprise from concept to end of life – integrating people, processes, business systems, and information. PLM forms the product information backbone for a company and its extended enterprise . It is composed of multiple elements including: foundation technologies and standards (e.g., XML, visualization, collaboration, and enterprise application integration), information authoring and analysis tools (e.g., MCAD, ECAD, FEA, and technical publishing), core functions (e.g., data vaults, document and content management, workflow, and program management), functional applications (e.g., configuration management), and business/industry solutions (e.g., automotive supplier, high tech) built on the other PLM elements.

The cPDm segment of the PLM market encompasses all of PLM except for information authoring and analysis tools such as mechanical and electronic computer-aided design (MCAD and ECAD), computer-aided software engineering (CASE), and technical publishing. cPDm is focused on collaboration, management and sharing of product-related information.

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