CIMdata PLM Industry Summary Online Archive

7 May 2009

CIMdata News

"Beating the recession: Investing in PLM now may bring competitive edge later" by CIMdata's President Ed Miller

Even in the face of a severe economic downturn, PLM investments continued to grow in 2008. According to CIMdata statistics, the overall PLM market experienced growth in 2008 that surprisingly fell only slightly short of earlier expectations—primarily because of a robust start for PLM investments in the first half of the year. Only in the last quarter did the market slow appreciably, which will undoubtedly continue in 2009 until the economy turns around significantly.

Nevertheless, a wide range of companies are investing in PLM, recognizing that implementing the approach may be one of the major deciding factors in determining which organizations are best able to weather the current economic storm. Companies leveraging PLM as part of their corporate strategy in the face of such difficult times will likely be among the top performers in the coming years as the economy improves.

In the current economic climate, many companies are primarily focused on the bottom-line benefits of PLM for controlling costs and improving operational efficiencies. The emphasis at these organizations is toward quick value, bite-size investments that will provide the fastest impact. Even as these short-term priorities dominate the current market, long-term strategies still continue at many companies focusing on initiatives critical for business success, including the harmonizing of global processes and managing the increased complexity of products and value chains.

CIMdata’s PLM market analysis provides two perspectives on PLM:

• Comprehensive PLM covers the full product definition over the entire product lifecycle, and across all industrial industries. This includes mechanical, electronic, and software components, as well as both discrete and process industries.

• Mainstream PLM covers a subset of the Comprehensive PLM market, but includes the subsectors that traditionally have been addressed by the major suppliers (i.e., drivers) of the PLM market.

According to CIMdata statistics, Comprehensive PLM investments were below forecasts for the year, but still grew 8.2 percent to reach $26.3 billion in 2008. Investments are anticipated to continue to be negatively impacted in 2009 and into 2010, but are forecast to achieve a 6.3 percent compound annual growth rate through 2013, when market size is expected to exceed $35 billion. Growth for 2009 is forecasted to be a much lower rate of 3.6 percent.

The worldwide Mainstream PLM subset of the overall PLM market also achieved below forecast results for 2008. Still, this subset experienced 7.8 percent growth to reach an estimated $16.7 billion for software and related services. Mainstream PLM investments are also anticipated to be impacted by the current economic conditions, but are expected to increase over the next five years, achieving at a compound annual growth rate of approximately 7 percent and expanding the market to over $23 billion by 2013. With the relatively restrained start for this year, growth in 2009 is forecasted to be at a more modest 4 percent .

CIMdata also segments the overall PLM market into three major sub-sectors:

• Tools (applications and solutions) that create product-related intellectual assets through authoring (such as CAD), analysis, modeling, simulation, and documentation of product and plant/facility information.

• collaborative Product Definition management (cPDm) applications and solutions to capture, manage, disseminate, visualize, and collaborate on product-related intellectual (digital/virtual) information, including related processes.

• Digital Manufacturing solutions for process planning, resource definition, factory floor layout, and product flow simulation and analysis—including ergonomics.

Tools sector investments increased 9 percent in 2008 for a total of $17.3 billion on solutions such as mechanical computer-aided design (MCAD), computed-aided manufacturing (CAM), electronic design automation (EDA), engineering simulation and analysis, architecture/engineering/construction (AEC), technical publishing, and others. Growth in the various solution areas were quite different, ranging from very low to relatively good. The Tools portion of the PLM market is forecasted to grow at a compound annual growth rate of 5.1 percent (2.6 percent growth forecast for 2009) over the next five years to reach $22 billion by 2013.

Expenditures in the cPDm segment increased 8.9 percent in 2008 for a total of $8.2 billion for software and services related to PDM, collaboration and visualization, data exchange, portfolio management, compliance management, strategic sourcing, enterprise application integration, workflow, functional applications such as configuration management, and solutions for specific industries or businesses. The cPDm segment is expected to exceed $12 billion by 2013 for a compound annual growth rate of 8.6 percent (5.7 percent growth forecast for 2009).

The Digital Manufacturing segment of PLM increased more than 9 percent for a total of $530 million in 2008, according to CIMdata statistics. This segment is expected to show an 8.3 percent compound annual growth rate over the next five years (5 percent growth forecast for 2009) and exceed $750 million by 2013. Because the definition of production processes is a critical part of the product life-cycle and is directly impacted by product designs, Digital Manufacturing is becoming an important element of PLM strategies and a key point of integration with factory automation equipment such as PLCs and transfer lines.

Despite a harsh business climate, the PLM market remains robust. Although the current economic climate will impact growth of investments during 2009 and into 2010, investments in PLM are expected to show considerable growth over the next five years as companies recover from the current recession and continue to invest in solutions that can provide them with sustainable business advantage and profitability. Market growth will be fueled as PLM becomes more important than ever and companies more deeply embed the approach within the enterprise.

This article by CIMdata President, Ed Miller, appeared in the May 7, 2009 issue of Manufacturing Business Technology.

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