PLM Market Outlook Solid Despite Economic Downturn

ANN ARBOR, Michigan, July 31, 2002 — In a recently released industry report from consulting and research firm CIMdata, Inc., the worldwide collaborative Product Definition management (cPDm) portion of the Product Lifecycle Management (PLM) market grew 25% to reach $3.6 billion during 2001.  Investments in software (including software maintenance) increased to more than $1.6 billion, while services revenues exceeded $1.9 billion.

"In the face of the general economic turndown, solid industry growth in 2001 is an indication that companies clearly recognize PLM as fundamental to their ability to operate more successfully in increasingly competitive global markets.  Significant investments in software licenses were made in the first half of 2001, following a strong ramp-up of implementation programs during 2000.  Despite the economic downturn, companies continued to deploy PLM solutions during the third and fourth quarters of 2001, though market growth was not as strong during the last half of the year as in the first two quarters," says Ken Amann, CIMdata Director of Research.

cPDm Market Revenue Growth History and Forecast

Note: Software maintenance was not separately measured prior to 2001

PLM is 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, 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 tools (e.g., MCAD, ECAD and technical publishing), core functions (e.g., data vaults, document and content management, workflow and program management), and functional applications (e.g., configuration management), and business solutions built on the other elements.

cPDm encompasses all of PLM except for information authoring 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.

According to the CIMdata study PLM Market Analysis Report for 2001, the full impact of the general economic slowdown became evident in the cPDm market in the third quarter of 2001.  cPDm solution suppliers reported excellent growth during the first quarter of 2001 and continued to report good growth rates during the second quarter.  License sales dropped significantly in the third and fourth quarters.  However, investments in services associated with continued deployment of cPDm programs underway supported the overall cPDm market.

CIMdata forecasts overall PLM investments to continue growing at a strong pace over the next five years.  Looking toward 2006, the cPDm market as a whole is forecasted to grow at a CAGR of 25% to exceed $11 billion.  Market growth in 2002 will continue to be impacted by the global economic slowdown and stress, although long-term prospects remain solid.  Continued growth will be driven by several factors including:

• Broader adoption by midrange companies
• Recognition by senior management that PLM is strategic to business survival in today's highly competitive global markets
• Continuation of the increasing role and impact of system integrators, resellers, and VARs
• Delivery of expanded solutions by cPDm technology suppliers enabling more users to participate in both the definition and use of product and plant/process information.
• Continued expansion of visualization and collaboration tools that enable more groups of users to utilize product definition information
• Integration of PLM solutions with other major business functions and initiatives such as CRM and SCM

Throughout this period, software license and maintenance revenues are expected to contribute 45% of the total market while expenditures for services constitute 55%, as cPDm solutions continue to expand in scope and become integrated with other elements of the extended enterprise.

The CIMdata report notes that overall sustained growth of the services segment has garnered the attention of major service and consulting companies such as Accenture, Atos Origin, Cap Gemini Ernst & Young, Deloitte Consulting, gedas, PwC Consulting, Siemens Business Services, and Technia Data Systems as well as IBM Global Services and EDS.  These and many other firms are establishing both business initiatives to deliver cPDm solutions and partnerships with the major cPDm technology suppliers.

Major industrial segments of the cPDm market, primarily transportation, high tech and aerospace, experienced solid growth in the past five years and these industries will continue to be leading adopters of PLM solutions.

cPDm Revenues by Industry

The electronics and telecommunications industries were the most affected by the 2001 economic downturn, however many companies continued to invest to position themselves for growth as the economy recovers.

Automotive and aerospace companies continued large-scale deployment of cPDm solutions; particularly visualization applications as they began to effectively integrate their supply chains and extended enterprises.  Integration of extended enterprises resulted in the purchase of significant numbers of licenses as well as major services expenditures.  The automotive industry will continue to be a major growth area for cPDm revenues during 2002.

About the Report
CIMdata's PLM Market Analysis Report 2001 is available for $9,500.  Information in the report is valuable for system and service suppliers to evaluate market opportunities and track competitive positions.  For users and those investigating cPDm, the report provides insight into worldwide trends, activities, and major markets of leading vendors.

The PLM Market Analysis Report 2001 comes in two modules.  The first module includes over 40 figures, charts, and tables for convenient reference and interpretation.  A background discussion of cPDm gives an overview of this strategic business approach.  An update on industry status describes key trends as well as ways products and solution approaches are evolving. Market overview material presents data on size and concentration of major market segments, historical and projected data on market growth, and analysis of market directions.  Revenue distributions are presented and analyzed for geographical regions and industry segments.  A section on suppliers lists data on overall market leaders and comprehensive technology suppliers as well as systems integrators and resellers, visualization and collaboration suppliers, and providers of specialized applications.

The second module provides greater detail on revenue distribution and trends for major geographic regions as well as market shares and outlook for key industry segments.

Learn More About PLM
Additional information on the PLM market is available through CIMdata's Market Service covering the latest trends, events, and issues surrounding the rapidly changing industry.  Subscribers receive periodic reports analyzing PLM market events and trends, a monthly industry news compilation, daily late-breaking industry news, a comprehensive Market Opportunities Analysis with revenue and sales statistics, access to teleconferences discussing issues and events relevant to the market, and a level of telephone support.  Other PLM reports from CIMdata include the newly published PLM Pricing Analysis Report and the PLM Benefits Appraisal Report.  Detailed information on all these publications can be found on our website at www.CIMdata.com.

Industry Conferences
CIMdata will hold its annual European conference on PLM October 22 - 24, 2002, at the ESTREL Hotel and Convention Center in Berlin, Germany.  The conference provides practical, relevant information on the latest trends, innovations and best practices people can take back to their companies and put into action immediately.

About CIMdata
CIMdata provides worldwide strategic PLM consulting and program support, in-depth research, and education for both industrial organizations and suppliers of technologies and services seeking competitive advantage in the global economy.

CIMdata helps industrial organizations establish effective PLM strategies, assists in the identification of requirements and selection of PLM technologies, helps organizations optimize their operational structure and processes to implement solutions, and assists in the deployment of these solutions.

For PLM solution suppliers, CIMdata helps define business and market strategies, delivers worldwide market information and analyses, provides education and support for internal sales and marketing teams, as well as overall support at all stages of business and product programs to make them optimally effective in their markets.

CIMdata provides world-class knowledge, expertise, and best-practice methods on PLM solutions. These solutions incorporate both business processes and a wide-ranging set of PLM enabling technologies including product data management (PDM), visualization, collaboration, digital manufacturing, computer-aided design/manufacturing (CAD/CAM), and numerical control (NC).  CIMdata also provides expertise in the integration of PLM with other business solutions such as customer relationship management (CRM), supply chain management (SCM), and enterprise resource planning (ERP).

In addition to consulting, CIMdata provides industry education through international conferences in the US, Europe, and Japan that focus on PLM.  The company also conducts research, provides PLM-focused subscription services, and produces several commercial publications.  CIMdata serves clients worldwide from locations in North America, Europe, and Asia Pacific.

To learn more about CIMdata's services contact CIMdata at:
3909 Research Park Drive
Ann Arbor, MI 48108, USA.
Tel: +1 (734) 668-9922.
Fax: +1 (734) 668-1957