CIMdata Press Releases
CIMdata Releases its 2006 PLM Market Analysis Report: Comprehensive Information and Analysis of the PLM Market
ANN ARBOR, Michigan, October 10, 2006— Consulting and research firm CIMdata announces the availability of its annual Product Lifecycle Management (PLM) Market Analysis Report. The 2006 report provides the most complete analysis of the 2005 PLM market available, with special emphasis on the collaborative Product Definition management (cPDm) segment of that market. This analysis, which builds on information released by CIMdata in April 2006, provides CIMdata’s perspective on PLM across a variety of industry and geographic sectors, identifies market trends, reviews investments in PLM-related software and services during 2005, and forecasts PLM investments for 2006 through 2010. The forecasts are based on data available through the first half of 2006.
The PLM Market Analysis Report comes in two modules: ‘Module 1’ presents an overview of the PLM market, overall market statistics, and an analysis of PLM suppliers’ performance in 2005. ‘Module 2’ builds on the information presented in Module 1 by providing detailed geographic and industry 2005 cPDm revenue results and forecasts from 2006 to 2010. The PLM Market Analysis Report is sold as a stand-alone report or as part of the CIMdata PLM Community Gold membership. Further details and pricing information about the report are available at http://www.cimdata.com/publications/reports.html.
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, and spanning from product 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. “CIMdata partitions the PLM market into two primary segments: cPDm and Tools. Tools include the primary design authoring tools such as mechanical and electronic computer-aided design (MCAD and ECAD), computer-aided software engineering (CASE), and technical publishing, while cPDm is focused on collaboration, management, and sharing of product related information.” explained Mr. Amann, CIMdata Director of Research.
PLM Market Growth Exceeds Forecast
Regarding the PLM market performance, Mr. Amann said, “Our research shows that the overall PLM grew 8.8% to reach $18.1 billion in 2005. This growth rate exceeded earlier estimates, with the boost attributed to continued strengthening of the global economy and an increased recognition of the value of PLM in improving companies’ business performance. PLM investments are forecast to continue their climb over the next five years, reaching an estimated $27 billion by 2010 (as shown in Figure 1), for a compound annual growth rate of approximately 8.3%.
Figure 1. Overall PLM Market Growth History and Forecast (Estimated for 2006 to 2010)
According to CIMdata, $12.1 billion was spent in 2005 by companies worldwide on PLM Tools. Growth in this sector was primarily driven by investments in areas such as mid-range MCAD while areas like high-end MCAD experienced very low growth. The Tools portion of the PLM market is forecasted to grow at a CAGR of 5% over the next five years to reach $15.5 billion by 2010.
CIMdata research indicates that the cPDm portion of the PLM market exceeded previous forecasts for growth and reached $6.1 billion in 2005, representing an increase of approximately 14.7% over 2004. The cPDm segment is expected to continue its strong growth to $6.8 billion in 2006 and reach $11.6 billion by 2010 for a CAGR of approximately 14% (as shown in Figure 2).
Figure 2. cPDm Market Growth History and Forecast (Estimated for 2006 to 2010)
Wide Range of Companies Supply PLM-Related Solutions
Mr. Amann explained that a wide range of companies supply PLM-related software, applications, and services. Overall, companies from many different sectors derived substantial revenues from the PLM market. Some of these suppliers focus on specific technologies or industries such as MDA, EDA, CASE, or engineering simulation. Others supply broad management systems that provide a backbone for overall PLM initiatives. Some PLM solution suppliers combine complementary technologies from multiple partner suppliers to deliver enterprise PLM solutions.
He added, “In order to more effectively analyze and report on the overall PLM market, suppliers are divided into sub-segments: comprehensive technology suppliers, system integrators-resellers-VARs, focused application suppliers (including visualization and collaboration), Digital Manufacturing, MCAD, EDA, AEC, and others.” The comprehensive technology suppliers (e.g., Agile Software, IBM+Dassault Systèmes (the combined IBM and DS entities), MatrixOne, PTC, SAP, UGS, etc.) provide core PLM functional capabilities, often including broad suites of technologies, as well as consulting and implementation services focused on providing full “solutions” to address major industry problems for their customers. Independent systems integrators, resellers, and VARs (e.g., Accenture, CENIT, Deloitte Consulting, EDS , TCS, T-systems, etc.) provide services, such as implementation and process re-engineering and some re-sell PLM products and even create added value capabilities built on technology provided by comprehensive and focused application suppliers. Focused application suppliers are targeted at solving problems within specific sub-segments of the PLM market. These include a broad collection of companies that are focused on many different problems such as visualization, portfolio management, content management and others.
The comprehensive technology suppliers represent the foundation of cPDm. These suppliers 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 (automotive, aerospace, high-tech electronics) and business problems, e.g. compliance. “The growth of supplier-developed ‘packaged solutions’ significantly enables small- and medium-sized businesses to adopt PLM solutions,” according to Mr. Amann. “Expenditures for mid-market PLM solutions continued its solid growth. PLM solution providers are fine-tuning their product suites and pricing models to better meet mid-market requirements for PLM adoption. PLM suppliers (such as Arena Solutions, Contact Software, and SofTech) have differentiated themselves by focusing on small and midsized businesses, Some other suppliers such as Prodika, Selerant, and Lascom are good examples of companies that have differentiated themselves by focusing on specific industries. Many of the larger PLM suppliers provide multiple solutions, each focusing on specific industries and sizes of companies.
Independent consultancies, systems integrators (SIs), resellers, and VARs (e.g., Accenture, Deloitte Consulting, TCS, 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 Accept Software, Centric Software, RuleStream, and Eurostep are examples of companies that are adding extended capabilities and value to PLM implementations. Major areas of growth include digital manufacturing, Enterprise Product Planning (EPP), program portfolio management, service-after-sales, and compliance solutions.
The area of simulation and analysis has received substantial emphasis recently, with expanded solutions to manage these environments and integrate them more fully into a full PLM program. Suppliers such as MSC and ANSYS have been quite visible. 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.
All Geography and Industry Sectors See Strong Growth
CIMdata statistics indicate that cPDm growth continued in all industry and geographic sectors. During 2005, all major geographies continued to grow. cPDm investments in the Americas and EMEA (Europe, Mid-East, and Africa) were on par with one another although EMEA’s growth rate was lower than that of the Americas during the year. cPDm investments in each of those theaters exceeded $2.3 billion; slightly less than 39% of the overall cPDm market for each. Asia-Pacific had 23% of the market with $1.4 billion.
“Our research indicates that the dominant industrial sectors were automotive, electronics, telecommunications, and fabrication and assembly which together comprised almost 66% of the cPDm market. Automotive received 25% of the overall cPDm market investment, while electronics and telecommunications (which include high tech and medical devices) had 21%, and fabrication and assembly had 20%,” explained Mr. Amann.
On an industrial sector basis, electronics and telecommunications, automotive, and fabrication and assembly will continue to be major influences. Mr. Amann said, “As we approach 2010 and growth rates in these sectors stabilize, there will be larger growth in the process and utilities areas, particularly consumer packaged goods and pharmaceuticals, other discrete manufacturing segments such as consumer products and retail, and non-traditional sectors such as insurance. As PLM solutions permeate middle-market companies (projected to be the fastest-growing sector of the), growth should continue at an aggressive pace.”