UGS’ announcement of a definitive agreement to acquire Tecnomatix comes as no surprise. These two companies announced a strategic working relationship in the third quarter of 2002 and have been diligently working to further integrate both their technologies and customer sales and support activities. Most recently, UGS’ announcement of their Open Manufacturing Backbone (OMB) and its tight integration with the Tecnomatix suite of offerings reinforced these activities publicly. In a teleconference call today to discuss the acquisition, many of the comments from UGS and Tecnomatix personnel focused on the acceleration this acquisition will have upon further integration of the Tecnomatix technologies within the overall UGS product suite.
UGS should gain from this acquisition by having direct control over development and support of technology that is critical to their future product suite. Their Digital Manufacturing suite of offerings will be much broader, and customer confidence in UGS’ ability to deliver a complete PLM solution should be improved. In addition, Tecnomatix has some technologies that have not yet been heavily leveraged by UGS and which offer opportunities for further expansion of the UGS footprint. These include products focused on electronics manufacturing as well as Manufacturing Execution Systems (MES) technologies resulting from Tecnomatix’s acquisition of USDATA.
UGS should also benefit from an expanded customer base. Although the two firms have worked on many large accounts jointly, there are many Tecnomatix customers that have not yet had substantial direct relations with UGS. UGS will also experience a gain in revenues commensurate with Tecnomatix’s existing revenue stream. Both UGS and Tecnomatix customers should view this action as positive, because it consolidates their long-term support into a single organization, and should improve the long-term investment in developing and expanding offerings to satisfy their future business requirements.
This market event further establishes UGS and Dassault (with their DELMIA offerings) as the “big gorillas” of Digital Manufacturing, both with broad programs that are integral components of their overall PLM strategies. This will put additional competitive pressure on other PLM suppliers who do not have Digital Manufacturing offerings among their product suites.
CIMdata originally commented (August 28, 2002) on the positive value of the joint working relationship between UGS (then part of EDS) and Tecnomatix, and indicated the potential for this relationship to become more permanent; that has now occurred. We are very positive on this action by UGS. It reinforces their view of Digital Manufacturing as a key component of PLM, and demonstrates again their willingness to invest in broadening their suite of offerings through acquisition. Their challenge will be to maintain the focus on Digital Manufacturing and further develop their offerings after this program is totally within the UGS development family, and must compete internally for resources and investment with other substantial UGS product development efforts that currently generate substantially more revenues. However, the new combined program offers potential for additional revenues beyond what either company could have obtained independently.
