Feature Article:The PLM Universe

We dislike TLA's (Three Letter Acronyms - even though we are just as guilty as anyone of using them) and express dismay at the haphazard way in which terms like PLM are used by the various vendors. We regard PLM as a concept, not a product to be sold; we prefer to use the term Engineering Applications.

This Universe includes overlapping application areas:

CAx = Computer Aided Design, Computer Aided Manufacture & Computer Aided Engineering
PDM = Product Data Management
EDM = Engineering Document Management
GIS = Geographic Information Systems and Mapping (part of)
EDA = Electronic Design Automation (small part of)

Many vendors use PLM (Product Lifecycle Management) to describe their combined CAx and PDM/EDM offerings, whilst others will include all or some of the above overlapping application areas as PLM. Enterprise Applications vendors also offer PLM, but we would classify most as downstream of the design process, where design has already been fixed. Some vendors do nothing other than pure-play PDM and EDM; others integrate these products with other specific business systems like Enterprise Resource Planning or Content Management. In our view, PLM functions are a sub-set of both Engineering and Enterprise applications.

CAx and PDM/EDM

The graphic above provides a visualisation of the definition of this Universe from an applications perspective. Using this definition, Cambashi focuses on groups of vendors in these key areas to build a picture of the universe and develop market sizing data. We have reported on the overall Engineering Applications market in our previous Web-article; we now look at the Product Data and Engineering Document Management and CAx parts separately. (Note: the GIS revenues of CAx players have not been separated from CAx revenue estimates).

PDM/EDM

Despite a lot of media promotion, growth in the PDM/EDM market remained lower than that in the CAX market in 2005 - see above. Although there has been an undoubted increase in the number of PDM/EDM applications in use, this has been tempered by the replacement of older implementations by lower-cost systems that attract less maintenance and implementation revenues. Hosted systems and on-demand web-based solutions are gaining traction in the market and are starting to present real choice for users as they offer attractive alternatives to owning and managing non-core IT functions. Hence, Cambashi sees lower than generally expected revenue growth in PDM/EDM. One factor which holds back this growth is the essentially flat performance of mySAP PLM, which led the way as a provider when it entered the market. Other vendors in this space have embarked on strategic or technical acquisitions to grow - Agile and Eigner; Dassault and MatrixOne for instance. Even without SAP, the market would have shown only slightly higher growth at 7% in 2005.

Note: We have used the same scale on the PDM/EDM applications graph as in the selected CAx vendors below to allow true comparison of revenues.

CAx

In contrast, the CAx portion of the market grew at double-digit rates in 2005, following an equally good year in 2004. The marketing and sales execution of CAx players has improved significantly in this period. End-of-life programs, upgrade and replacement offers have kept prices competitive and made it cheaper for existing customers to move to new platforms and applications, whilst maintaining investments in staff and data. Management of partnerships and channels is becoming a key area again, as much of the growth exhibited in the CAx market is driven by small and medium businesses (SMB's) which are uneconomic direct sales targets. With a couple of profitable years behind them, CAx vendors are also on the acquisition trail, though they are now generally looking for smaller acquisitions that fill technology or installed-base gaps in their portfolios, rather than those that increase revenue or bottom-line contributions. Autodesk and Alias; Dassault and ABAQUS; or Bentley Systems with REI and RAM International; AVEVA with Tribon; Ansys and Fluent are all examples..

Looking forward

Overall, we see that, whilst new 3D and especially task-specific CAx applications are now being accepted in the market, PDM/EDM remains an area that users are still unsure of. We expect growth in CAx to continue in 2006, but at a slightly lower rate of around 10%, compared to 2005. Areas that are attracting interest are simulation and analysis and emerging territories like EU Accession States and former Soviet Bloc members, plus China, India and South America, as these economies take on manufacturing from the developed economies of the West.

PDM/EDM will continue to grow. At the lowest level - simple document vaulting in the design office - acceptance of some sort of document management is gaining ground in smaller accounts, though low-cost or free tools (included with CAx) continue to dominate this market. On-line and on-demand/pay-for-use systems which extend and control the use of design information throughout project teams are also gaining customers, particularly in large-scale civil and architectural engineering companies. Here the emphasis is on leveraging design information for costing and planning purposes. With prospects still somewhat confused on what to expect from these technologies, we see growth of only half that in CAx for 2006 - 5% to 6%.

Nick Ballard

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