The graph on our website plots the average vendor revenues per 3-month period for the Euro against the US$ since Q1 2000, when the exchange rates were pretty close to parity - €1= $0.988. At the end of this period, Q1 2003, the Euro rate has, for the first time, gone beyond the $1 mark - €1=$1.07282. This means that the Euro has effectively risen by nearly 10% against the $US in this period.

With most of the Q1 2003 financial results announced, the above chart gives two main messages:
1) 2003, regardless of which currency view is taken, is not looking as though it is the end of the downturn for EMEA. The peak of Q4 2002 was less pronounced than the previous 2 peaks in 2001 and 2000, and the trend continues downwards.
2) Whilst the picture in $US may be more positive, showing a small (2%) increase over Q1 2002, when we look in Euros, the measure of domestic demand, we see a sharp fall over Q1 2002 of some 15%.

This decline in investment in engineering applications is consistent with the pattern of investment in the European economies over the last two years. The latest (February 03) forecasts by PwC show investment picking up in 2003, but we rather doubt whether engineering applications will be in the frontline for this investment. Other areas such as industrial automation appear to offer better business cases in the short term - and with today's economy it is the short term that matters.

Nick Ballard

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An interesting observation is that a number of companies selling analysis and simulation technologies are seeing increased sales, as they did last year. Take MSC Software. Last quarter worldwide revenues were up 28% over last years' results. Ansys Inc., another major analysis company saw revenues increase over 15% compared with the previous year.

So what's the difference between the analysis and simulation market and the design solutions market? We'd argue that the answer lies in the inability of vendors to present their products in a light that delivers positive business value. The board of directors wants to see profit, not technology. They want to hear about positive cashflow in short timeframes with minimum risk. Gone are the days when you could justify an investment because of its great new features or long term benefits.

Generating a business case that conforms to the typical user's internal rules on capital returns etc. is not easy. It often involves processes to manage the risk that benefits won't be achieved, several departments may have to sign up for a particular saving. Simple return on investment is not sufficient.

Successful implementations of engineering design and product data management improve sales capability, reduce time to market, improve production throughput and reduce service overheads. They reduce overhead costs by reducing inventory, manufacturing rework and prototype costs. They improve engineering innovation, efficiency and capability. They allow companies to integrate suppliers and customers into the development cycle, improving the quality of product and service. They reduce risk and encourage greater product and service differentiation. Benefits are delivered throughout the lifecycle of a product to numerous stakeholders.

For example, by improving part reuse in design, manufacturing inventory can be reduced and product quality improved. In addition, fewer spares are required to be stocked for service, and procurement is able to achieve more favourable prices on these parts due to higher volume discounts with fewer suppliers.

One of the major issues is that vendors are not able to articulate this message to their potential customers. Their use of acronyms doesn't help. Customer research developed for last year's Cambashi Seminar showed that customers often don't understand their suppliers. Customers want to hear how benefits can be achieved in their business, in their language.

Engineering design and associated data management solutions deliver significant value to customers but vendors must develop more competent business and customer centric sales arguments. Money talks, and the more money you can make for a customer, the more they'll listen.

Allan Behrens