Market consolidation raises executive awareness of PLM

July 25, 2002

By Ed Miller
CIMdata Inc.
Ann Arbor, Mich.

Edited by Stephen J. Mraz

Acquisitions, mergers, partnerships, and other consolidations in the product life-cycle management (PLM) industry are substantially impacting the visibility and credibility of PLM for industry executives. Consolidations bring together different technologies from major vendors who offer enterprise-wide programs focused on all phases of product life cycles.

These big-name vendors and system integrators have the ear of senior executives at industrial companies. They are finally becoming aware of the critical role PLM plays in gaining a competitive business advantage. This increased executive awareness is also giving a boost to smaller suppliers and niche players who are aligning themselves with major vendors as they find their place at the PLM table.

The clear winners in this increased activity are the users. They get benefits from a healthier PLM industry and programs that solve short-term operational problems and help gain long-term strategic business objectives. Fueled by heavy demand for these benefits, companies have invested in PLM in record numbers. The collaborative product definition management (cPDm) market segment reached $3.6 billion in 2001. An anticipated 25% annual growth through 2006 could mean market exceeding $11 billion.

Rising investments in a consolidating industry has caused substantial growth among PLM suppliers. In CIMdata's recently released 2001 market analysis, the top five companies (by revenue) providing comprehensive PLM technology included EDS, SAP, IBM/Dassault, PTC, and MatrixOne.

The biggest recent PLM consolidation action was the purchase and merger of SDRC and UGS by EDS to create a single business unit, EDS PLM Solutions. The combined product lines including those from Sherpa and EAI give EDS one of the most comprehensive portfolios of PLM offerings in the industry and move it to the top spot in PLM market revenues.

At the same time, Dassault Systemes has created one of the broadest and deepest PLM line of offerings. It now controls technologies from SmarTeam, SolidWorks, Deneb, Delta, Spatial, and several others. Dassault continues to leverage its close relationship with IBM, which is concentrating its own PLM Solutions program. Dassault uses IBM's services and suite of middleware technologies to enhance its PLM offerings. The overall growth rate for the IBM/Dassault program in the last couple of years has been impressive, and they continue to expand their industry presence.

SAP, for example, has also established PLM as one of its major businesses, and continues to broaden and develop it's PLM software to include asset management and recipe management for the process industry. SAP also continues to improve the focus on their PLM program within their own field organization and will work with their integration partners to broaden client support.

PTC is still enhancing its Windchill-based business and developing a partner program with leading system integrators and suppliers. This has helped PTC expand its PLM business, their Product First initiative.

MatrixOne has been particularly effective at creating strong PLM revenue streams for their consulting and system integration partners. The firm's many active and cooperative partners deliver significant levels of services and resales around MatrixOne's products. The result: MatrixOne's effect on the market far exceeds the level of its revenues.

These suppliers are becoming closely aligned with major systems integrators, which have established their own PLM initiatives over the past few years. Service-based groups bring a wealth of industry expertise and "best-practices" to companies leveraging their PLM technology.

Meanwhile, focused companies with visualization, collaboration, and configuration technology have felt the pressure to align themselves with others or risk being left out of major PLM investments. The groundswell of activity in these areas strengthens the PLM industry. It is being driven by tremendous demand at a wide range of companies, where impetus to implement PLM comes directly from savvy senior executives with a well-founded sense of urgency in making PLM a part of their business strategy. Top managers know that in today's turbulent economy and brutal global markets, it is time to leverage PLM if they want to succeed.

Additional information on the PLM market is available through CIMdata's Market Service. Subscribers receive periodic reports analyzing PLM market events and trends, weekly industry news, daily late-breaking news, a comprehensive Market Opportunities Analysis with revenue and sales statistics, access to teleconferences on issues relevant to the market, and telephone support.

CIMdata will hold its annual European conference on PLM strategies and solutions October 22-24 in Berlin, Germany. Several hundred delegates from across Europe and around the world are expected to attend. The annual event brings together suppliers, users, executives, consultants, and experts to discuss important issues and industry trends, share experiences, provide information, and exchange ideas on a wide range of topics. For more information, visit or call (734) 668-9922.

Ed Miller is president of CIMdata Inc., a global firm providing consulting and research in Product Lifecycle Management (PLM) solutions, best practices, and technologies that help companies develop products in the evolving global e-business environment. Contact him at [email protected].

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