Return on Investment

CIMdata forecasts cPDm to be the fastest-growing segment of the PLM market with a 15+% CAGR to exceed $10.5 billion in 2009. The Tools segment is forecast to grow at a slower 4+% CAGR over the next five years, reaching approximately $13.8 billion during 2009.

In the PDM arena Dassault offers Enovia for the high end and Smarteam for the midrange, PTC offers Windchill and Unigraphics offers Teamcenter (initially a combination of SDRC's Metaphase and their own iMAN) and more recently Teamcenter Express for smaller firms. Other vendors in this marketplace include MatrixOne ($124 million in fiscal 2005), Agile ($31 million last quarter) and SAP. SAP is the ERP industry leader and the third-largest independent software provider overall. SAP reported £31 million in PLM software last quarter out of £2 billion in total revenue.

Historical Background

Several leading PLM vendors can trace their lineage back to major aerospace and automotive companies. CADAM, a 2D drafting system was developed internally at Lockheed in the 1970s to run on IBM mainframe computers with 3270 and later 5080 graphics terminals. IBM and Lockheed signed an agreement whereby Lockheed would continue to develop and maintain the software while IBM would be the exclusive sales and marketing arm for the product. Lockheed also acquired Calcomp the manufacturer of graphics terminals and plotters. The CADAM software was sold in source code form to several large companies. One of the source code licensees was Dassault, a major French aerospace firm. Dassault developed a 3D add-on to CADAM called CATIA. IBM and Dassault entered in a business arrangement similar to one IBM had with Lockheed. Years later IBM acquired CADAM, then a wholly owned subsidiary of Lockheed. IBM subsequently sold most of this business to Dassault.

In 1976 McDonnell Douglas Corporation acquired United Computing, a small CAD/CAM company along with its Unigraphics product. United Computing became the CAD/CAM division of McDonnell Douglas Automation; a Unigraphics Group was part of the CAD/CAM division, as well. McAuto had its own internal development, called CADD. In 1991 EDS acquired this group and establishes a wholly owned subsidiary. In 1998 EDS sold a 14% minority stake through an IPO. In September 2001 EDS bought back the outstanding public shares, acquired SDRC and merged it with Unigraphics. In March 2004 a private equity group acquired the firm.

Patrick Hanratty is often considered the father of mechanical CAD/CAM. He was responsible for internal CAD development at GM. He left the company and established Manufacturing and Consulting Services, Inc. (MCS). In 1972 he introduced ADAM (Automated Drafting and Machining), the first commercially available integrated graphics design, drafting and manufacturing system. Over time he sold OEM licensees to ComputerVision, Gerber Scientific, McDonnell Douglas, Autotrol, Control Data and others spawning the CAD industry.

In the eighties GM hired EDS as a consultant to among other things rationalize its CAD operations. There were several internal CAD development groups and systems from several commercial vendors. These systems did not communicate with one another and often ran on proprietary hardware. EDS published a standards based RFP and conducted extensive benchmarks. In particular the requirements included the capability to run on multiple UNIX platforms. They chose CADAM and Unigraphics. Soon thereafter IBM acquired CADAM. The then available IBM workstation was not high on EDS' list of preferred platforms. The arrangement unraveled. EDS then purchased Unigraphics.

SDRC (Structural Dynamics Research Corporation) was found in 1967 by professor from the mechanical engineering department of the University of Cincinnati as a consulting firm for machine tool and automotive industries. The firm decided to commercialize the software tools that they had developed in support of their consulting activities. Software revenue soon outstripped the consulting revenue. SDRC went public in 1987. In 1995 Ford Motor Company selected SDRC software as its corporate standard. Internally developed code at Ford found its way into SDRC software. SDRC was acquired and merged with Unigraphics by EDS in 2001.

There are several other CAD companies that were started by former employees of firms mentioned above. For example Sam Geisberg, a Russian immigrant and the founder of PTC worked for both ComputerVision and Applicon (in a group that I managed). Many CAD companies have been acquired over the years by the leaders: PTC acquired ComputerVision who had acquired Calma. Unigraphics acquired SDRC, Applicon and Tecnomatics. Dassault acquired MatraDatavision and Abacus.

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