In mid-June Dassault Systèmes held its annual analyst's briefing event in its usual generous and expansive style at the headquarters just west of Paris.
The two days, attended by me and colleague Dan Miklovic, delivered a comprehensive update on the 3DEXPERIENCE strategy first announced in April 2012. Dassault Systèmes is a leader in product lifecycle management and other software related to manufacturing and engineering. Over the last few years it has substantially grown both organically and by strategic acquisitions, more on which below.
The event opened with a presentation from the mercurial CEO Bernard Charlès, who promoted the 3DEXPERIENCE vision, announced out of the blue three years ago. In order to transform Dassault Systèmes, Charlès has built a team around him that consistently delivers the message of Dassault Systèmes as a provider of much more than software – a company that truly delivers on its values related to product, nature, and life. Everything presented over two days carried a consistent message of delivering complete solutions across the lifecycle of a product from initial idea through design, development, production, distribution, service, and replacement. Solutions are presented as industry specific solution experiences, with a large measure of 3D and virtual representation to reinforce the message that experiences drive products rather than the inverse. Since the 2012 announcement we have seen tremendous progress on making this vision a reality. We now see a whole set of concrete examples of solutions with technology from the acquisitions being delivered to customers through the focus on industry solutions. This does suggest that industries rather than brands are being put front and center – something we believe will make life less complex for Dassault Systèmes and its customers.
Dassault Systèmes’ has an inspiring vision. Having chosen 12 industries in which to work it's defining solutions across the lifecycle to support the 3DEXPERIENCE from idea to end of life of its customers’ products. Clearly there are large technical gaps at the start of this journey. Dassault Systèmes has decided to fill some of the larger gaps through strategic acquisitions. Two that will be of great interest to LNS Research clients are Apriso and Quintiq.
Apriso is a provider of Manufacturing Operations Management (MOM) software across a broad spectrum of discrete and batch oriented industries. In a crowded marketplace of usually small providers in the MOM market, Apriso was a wise acquisition target as it has demonstrated the ability to roll out MOM solutions across a client’s many plants. This will be a key requirement in some of Dassault Systèmes’ large customers in its traditional industries such as automotive and aerospace. Apriso will become the production management solution for the majority of industry solutions and one can foresee the integration of 3D technologies into the manufacturing space being a great boon to shop floor workers.
Quintiq is a leader in the second generation supply chain software industry. It is recognised for its technical excellence in planning and optimization and holds a number of world records for the best optimization of known global planning challenges. Clearly advanced planning, scheduling, and optimization will bring benefits to almost any industry. Dassault Systèmes is taking the integration of Quintiq at a steady pace, also ensuring that existing customer are well served.
These along with other acquisitions, most notably Accelrys in the drug discovery and development space, demonstrate that smart M&A along with good integration policy can help traditional software companies to transform themselves. Real progress in seeding these products into industry solutions is encouraging.
During the event Dassault Systèmes announced a partnership with Accenture in retail planning and consumer packaged goods. The significance of this is that we see Dassault Systèmes working with a 'big five' system integrator in a strategic way for the first time. This shows they type of behavior of an enterprise software provider and is a positive sign for the future.
Branding used to be the darling of Dassault Systèmes; CATIA, DELMIA, SIMULIA, ENOVIA--have expanded to include BIOVIA, GEOVIA...etceteria! With this expansion it has probably become more confusing than helpful for customers. The faster Dassault Systèmes moves from brand to industry focus the better for easy communication of solution value to customers.
Some key functionality vital to industrial customers such as Asset Performance Management (APM) were little covered despite some coverage of Asset Lifecycle Management (ALM). Similarly, the presentation on mechatronics claimed it did everything for mechatronics design, except software development. One could argue that mechatronics without software is not really mechatronics at all.
There are also many gaps in the industry solutions experiences and filling these gaps needs to be well planned if not made public. We got the impression that there is undue pressure from customers, especially in China, to deliver far more than Dassault Systèmes’ current capacity can achieve. All of these gaps are “OK for now” and we expect to see Dassault Systèmes continue to make steady progress over the coming years.
The 3D experience would not be terribly useful if it were limited to looking at complex mechanical pieces from any angle. The advent of the Internet of Things (IoT), or the Internet of Experiences, as Dassault Systèmes would have it, will require much more 3D modeling than presently used. Dassault Systèmes demonstrated its 3D experience in large towns with full infrastructure, traffic, and other information available as you zoom in. This was one example of an important concept, the digital twin, a fully realistic and up-to-date digital implementation of a system. For example:
Dassault Systèmes promotes its digital twin and 3D experience philosophy as opposed to many vendors’ attempt to jump on the IoT bandwagon. While we admire an original approach, Dassault Systèmes will need to make further investments, internally and possibly by acquisition, in connectivity, Cloud, Big Data, and application development capabilities to enable the digital twin and deal with the reality of smart connected products.
Bernard Charlès is a dreamer and he has proven in the past with his 3D focus that his dreams can become reality. Today, the vision is much more ambitious and, if successful, will transform Dassault Systèmes from an engineering company to a leader in the Internet of Experiences. We have little doubt that many of the components of the dream can be realized but it's the definition of success that gives us some cause for concern. With such a grand vision 70% success would be remarkable but might be seen as not meeting objectives by financial backers, ambitious customers, and the more cynical and traditional of engineers.
When we, hopefully, return to hear an update in 2016, we would like to see a clear list of delivered products that use the 3D experience platform and have had sales success. Each year this list has to increase both through more acquisitions and completion of parts of the vision. This, of course, has to be backed up by solid sales success of traditional engineering software. If successful, our fathers will be impressed.
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