CIMdata Releases 2007 PLM Market Analysis Report

November 6, 2007 // Published as a news service by IHS

The 2007 report analyzes the 2006 PLM market, with special emphasis on the collaborative product definition management (cPDm) segment of that market.

Ken Amann, CIMdata director of research, said this strong growth rate is attributed to continued recognition of the value of PLM in improving companies' business performance.

PLM investments are forecast to continue their climb over the next five years, increasing at a compound annual growth rate (CAGR) of 8.5% to exceed an estimated $30 billion by 2011.

The CIMdata report also includes an analysis of the multidiscipline mechanical computer-aided design (MCAD) segment of the market.

This analysis provides the CIMdata perspective on PLM across a variety of industry and geographic sectors, identifies market trends, reviews investments in PLM-related software and services during 2006 and forecasts PLM investments for 2007 through 2011.

The forecasts are based on data available through 1Q 2007. The data and revenue information presented in this report are CIMdata estimates of the PLM revenue performance of the various suppliers. The PLM market analysis report comes in two modules:

• Module 1 presents an overview of the PLM market, overall market statistics and an analysis of PLM suppliers' performance in 2006.
• Module 2 builds on the information presented in Module 1 by providing geographic and industry 2006 cPDm revenue results and forecasts from 2007 to 2011.

CIMdata defines PLM as a strategic business approach that applies a consistent set of business solutions in support of the collaborative creation, management, dissemination and use of product definition information across the extended enterprise, and spanning from product concept to end of life - integrating people, processes, business systems and information.

"PLM forms the product information backbone for a company and its extended enterprise," said Amann. Amann said PLM is composed of multiple elements that incorporate best practices and methods including:

• Foundation technologies and standards, such as extensible markup language (XML), visualization, collaboration and enterprise application integration.
• Information authoring and analysis tools such as mechanical design, electronics design, software engineering, technical publishing and finite element analysis.
• Core functions including data vaults, document and content management, workflow, product structuring and program management.
• Functional applications such as configuration management and engineering change control.
• Business solutions such as new product introduction and supply chain collaboration.

Amann said that CIMdata partitions the PLM market into two primary segments: cPDm and tools. "Tools are focused on fundamental intellectual property (IP) creation, and cPDm is focused on IP management including collaboration, visualization, vaulting and sharing of product related information," he said.

According to CIMdata, companies worldwide spent $13.2 billion in 2006 on PLM tools such as MCAD, computer-aided manufacturing (CAM), electronic design automation (EDA), engineering simulation and analysis and technical publishing.

Growth in this sector was primarily driven by investments in EDA and midrange MCAD. Areas such as high-end MCAD and simulation and analysis experienced relatively lower growth. The tools portion of the PLM market is forecasted to grow at a CAGR of 5.3% over the next five years to reach $17.1 billion by 2011.

The fastest-growing sector of PLM is for expenditures on cPDm, which is focused on collaboration, management and sharing of product-related information. This segment covers technologies and approaches such as PDM, collaboration and visualization, data exchange, portfolio management, compliance management, strategic sourcing, enterprise application integration, workflow, functional applications such as configuration management and tools for specific industries or businesses.

CIMdata research indicates that the cPDm portion of the PLM market met the forecast for growth and reached $6.9 billion in 2006, representing an increase of approximately 13.6% over 2005. The cPDm segment is expected to continue this growth to $7.8 billion in 2007 and reach $13 billion by 2011 for a CAGR of 13.6%.

According to Amann, a diverse group of suppliers provide PLM tools and services. Some of these suppliers focus on specific technologies or industries such as MDA, EDA, CASE, or analysis and simulation. Others deliver broad management and collaboration products that are the information backbone for PLM initiatives.

Many PLM suppliers partner with suppliers of complementary technologies and applications in order to deliver more comprehensive enterprise PLM tools than each could provide individually. Overall, companies from many different technology and service sectors derive revenues from the PLM market.

Companies that have broad product suites designed to manage the full lifecycle - comprehensive technology suppliers - represent the foundation of PLM. These suppliers continue to expand their product suites to meet customer needs.

"Increased end-user investments are being driven by the continually broadening scope of enterprisewide implementations, expansion into new areas such as digital manufacturing, strategic product planning, compliance management, industry-focused packaged solutions and integration with other business initiatives such as customer relationship management (CRM)," Amann said.

Both comprehensive PLM technology suppliers and focused application suppliers are packaging their products so that they focus on and support the practices of specific industries (automotive, aerospace, high-tech electronics) and business problems such as compliance.

"The growth of supplier-developed packaged solutions is significantly enabling small- and medium-sized businesses to adopt PLM solutions," according to Amann. "Midmarket investment in PLM continues to grow, and PLM solution providers are fine-tuning their product suites and pricing models to better meet midmarket requirements for PLM adoption."

Amann said PLM suppliers have differentiated themselves by focusing on small- and mid-sized businesses or by focusing on specific industries. Many of the larger PLM suppliers provide multiple products that each focus on specific industries and sizes of companies, he said.

Independent consultancies, systems integrators (SIs) and value-added resellers (VARs) continue to expand their PLM programs in response to the growing demand for such services. Major comprehensive technology suppliers expanded their direct service delivery programs and increased their development of alliances with SIs and VARs.

"Consultancies and SIs are growing PLM programs by teaming with one or more of the comprehensive technology suppliers as well as expanding their own PLM knowledge staff," said Amann.

Application suppliers focused on specific technologies and functions that are part of an overall PLM environment continue to expand the PLM footprint. Some suppliers are adding extended capabilities and value to PLM implementations. Examples of these expansion and/or niche areas include service-after-sales, strategic sourcing and materials compliance products.

The area of simulation and analysis continues to receive emphasis, with expanded tools to manage these environments and integrate them more fully into a full PLM program emerging and transitioning this sector of the market toward comprehensive enterprise simulation management (ESM) support.

CIMdata statistics indicate that cPDm growth continued in all industry and geographic sectors for 2006. Both Europe, Mid-East and Africa (EMEA) and the Americas maintained solid growth, with the Americas growing at more than 15% and EMEA up 13%.

Asia-Pacific (AP) continues to be a major opportunity. While Japan dominated the 9.2% growth of the Asia-Pacific region, continued investment by providers in China and other AP countries should result in increased growth across the region in the coming years, CIMdata said.

"Our research indicates that the automotive and high tech [industries] continue to be the largest cPDm adopters in 2006," Amann said. "Aerospace and defense (A&D) and fabrication and assembly (F&A), which includes white goods, machine tools, retail and apparel and others, had solid revenues."

He added that all process industry sectors had solid growth. This includes consumer-focused process industries (consumer packaged goods, food and beverage and pharmaceuticals), petrochemical and utilities. Shipbuilding, construction, infrastructure and nontraditional sectors also showed strength based on increasing adoption of PLM by those industries.

"This across-the-board growth demonstrates the universality of PLM in providing business value across such a diverse spectrum of industries," Amann said.

The PLM market analysis report is sold as a stand-alone report or as part of the CIMdata PLM community gold membership. For more details, go to http://www.cimdata.com/publications/reports.html.

Source: CIMdata Inc.