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Has Consolidation Made the PLM Market More Agile?

Written By: Predrag Jakovljevic
Published On: October 22 2003

Event Summary

While the race for the pole position in the still evolving, moving-target product lifecycle management (PLM) market started several years ago, two notable players have recently decided to leapfrog the competition by joining complementary forces. Namely, early in August, Agile Software Corporation (NASDAQ: AGIL), a San Jose, CA-based provider of PLM solutions with historical strength in the high-tech and electronics industries, announced it has entered into a definitive agreement to acquire, Eigner (www.eigner.com ), a German provider of PLM solutions to the automotive, industrial equipment, aerospace and defense (A&D) industries, for an undisclosed consideration comprised of stock and cash. Agile and Eigner expect to complete the acquisition as quickly as possible. Agile hopes that the addition of Eigner's industry expertise in automotive supply chain, industrial machinery, and aerospace and defense to Agile's capabilities in life sciences, consumer products, electronics, and high technology, will makes the combined company a dominant player across all key discrete manufacturing verticals, and will help the company fully recover from the slump it has been in for some time.

Other recent Agile announcements include:

  • Quarterly financial results

  • Acquisition of certain customer assets and the intellectual property of privately-held MS2, Inc., a provider of the product portfolio management solution, MS2 Accelerate

  • Completion of the acquisition of ProductFactory, Inc., another product portfolio management company

  • Completion of the acquisition of oneREV, Inc. of Cupertino, CA, which added important enabling technology that should benefit Agile's customers by speeding the exchange of information between Agile systems and external information sources

  • Launch of Agile MD, a PLM solution designed specifically for the medical device industry in their aim of accelerating time to market, reducing operating and direct material costs, and ensuring regulatory compliance

  • General availability of Agile Product Cost Management 8.5.

Two weeks after the Eigner announcement, on August 19, Agile Software announced somewhat improved results for the first quarter of fiscal 2004, which ended July 31, 2003. Total revenues for the quarter were $18.3 million, a 14 percent increase compared to $16.0 million for Q1 2003, while license revenues were $7.4 million, which is a 7 percent increase compared to $6.9 million a year ago. Net loss for Q1 2004, on a generally accepted accounting principles (GAAP) basis, was still $2.7 million, albeit much less compared to $12.3 million for Q1 2003.

Eigner, a private company founded in 1985 in Karlsruhe, Germany, is now headquartered in Waltham, MA. It serves over 250 customers including Lockheed Martin, Magna Steyr, Siemens, Varian, and ZF. Agile, with over 850 customers around the world, is a leading provider of PLM solutions to the electronics, high technology, life sciences, and consumer product goods (CPG) industries. Agile customers include Dell, Flextronics, GlaxoSmithKline, Hitachi, Johnson & Johnson, Leapfrog, Microsoft, and QUALCOMM.

Eigner's acquisition is the fourth one for Agile this year, but definitely the most notable in terms of functional footprint expansion for Agile. Interesting to note would also be that all four acquired companies were privately held and the terms of the transactions were not made public.

This is Part One of a three-part note.

Part Two will discuss the Market Impact.

Part Three will detail the Challenges and make User Recommendations.

MS2

In June, Agile announced the acquisition of certain customer assets and intellectual property of privately-held MS2, Inc., provider of the product portfolio management solution, MS2 Accelerate. The acquisition further built upon Agile's product portfolio management offering, Agile Program Execution, and Agile pledged to continue to support MS2 Accelerate customers, and offer a migration path for customers to Agile Program Execution. Launched in 1998, MS2 Accelerate integrated portfolio management with product development initiatives and financial information to provide an objective framework for evaluating programs and resource optimization, enabling companies to develop and deliver products faster. Customers common to Agile and MS2 include Aspect Communications, Brooks Automation, and Lucent.

ProductFactory

Further, at the beginning of April, Agile announced that it has completed the acquisition of ProductFactory, Inc., another product portfolio management company, which initially reinforced Agile's investment and commitment to its product portfolio management offering. Agile also then named ProductFactory's CEO, Edward Fields, senior vice president of marketing. Founded in 1999, ProductFactory had been helping companies do more with less by delivering phase-gate portfolio management solutions to the aerospace, automotive and high-tech industries. Prior to the acquisition, Agile licensed the ProductFactory solution in June 2002 to extend Agile's PLM footprint from concept to end-of-life with a comprehensive expansion of Agile's product record, quality, and cost management solutions.

oneRev

Finally, at the end of January, Agile announced that it has completed the acquisition of oneREV, Inc. of Cupertino, CA, which added important enabling technology that should benefit Agile's customers by speeding the exchange of information between Agile systems and external information sources, including information from supply chain partners, from customers' internally maintained information warehouses, or from external supplier catalogs. The increasing pace of product innovation, combined with a move toward outsourced manufacturing, means that manufacturing companies have become increasingly involved in complex product networks to meet changing market demands. This expanding supplier network depends on a constant flow of product information, with information communicated in dozens, and sometimes even hundreds of data formats and reflecting a variety of information systems and component naming conventions.

When Agile looked at problems around product records when companies exchange information, as well as when products move around inside an organization, what it has found was a significant problem around semantics, with different companies using different naming conventions, schemas and standards for product definitions. To that end, oneREV's technology is meant to address the tricky and critical problem of mapping semantics across different systems. What oneREV provides is technology that maps component data from one supply partner, for example, to another, as well as a means to apply automated information.

Agile has also never abandoned in-house development. Quite the contrary, during past two years, Agile has invested about $20 million into its Agile PLM platform, as the country-specific software was developed in India, China, and the US, with offshore initiatives dating back to 1996. The Eigner acquisition should now add a European center to the existing Agile repertoire.

agileMD

In July, Agile announced the launch of agileMD, a PLM solution designed specifically for the medical device industry in their aim of accelerating time to market, reducing operating and direct material costs, and ensuring regulatory compliance, such as satisfying FDA requirements for closed-loop, corrective action/preventative action (CAPA) management and Compliance with FDA Title 21 CFR Part 11, which prescribes the accepted use of electronic records and signatures. The agileMD solution entails:

  • Agile's PLM solution for managing the medical device product record from research and development, clinical trials, regulatory approval, new product introduction (NPI), market acceptance, to product phase-out.

  • Medical device best practices templates that should deliver fast time to value.

  • Validation Protocol Packs aimed at reducing the time and cost to validate an instance of agileMD.

  • MEDSIG, Agile's Medical Industry Special Interest Group, that brings together professionals and thought leaders from across the industry to drive future agileMD development.

  • Agile's Quality Assurance Program that provides customers with the confidence that their solutions exceed the industry standards for quality and compliance.

  • Agile's Guaranteed Business Results Program that ensures customer expectations, milestones, and measurable results are achieved.

  • A partner ecosystem for agileMD, which brings together best of breed partners, including Deloitte Consulting, Adobe, PeopleSoft, and J.D. Edwards, to deliver complementary solutions, solid integrations, consulting, and validation services.

Agile Product Cost Management 8.5

Last but not least, in February, Agile announced the general availability of Agile Product Cost Management 8.5. Agile touts the product is unique among direct materials sourcing solutions in two ways: 1) it is the only such solution to integrate to the product record, and 2) it is the only direct materials sourcing offering which provides cost management visibility across a multi-tiered supply chain. Integration of direct materials sourcing functionality and the product record supposedly enables Agile customers to gain early visibility into new designs, integrate sourcing processes with design operations, and effectively leverage the product record throughout the product life cycle. Multi-tier supplier cost management should provide customers with the ability to expose risks and better manage costs within their extended supplier network. Cost management is becoming an important issue in PLM, with many vendors offering only rudimentary costing capabilities.

This concludes Part One of a three-part note.

Part Two will discuss the market impact.

Part Three will detail challenges and make user recommendations.

About the Authors

Predrag Jakovljevic is a research director with Technology Evaluation Centers, Inc. (TEC), with a focus on the enterprise applications market. He has over fifteen years of manufacturing industry experience, including several years as a power user of IT/ERP, as well as being a consultant/implementer and market analyst. He holds a bachelor's degree in mechanical engineering from the University of Belgrade, Yugoslavia, and he has also been certified in production and inventory management (CPIM) and in integrated resources management (CIRM) by APICS.

Jim Brown has over fifteen years of experience in management consulting and application software focused on the manufacturing industries. Jim is a recognized expert in software solutions for manufacturing and has broad experience in applying enterprise applications such as Product Lifecycle Management, Supply Chain Management, ERP and CRM to improve business performance. Jim is a frequent author and speaker on applying software technology to achieve tangible business benefits. Jim can be reached at jim.brown@tech-clarity.com

 
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