Background
Given its size as the largest product lifecycle management (PLM) vendor worldwide and its status as a major force in Europe for 3D computer-assisted design (3D CAD) as well as PLM, Dassault Systmes does not seem to garner North American media/analyst attention and respect equivalent to its global position. From a marketing perspective, it is one of those situations where the sum of the parts does not necessarily equal the whole. One clear reason for this is the fact that the Americas represent only 30 percent of the company's total revenues for fiscal year 2005, while Asia represents 23 percent, and Europe represents 47 percent. Additionally, most of the competition, including second-ranked UGS, as well as Agile, Arena, MatrixOne, and PTC, are all US-based software companies, and thus capture headlines more frequently.
This is all about to change, however, as Dassault Systmes made a major splash with its recently announced $408 million (USD) cash acquisition of MatrixOne, a leading provider of collaborative PLM solutions for an impressive clientele. The deal has been approved by both companies' boards of directors, and will not only expand Dassault Systmes' lead in PLM revenues, but will also bring it closer to the forefront as a North American force in the CAD and PLM markets.
Dassault Systmes' product suite is comprehensive, but sometimes seen as complex and confusing, given product name similarities. In 2005 the software vendor made strides to leverage the competitive advantages of each brand:
Significant challenges remain to be addressed in order for the benefits of this merger to come to fruition. The most notable challenges will be rationalization of the product suites, research and development (R&D) unification, MatrixOne product service continuity, as well as rationalization of organizational structures. Merging organizations is never easy, and an awkward "who's-responsible-for-what" period inevitably results, at the executive levels, within product marketing, and with the transition of joint product development plans. As for R&D synergy, Dassault Systmes argued that it has a two-year development plan, and that there will be only a limited impact on this plan. A timeline for rationalization was not delineated, nor were specifics of organizational challenges, such as the merger of numerous channel partnerships (MatrixOne has fifty-four active partners) developed by both companies across common territories and coverage areas. One thing that is clear is that IBM's role in selling and servicing the joint solutions portfolio will likely increase over time.
While perhaps not the first PLM software vendor to jump to mind in North America, Dassault Systmes is a significant force in the PLM market, and warrants more scrutiny by the industry analyst community. Prospects for product lifecycle management software likewise warrant a close look. With the acquisition of MatrixOne, enhanced scrutiny is likely to be the case. But first the focus needs to be placed on the ongoing organizational rationalization of two companies with different business cultures. How dramatically the MatrixOne organizational structures and internal business culture change over time, and how MatrixOne employees react to the acquisition and resulting organizational changes, will be telling. Gartner is already hedging any speculation on the part of Dassault Systmes that the joined entities will catapult them into the leader's quadrant. There is far too much work to be done. From a product technology perspective, R&D synergy can be elusive in technology mergers of this kind, and success requires balance and trade-offs. Data synchronization of the three PDM variants (Enovia, Smarteam, and MatrixOne) can be a chore, and should also be watched with interest. As timelines for product rationalization are developed, new prospects will have some difficult choices, but in the long term, the potential of a joined product suite is considerable.