Upheaval in the PLM market: Daimler and Chrysler are separating from former partner Dassault Systemes and are doing development work with Siemens PLM software. On the other hand, BMW has settled on Dassault in the E/E domain. In turn, Hyundai has chosen PTC’s Windchill as its collaboration software, making it the backbone of its PLM strategy. The PLM market is on the move in a big way.
Old alliances are collapsing and new partnerships are emerging, on terrain that had been clearly delineated for automakers and suppliers for decades. The latest deal so far has also been the most spectacular.
"Daimler currently uses Catia as its CAD software in various business areas,” a Daimler spokesman said. "The company will migrate this application completely to NX." And Dassault made no secret of its disappointment in a press release. There was some explosive material in its statement. With the loss of Daimler, Dassault is losing one of the large automakers and a good deal of money.
Until now, Dassault’s role as the market leader has scarcely been contested. Morgan Stanley analysts conservatively put its annual loss at 15 to 20 million euros. That is roughly 1 percent of Dassault’s total revenue, but also just the tip of the iceberg.
For one thing, charges for data integration and adaptation are on top of the license fees. But even more importantly, a legion of tier 1 and tier 2 suppliers move in sync with Daimler. They more or less have to adopt whatever decision the company makes.
That's why rival PTC properly calls customers with more than $10 billion in revenue "dominoes,” referring to all the important automakers and the major suppliers. The providers battle tooth and nail for their favor. Market share is ultimately at stake.
Chrysler's change caused an uproar
More than in Europe, Chrysler's migration from Dassault to Siemens PLM caused an uproar in the US not so long ago. This was shortly after Fiat took its stake in the US automaker. The move was understandable. Fiat already used NX in the CAD area and Siemens software in its entire PLM area
That is arguably not the sole reason for the movement in the market. A Chrysler systems engineer has found a startling and equally plausible explanation. He points to the fact that successful companies characteristically rest on their laurels and are caught napping when the latest developments come along.
In the press, a Chrysler executive called it the “fat, dumb and lucky” syndrome. He was referring to Dassault, although its major rivals have to stay just as alert to the syndrome.
The reasons for the sudden shift on the auto industry’s PLM terrain run more deeply. Besides rising cost pressures and global overcapacity, which persists despite the boom in China, the rising complexity in design and development has led many automakers to take another look at their systems.
Pressure on development times is rising. New models or model variants are coming out at an increasingly fast pace. From every standpoint, the best available technology on the market is in demand, especially in Germany.
Here it is increasingly clear that an engineer shortage makes it necessary to deploy human resources as well as possible.
This is a true paradigm shift. There has naturally always been competition between systems providers. But in the past few years, customers, especially the automakers, have hardly ever made a move.
That's understandable. The conversion to a new, overall system takes at least 10 years, as Alfred Katzenbach, Daimler's manager for engineering IT, explained. And it entails considerable risk to processes and ties up immense staff and financial resources.
But now nearly all car companies are taking a close look at their systems. Audi (Catia/Creo) is specifically referring to a review. Parent company Volkswagen is more hesitant, saying it is "constantly watching the market."
The introduction of Dassault’s new Catia V6 is certainly playing a major role. Not every company has greeted it as enthusiastically as Renault has. Early on, it decided to introduce the system across all its brands worldwide.
In many development departments, people still shudder at the thought of their conversion from Catia V4 to V5. It was beset with seriouis problems due to insufficient “backward compatibility." Many are already thinking about switching suppliers and not just systems.
A handful of heavyweights are courting the customers. Dassault remains the favorite, Siemens PLM is its toughest competitor, and US-based PTC, in third place, gets to watch the two at the top battle it out.
In data management, the Americans have established Windchill alongside Siemens Teamcenter and Dassault’s Enovia. The Creo product family (previously Pro/Engineer) represents the company in the development realm.
Besides Hyundai and powertrain development at some other automakers, PTC has lately tended to land suppliers (Continental, ZF) as its major customers.
One main argument in the competition is the openness of the system. Automakers above all want systems that can communicate with one another and that are suited to their own or still other applications. The goal is not to be overly wed to a single supplier when they make decisions in the future.
In the CAD area, Volkswagen has deliberately turned to a two-system strategy with Dassault’s Catia and PTC’s Creo-Pro/Engineer.
Only six of the 16 leading global automakers have universally put their faith in the same supplier for the entire PLM area (development, product data management, manufacturing).
But that means significant maintenance and conversion expenses, for there is no general, manufacturer-independent standard for the exchange of product data.
A study by RAAD Research and Contract Software titled "PLM Potential 2010" came to this forthright conclusion: “With regard to standardization, users ought to not overly pin their hopes on providers’ initiatives. They earn good money from the format convertors that they sell, and standardization would deprive them of a source of revenue.”
RAAD based the study on a survey of German manufacturers.
Standardization would help
Standardization would not only offer savings to automakers. It would also facilitate the switch from one provider to another.
But as the weakest link in the chain, auto suppliers would primarily benefit. If they supply to several manufacturers, they mostly have to deal with several systems, in the CAD area, for example.
“But no engineer can perform NX, Catia and Creo equally well,” said Steven Vettermann, general manager of the ProSTEP iViP association. “For the supplier, two systems don’t just mean a duplication of software, but manpower as well.”
ProSTEP iViP is pursuing standardization in product data management and virtual product development, bringing automakers, suppliers and the IT industry together for this purpose.
With file formats such as Step and JT, it is possible to “mitigate the greatest need,” said Vettermann. A great deal of potential lies slumbering here.
There may be a thousand small and micro systems at the automakers themselves, aside from the large systems. They are often developed or customized in-house and are hardly straighforward.
As a result, all the major automakers employ “data hunters,” sometimes 50 of them or more. Little by little, they track down data pools slumbering out of view. This is a time-consuming and expensive proposition: According to one study, the data search accounts for more than half the time spent on a simulation, for example.
That time is valuable. And it might be in short supply somewhere else.
-By Gert Reiling