Dassault Agrees to Buy Its IBM Sales Channel for $600M

The agreement ends a sales relationship between the PLM provider and Big Blue that has stretched across three decades.

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Posted on Oct 27, 2009

Like a protégé that has grown out from underneath its mentor’s wing, PLM pioneer Dassault Systèmes today said it would spend $600 million to buy the IBM division dedicated to selling Dassault products to large enterprises, a move that ends a long-standing software reseller alliance between the two companies. From the time of Dassault’s founding in 1981, IBM had acted either as the primary sales channel or an instrumental reseller for the PLM company. Under the terms of today’s deal, which is expected to close in the first half of 2010, 700 IBM employees who have sold Dassault products to 1,000 large manufacturers worldwide will now ply their trade under Dassault’s auspices. IBM will continue to offer systems integration and other services to Dassault customers, but will no longer sell the company’s PLM software. Dassault executives today characterized the arrangement as a way to simplify its customer-facing operations. “After completion of the transaction and integration of the two companies’ PLM operations, DS PLM customers will benefit from simplified engagement and support processes for DS’ market-leading PLM product portfolio,” a Dassault statement read. The companies will remain business partners, with Dassault elevated to IBM Global Alliance partner status. “This is an evolution that’s been going on for a while, and they’re finally just finishing it off,” said Ken Amann, who follows the PLM industry for analyst firm CIMdata. “I think it’s probably time for both of them to change their relationship. It’s probably good for both of them.” From a customer perspective, the deal may not usher in great changes. But for Dassault, the move is the latest in a series of tectonic shifts that have helped define its place in the PLM market. In 2007 Dassault dropped IBM as a reseller of its software to small and mid-sized companies, preferring to handle those sales on its own. IBM remained a reseller of Dassault software to large enterprises. Now that that last vestige of their reseller partnership has dissolved, the two are free to collaborate in new ways, Dassault executives said today. Cloud computing will be one such area. Earlier this month at Dassault’s customer conference, CEO Bernard Charles emphasized the company’s push to facilitate cloud-based deployments of its current-generation V6 platform, and said IBM would play a prominent role in that effort. Today, in response to a question from Managing Automation on a conference call with the media, Charles reiterated that point. “Clearly we’ve worked a lot with IBM, and I think it’s a great company to lead the activity with us on private clouds.” Among the additional areas in which the allies will support each other’s market efforts will be professional services, middleware, IBM-based financing, hardware, and sales and distribution in the context of complementary sales opportunities — for instance where IBM hardware or middleware supports a Dassault software deployment. “We can work as a team with IBM for the total solution delivery, without having to share the royalties on the application selling,” Charles said. He also noted that the global alliance relationship with IBM is not exclusive. Indeed, IBM has forged ties with Dassault competitors PTC and Siemens PLM for various integrated sales opportunities. “I think that those two vendors are probably going to be happy [about today’s deal],” Amann said, “and they’ll think that they can go get more of IBM’s business. Whether they can or not is a different question.”

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