Seeking to push into new markets and expand the functionality of existing products, major product lifecycle management (PLM) market players Agile Software Corp. and Dassault Systemes this week made significant acquisitions.
Agile (San Jose, CA) said it will pay up to $27.5 million for Prodika Inc., a vendor of PLM tools mainly for the food and beverage industry. Dassault (Paris), meanwhile, said it has acquired Dynasim AB, a maker of modeling and simulation software. Dassault did not reveal how much it paid for Dynasim.
Agile's acquisition of Dallas-based Prodika -- scheduled to be completed Friday (June 30) -- continues the company's strategy of focusing on specific vertical industries. Historically, Agile has targeted high-tech manufacturers and, more recently, has added to its product line compliance and other features required by makers of medical devices and other life sciences products. Consumer products goods manufacturers, however, have not been a significant market for Agile. Revenue from CPG manufacturers in recent years has averaged about 5% of Agile's total, said Sarvesh Jagannivas, vice president of industry and field marketing.
Generally, said Ken Crain, CEO of Prodika, CPG manufacturers have been slower than manufacturers in other industries to embrace packaged PLM software. While consumer goods represents about 18% of manufactured goods overall, CPG accounts for only about 10% of the PLM market, Crain estimated.
That is beginning to change, however. Spending on PLM products by CPG manufacturers is growing by between 18% and 25% annually, Crain noted, far faster than the 10% growth rate of the PLM market overall.
"CPG companies -- including food and beverage -- have been latecomers to the market," Jagannivas said. "But PLM within the CPG space is now growing at a fast clip."
Agile chose acquisition rather than internal development to accelerate its entry into the CPG space, Jagannivas said. Unlike Agile's current PLM products, which target discrete manufacturers and focus on bill-of-material data, PLM tools for the process-oriented food and beverage industry like Prodika's revolve around managing product formulation data.
Prodika will be operated as a stand-alone Agile business unit, Jagannivas noted. CEO Crain will be in charge of the Prodika unit.
Agile has no plans to integrate or merge the Prodika products with Agile's product line, although the companies may integrate Agile's analytics tools with the Prodika applications, Crain said.
"[Prodika] is a solution that is purpose built for the CPG and food and beverage industry. We will nurture the product line," Jagannivas said. 'We don't need to merge it with other Agile solutions."
While Agile has signed a few CPG customers -- including Playtex and Herbalife -- it has no shared customers with Prodika, Jagannivas said. Prodika's largest customers include Tyson Foods, Coca Cola, and ConAgra.
For its part, Prodika will benefit by gaining access to Agile's sales and marketing resources and the company's global reach, Crain said. Currently, Prodika sells only to U.S.-based CPG businesses, although the company supports its product in over 70 countries. "We want to sell to companies based outside the U.S. and broaden our support," Crain said.
Unlike Agile's purchase of Prodika, which is designed to open new markets, Dassault's acquisition of Dynasim is intended primarily to enhance the modeling and simulation capabilities of Dassault's existing CATIA CAD tools. Until now, the company's CATIA product has been focused on building models of one or two systems -- such as mechanical or electrical systems -- within an overall design, noted Dassault modeling strategist Gérard Lecina. The addition of Dynasim's Dymola suite, Lecina said, will allow manufacturers to more easily model multiple systems within a design and understand how they interact.
"Our customers are doing products that are more and more complex," Lecina noted. "They need to be able to model the whole design, not just 50% of it."
A 14-year-old company based in Lund, Sweden, Dynasim has built its Dymola suite on top of the Modelica modeling language which has been developed using a partial open source model. Definition of the Modelica specification is controlled by the Modelica Association (Linkoping, Sweden). Libraries that enable modeling of different types of systems using Modelica are open source and are created by individuals and organizations that have access to Modelica source code.
Dassault decided to target Dynasim for acquisition, Lecina said, because its product is based on Modelica. "First we selected the language," Lecina explained. "Modelica is an object-oriented language that allows a very easy, natural way to describe and model a system. And it is an open language which allows for easy, fast development."
While other vendors -- including ITI in Germany -- have announced modeling tools based on Modelica, Dynasim's implementation is the most complete, Lecina said.
Users of Dymola said they hope Dassault's acquisition of Dynasim will stimulate use of and investment in the Modelica language, particularly in the U.S., where so far large manufacturers have not yet standardized on the technology.
"There's no question this will be positive for Modelica. I don't see how it could possibly hurt," noted Michael Tiller, secretary of the Modelica Association and author of a book on Modelica. "Dynasim will now have the resources to put to bear on building a larger support network and greater access to markets, particularly in the U.S."
While manufacturing support for Modelica in the U.S. has been slim, some major manufacturers including Toyota Motor Corp. use Dymola, according to Lecina.
Support by Dassault for the open Modelica language will also help manufacturers avoid becoming dependent on proprietary modeling tools such as the MatLab and Simulink tools from MathWorks Inc. (Natick, MA).