Expanding an existing relationship, UGS Corp. yesterday disclosed that it has tapped IBM to resell collaborative product data management (cPDM) software to small to medium-sized businesses (SMBs) domestically and across the globe.
Under terms of the reseller arrangement, IBM will market, sell, and support UGS's Teamcenter Express software and services to SMB customers in six countries: the U.S., Canada, France, Germany, Japan, and China. Unveiled 15 months ago, Teamcenter Express -- the cPDM component of the UGS Velocity Series portfolio for the mid-market -- includes preconfigured software templates for SMBs in the machinery, automotive, and aerospace and defense industries. The software can be used in multi computer-aided design environments that include UGS NX and Solid Edge CAD software as well as third-party applications from Autodesk, Dassault, and PTC.
Disclosure of the deal follows the release late last year of IBM's Product Development Integration Framework (PDIF). The PDIF lays out an PLM industry ecosystem of vendors -- including UGS -- whose products use IBM's WebSphere middleware as the foundation of their service-oriented architectures.
The latest reseller agreement also represents an expansion of UGS's relationship with IBM. The industry giant's Global Services unit currently provides system integration services to companies across the industrial space interested in deploying UGS's PLM software in conjunction with other enterprise packages, including ERP software, according to Kerry Grimes, UGS's vice president of midmarket and global channel sales .
The deal, moreover, comes at a pivotal time for UGS. The company is pushing hard to jumpstart revenues generated by its fledgling indirect sales channel amid a slowdown in the torrid growth it has experienced since its independence from EDS two-and-half years ago. Although UGS posted its thirteenth consecutive growth period in its recently completed fiscal third quarter, the company's top line increased only 1.8% to $295.5 million in the period, a figure well below recent quarterly growth rates.
Last fall, UGS said indirect revenues had grown 35% from the prior year, and that the company had met its 2006 channel capacity goal -- which was to increase its number of resellers by 50%.
IBM, which has a long-standing agreement with Dassault that has recently moved downstream to include SMBs in the industrial machinery and aerospace segments, sees the agreement with UGS as a means to further meet the product data management needs of industrial and utilities customers. "IBM's philosophy is focused on giving customers the broadest choice possible," noted Elaine Case, IBM's vice president of business solutions, in an interview.
Dassault, she said, remains an important IBM partner. "This [deal with UGS] is all about looking at what products customers want," she added.
And in Teamcenter Express, IBM gets a product that is leads in the SMB market, UGS's Grimes claimed. Smaller companies with fewer IT resources like Teamcenter Express's preconfigured approach to PDM, which saves them serious deployment and integration time and effort, he said.
"SMB customers do not have the money to customize software ... They also do not have [established] business practices in using this type of software," Grimes explained.
For UGS, the deal gives the company a big-name backer and more feet on the street to pitch Teamcenter Express, noted Ken Amann, a PLM industry analyst with CIMdata. "For [UGS] and PTC for that matter, any time they get business from IBM it means taking business from Dassault," Amman pointed out.
Although it did not put a figure on how much Teamcenter software has been sold in 2006, UGS recently disclosed a number of high-profile wins. UGS pointed to Wanfeng Auto Holding Group, which selected the software for its first cPDM system. Meerecompany, a South Korean mid-sized manufacturer of LCD/semiconductor equipment, is said to have selected UGS's Solid Edge CAD software in conjunction with Teamcenter Express as its first PLM system. And Siemens Gas Turbine Parts Ltd., UGS noted, recently implemented Teamcenter Express as its PLM backbone.
CIMdata's Amann said it isn't clear how successful Teamcenter Express has been, since it has only been available for a short time primarily through a reseller channel that is just now emerging. The initial verdict will come when UGS discloses its fiscal fourth quarter financial results later in the first calendar quarter, he said. "We'll see now that the channel is in place how much business is being closed and how much revenue [Teamcenter Express] is generating," Amann noted.
For IBM, the UGS deal provides the industry giant with yet another vehicle to help penetrate the SMB market -- a segment the company has increasingly emphasized over the last few years. In fact, SMBs now account for approximately 20% of IBM's overall revenues, Case said. And the plan, she noted, is to move the percentage higher over time -- not just in selling PLM software and services but across the entire business-technology spectrum.
Amann noted that IBM has been working to position itself more effectively in the SMB space. "This gives IBM the ability to broaden its footprint."