Some observations on Dassault Systèmes Q2 2012

I thought to touch on a few topics mentioned in Dassault Systèmes Q2 announcements. Firstly, Dassault’s results were commendable and I’m sure that the press and my colleagues in the financial and industry analyst community will comment on these in more detail over the forthcoming days.

It’s the first time I reflected on their new slogan “IF WE ask the right questions, we can change the world”. To Dassault’s credit, a great slogan and one that’s sits well with their on-going verticalisation initiatives.

Bernard Charles noted that Dassault were seeing a reverse sales “domino effect”.  The “domino effect” probably (?) refers to one of their competitor’s comments dating back to 2009 on a program focused on major competitive displacement. A major sales deferral/setback was highlighted in the same competitors’ earnings announcements earlier this year. May this have been one such instance, perhaps?

Bernard Charles referred to increasing focus on “Advanced Asset Lifecycle Management”.  This is an interesting area of expansion with new competitors, many of whom are smaller companies such as Apriso (manufacturing operations management), as noted by Bernard Charles. Of course, asset lifecycle management is also an area of significant focus for larger competitors; IBM with Maximo as one example. Recent expansion of the DELMIA portfolio to include recently acquired Intercim will no doubt help to capture both new customers, and adjacent revenues from within Dassault’s customer base; it may also serve in part to counter to the breadth of manufacturing offerings from their significant competitor, Siemens.

Dassault’s acquisition of Gemcom earlier this year has now closed. GEOVIA, as it now named, provides some interesting opportunities for short term verticals expansion. Bernard Charles’ comments on achieving sub-meter fidelity of (3D) data indicates possible aspirations beyond that of traditional Dassault Systèmes markets; infrastructure being one that comes immediately to mind. If this is the case, Dassault Systèmes will face new competition;  Autodesk (their infrastructure Solutions business), Bentley Systems and Intergraph (Hexagon Group) amongst them. One can, of course expand this thought further to consider whether Dassault will expand their offerings to touch on areas of geospatial intelligence, with companies such as ESRI in play.

Finally, on the topic of their recent disposal of their Transcat operations; Bernard Charles noted that this reflected execution of strategies defined many years ago. I for one see this as being fairer to the ‘Indirect’ channel, some of whose members viewed TransCAT as having a preferential situation in Dassault’s channel. Acquisition of IBM PLM, direct channel partners pre/post IBM PLM and the SolidWorks acquisition in 1997 resulted in a three tier sales ecosystem; Direct, Indirect and Volume. (Bernard Charles’ words, not mine). With rumours of new Cloud based solutions, SolidWorks II (and/or CATIA Lite) and the SolidWorks channel already cross-selling other Dassault branded products, it could be that we will see further refinement (perhaps even redefinition) of go-to-market and channels strategies. Only time will tell.