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Dassault to Acquire IBM's PLM Sales And Consulting Arm

Dassault to Acquire IBM's PLM Sales And Consulting Arm

Culminating a nearly 30-year relationship around CAD and Product Lifecycle Management (PLM) software, IBM and Dassault Systemes have entered into a deal in which Dassault plans to acquire IBM's sales and consulting operations around PLM for the hefty price tag of $600 million in cash.

The deal, the largest in Dassault's history, will allow both companies to concentrate on their core competencies. IBM, which has been selling components of the Dassault suite, including its CATIA 3D CAD software and ENOVIA data management software, will now focus exclusively on its consulting and integration services for the broad spectrum of PLM offerings in addition to selling its middleware and infrastructure products. For its part, Dassault, which will gain ownership of its complete PLM application portfolio as well as existing customer contracts and related assets, will now have direct control over the sales process and more interaction with its PLM customers.

For existing and future IBM and Dassault customers, the deal should simplify the engagement process since oftentimes they would have a software licensing deal with Dassault and a separate consulting and services contract with IBM. "The acquisition will simplify the engagement process because sometimes IBM wasn't selling all the Dassault applications at once," says Dassault President and CEO Bernard Charles. "Now with one set of contracts, we can provide the software and the consulting expertise and focus on our application knowledge and industry knowledge. We can work as a team for a total solution delivery without having to share royalties on software, which was the case in the past."

While the IBM/Dassault partnership was never exclusive, the proposed sale will give IBM more opportunity to offer consulting and integration services around other PLM offerings. In June, IBM took some key steps toward that scenario with the announcement of a deal with Siemens PLM Software on a set of PLM applications and consulting offerings based on Siemens' Teamcenter platform and IBM's middleware and service-oriented architecture (SOA) framework. "This levels the playing field for Siemens and other players," says Bill Carrelli, vice president of Strategic Marketing for Siemens PLM Software. "There were certainly some differences in terms of the relationship (with Dassault) before ... and for clients of IBM, this opens them up to look at other (PLM) players."

Industry analysts played down the idea of the announcement signaling a rift between IBM and Dassault, but rather say that the timing is right to go their separate ways and the move will ultimately benefit customers. "It gives customers direct contact and direct dialog with the owner of the software," says Ed Miller, president of CIMdata Inc., a market research firm specializing in PLM and product development. "This is a big deal. Nearly all the big CATIA sales have gone through IBM and now (those customers) are getting direct participation with Dassault. Many of them are very happy about that."

As part of the acquisition announcement, IBM says Dassault will continue to remain a close development and integration partner via Dassault's appointment as an IBM Global Alliance Partner. The deal, which is expected to be complete in the first half of 2010, calls for nearly 700 IBM employees to become part of the Dassault organization. Managing that integration seamlessly will be Dassault bigger challenge going forward, Miller says.

Carrelli, who has experienced firsthand the difficulties in melding organizations, agrees. Siemens PLM software grew by acquisition over the last few years and the company has toiled over the years to integrate both the people and the disparate technologies into a cohesive PLM solution. "While the technology isn't changing, the people issue is still huge," he says. "You can't underestimate that."

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