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

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

For existing and future IBM and Dassault customers, the dealshould simplify the engagement process since oftentimes they would have asoftware licensing deal with Dassault and a separate consulting and servicescontract with IBM. "The acquisition will simplify the engagement processbecause sometimes IBM wasn't selling all the Dassault applications at once,"says Dassault President and CEO Bernard Charles. "Now with one set ofcontracts, we can provide the software and the consulting expertise and focuson our application knowledge and industry knowledge. We can work as a team fora total solution delivery without having to share royalties on software, whichwas the case in the past."

While the IBM/Dassault partnership was never exclusive, theproposed sale will give IBM more opportunity to offer consulting andintegration services around other PLM offerings. In June, IBM took some keysteps toward that scenario with the announcement of adeal with Siemens PLM Software on a set of PLM applications and consultingofferings based on Siemens' Teamcenter platform and IBM's middleware andservice-oriented architecture (SOA) framework. "This levels the playing fieldfor Siemens and other players," says Bill Carrelli, vice president of StrategicMarketing for Siemens PLM Software. "There were certainly some differences interms of the relationship (with Dassault) before ... and for clients of IBM, thisopens them up to look at other (PLM) players."

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

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

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