Anthony J. "Tony" Affuso
Chairman, CEO, and President, UGS
Earlier this year, Bain Capital, Silver Lake Partners, and Warburg Pincus jointly bought UGS PLM Solutions from EDS. According to observers, it was the largest private-equity investment ever in a technology company. Affuso heads the newly independent company, UGS.
What does it mean to engineers that UGS is now its own company? They should care because we are now a company totally devoted to software and services. When we were part of EDS, we were just a software company.
What about your R&D budget? Will it increase or decrease? We are increasing it. The private-equity partners are long-term investors and understand the need to invest in R&D. For us, R&D is now 20 percent of revenue. Typically, companies we compete with spend 12 to 15 percent of revenue on R&D. In addition, we are going to increase our technical staff.
And new products? What will we see? We've launched NX3 and Version 16 of Solid Edge. Teamcenter, our PLM suite, will get new modules for manufacturing services and repair processes, and our E factory line will be enhanced.
PLM is certainly a growing niche. But there is confusion as to what it is. What do you say PLM is? Different interests have different views. Wall Street calls it product data management. Our definition of PLM is software systems that reinforce the entire product development process; manage part reuse; 3D modeling; factory simulation; and manage collaboration among design, marketing, and servicing departments. It even extends to helping on the procurement side.
That sounds like a lot of functions. It is, but PLM isn't a one-time event. It's a journey that takes several years. All our customers are somewhere along that journey. We work with customers on where they want to go to.
So where could they go with it? One place is cost reduction. There is a lot of opportunity for reduction of lead time to market and a lot of payback there. There are cost reductions in fewer manufacturing tryouts because, for example, you're working out the bugs in the computer. PLM also provides the opportunity to look at alternatives quicker.
You've written about the connection between PLM and quality. Sum up the connection for us. We're talking about Six Sigma, which applies a consistent set of business practices and problem-solving methodology for using human assets, data, measurements, and statistics to identify factors to decrease waste and defects while increasing customer satisfaction and profit. PLM also applies a consistent set of business technology solutions to support team collaboration, management, dissemination, and use of product-definition information from concept to end of life. They're both focused on improved quality, customer satisfaction, process efficiency, strategic alignment with the extended value chain and profit. Six Sigma supporters claim that its benefits include up to 50 percent process-cost reduction, and more reliable products and services. These are the same benefits delivered by PLM. PLM can and must support Six Sigma methodologies for process improvements and process creation. The ultimate goal of Six Sigma and PLM integration is business transformation, creating a new reality.
Affuso was previously president and CEO of Unigraphics Solutions Inc.