CIMdata: PLM Market Grows 10.4% in 2006, Expected to Exceed $30B by 2011

April 12, 2007 // Published as a news service by IHS

CIMdata attributes this growth rate to continued recognition of the value of PLM in improving business performance. PLM investments are forecast to continue to climb over the next five years, increasing at a compound annual growth rate of 8.5% to exceed $30B by 2011.

PLM is the product information backbone for a company and its extended enterprise. In addition to technologies, it includes a strategic business approach that applies a consistent set of business solutions to support the collaborative creation, management, dissemination and use of product definition information across the enterprise from concept to end of life.

CIMdata divides the PLM market into two subsectors:

• PLM information authoring and analysis applications (tools), including:
  • Mechanical computer-aided design (MCAD).
  • Computer-aided manufacturing (CAM).
  • Electronic design automation (EDA).
  • Engineering simulation.
  • Analysis and technical publishing.
• Collaborative product definition management (cPDm), which focuses on collaboration, management and sharing of product-related information and covers approaches such as:
  • Product data management (PDM).
  • Collaboration and visualization.
  • Data exchange.
  • Portfolio management.
  • Compliance management.
  • Strategic sourcing.
  • Enterprise application integration.
  • Workflow.
  • Functional applications such as configuration management and solutions for specific industries or businesses.

Historically, the tools sector has received the largest amount of investment, although growth of that sector has consistently been slower than that for cPDm. In 2006, industry investments in tools were above forecasts. According to CIMdata, $13.2 billion was spent in 2006 worldwide on PLM tools.

Growth in this sector was primarily driven by investments in EDA (up 11.9%) and midrange MCAD (up 11%). Areas such as high-end MCAD and simulation and analysis experienced relatively lower growth. The tools portion of the PLM market is forecasted to grow at a compound annual growth rate (CAGR) of 5.3% over the next five years to reach $17.1B by 2011, according to CIMdata.

CIMdata identified expenditures on cPDm as the fastest-growing sector of PLM. The cPDm portion of the PLM market met the forecast for growth and reached $6.9B in 2006, an increase of 12.9% over 2005, according to CIMdata research. The cPDm segment is expected to grow to $7.8B in 2007 and reach $13B by 2011 for a CAGR of 13.6%.

CIMdata statistics indicate that cPDm growth continued in all industry and geographic sectors for 2006. Europe, the Middle East and Africa (EMEA) and the Americas maintained solid growth with the Americas growing 14.1% and EMEA up 13.8%. Asia-Pacific continues to be a major opportunity, according to CIMdata. While Japan dominated the 8.2% growth in Asia-Pacific (AP), continued investment by solution providers in China and other AP countries should result in increased growth across the region.

Automotive and high-tech were the largest cPDm adopters in 2006. Aerospace and defense (A&D) and fabrication and assembly (F&A), which includes white goods, machine tools and retail and apparel, had solid revenues.

All process industry sectors, including consumer-focused process industries (consumer packaged goods, food and beverage and pharmaceuticals), petrochemical and utilities, had solid growth. Shipbuilding, construction, infrastructure and nontraditional industries also showed strength based on increasing adoption of PLM, according to CIMdata research.

"Strong market growth continues to be driven by heavy investments from manufacturers of all sizes implementing PLM in record numbers," said Ed Miller, CIMdata president. "PLM is enabling enterprises of all sizes to bring continuous streams of winning products to market more efficiently, accelerate their product development and introduction processes, maintain high quality and provide greater agility in adapting to rapidly shifting market and competitive trends."

According to Miller, the scope of PLM continues to evolve and expand, extending its reach across the enterprise from product planning and design to production, service and product support. He said the impact of this PLM footprint expansion is that many diverse, previously isolated disciplines and pockets of automation are being integrated and coordinated through unified PLM solutions at a growing number of companies.

"PLM is an enterprise enabler for achieving product and process innovation, and it is the foundation of many business initiatives including strategic product planning, integrated product development, design collaboration, supply chain management, digital manufacturing and global resource [use]," Miller said.

" ... PLM has become a critical enterprise investment and is widely regarded by some of the world's most successful companies as a competitive necessity in today's global economy. Now and in the years to come, industry-leading manufacturers with the greatest profitability and success will be those with PLM as part of their corporate strategy," he said.

A diverse group of suppliers provide PLM solutions and services, said Ken Amann, CIMdata director of research. Some of these suppliers focus on specific technologies or industries such as model driven architecture (MDA), EDA, computer-aided software engineering (CASE) or analysis and simulation.

Others deliver broad management and collaboration solutions that are the information backbone for PLM initiatives. Many PLM solution suppliers partner with suppliers of complementary technologies and applications in order to deliver more comprehensive enterprise PLM solutions than each could provide individually.

Comprehensive technology suppliers, which have broad product suites designed to manage the full lifecycle, represent the foundation of PLM. These suppliers continue to expand their product suites to meet customer needs.

"Increased end-user investments are being driven by the continually broadening scope of enterprisewide implementations, expansion into new areas such as digital manufacturing, strategic product planning, compliance management, industry-focused packaged solutions and integration with other business initiatives such as customer relationship management (CRM)," Amann said.

Comprehensive PLM technology suppliers and focused application suppliers are packaging their products into solutions that focus on and support the practices of specific industries (automotive, aerospace, high-tech electronics) and business problems such as compliance, Amann said. Many of the larger PLM suppliers provide multiple solutions, each focusing on specific industries and sizes of companies.

Independent consultancies, systems integrators (SIs) and value-added resellers (VARs) continue to expand their PLM programs in response to the growing demand for such services. Major comprehensive technology suppliers expanded their direct service delivery programs and increased their development of alliances with SIs and VARs.

"Consultancies and SIs are growing PLM programs by teaming with one or more of the comprehensive technology suppliers as well as expanding their own PLM knowledge staff," Amann said.

Application suppliers focused on specific technologies and functions that are part of an overall PLM environment continue to expand the PLM footprint by adding extended capabilities and value to PLM implementations. Examples include service-after-sales, strategic sourcing and materials compliance solutions.

According to CIMdata, the area of simulation and analysis continues to receive emphasis, with expanded solutions to manage these environments and integrate them more fully into a full PLM program emerging and transitioning this sector of the market toward comprehensive enterprise simulation management (ESM) support.

Source: CIMdata Inc.