I had recently posted a few excerpts of an interview, given at a venture capital event in Paris, of Bernard Charlès, the CEO of Dassault Systèmes. This time this post is about Dassault Systèmes, a world leader in product life cycle management (PLM) solutions aimed soon to turn to B-to-C 3D environments.

An public company listed (Euronext), Dassault Systèmes is a spin off of jet manufacturer Dassault Aviation – born after a bunch of people decided to market outside the company the CAO software they had devised for internal purpose. 60% of Dassault Systèmes is owned by a number of historical, managerial & institutional investors. Thanks to its locked capital structure, Dassault Systèmes engineers don’t get disturbed by M&A rumors such as Business Objects software guys, which helps the management (Charles Edelstenne, a chartered accountant and significant shareholder, as a President & Bernard Charlès as an executive director) execute their very conservative and yet aggressive acquisition strategy (DS is hot on acquiring strategic targets; e.g. SolidWorks in 1997, MatrixOne in 2006, etc.).

DS competitors include AutoDesk, PTC, SofTech, EDS-PLM Solutions, MSC Software, Aras Corp, Arena Solutions, Agile Software Corporation & Unigraphics on a fast, 2-digit growing but yet cyclical market. Indeed, in case of an economic downturn, R&D budgets are likely to be cut first (which I think is dumb, but what can I do about it?). And since PLM is aimed at R&D departments…

Dassault Systèmes is truly international software company: 60% of its revenues are generated in Asia & the Americas. Unlike a majority of software publishers who prefer to keep product development centralized at corporate headquarters (such as Microsoft does), Dassault Systèmes has R&D centers spread all over the world (France, USA, India, Israel, etc.) – which I think is good in the business of technology: it fosters competition, diversity, creativity & innovation.

Dassault Systèmes has one of the best software development teams worldwide: their people are highly knowledgeable in a number of areas such as C++ programming, 3-D modeling & mathematics, industrialization processes, & mechanical engineering. Oddly enough, and although Dassault Systèmes isn’t famous for paying software developers so well (compensated by a highly technical culture within the company & a number of perks such as preferred shares, no work on week ends, etc.), staff turnover is extremely low. Headhunters spend a lot of time trying to recruit these high flyers for their software clients, but it’s no piece of cake: Dassault Systèmes’ technology is cutting-edge in the industry. DS engineers know too well about their technological competitive advantage and are, as far as I know, usually proud of their company.

DS’s product portfolio include 5 brands: CATIA, DELMIA, SIMULIA, SolidWorks & ENOVIA. Each one of these address specific market segments & functional needs. See for yourself: product engineering for CATIA, life cycle management & product data for ENOVIA, manufacturing process simulation for DELMIA, physical phenomena simulation for SIMULIA, etc.. In total, DS’s 5 brands have been packaged into 400 different products!

Dassault Systèmes’ 90,000 clients include Boeing, Embraer, Airbus Industries, Toyota, Smoby, Essilor, Nordica, and, this is pretty new, a number of pharmaceutical companies. One of Dassault Systèmes’ major upcoming challenge, considering the sector diversity of its clients, will be to integrate its clients’ know-how into DS products.

When it comes to distribution & integration, DS rests on a vast ecosystem of local VAD and global partners. The most noticeable of these partners being IBM: Dassault Systèmes & IBM Software Group have been working together for more than 25 years. The latter is responsible for marketing & deploying the solution to Fortune 500 corporate accounts – which enables DS to focus on its core business: crème-de-la-crème product development.

A few figures now: DS is to generate US$ 1.5 bn of revenues this year, representing a US$ 6.5bn market cap. Its business model is one of the most profitable in the entire software industry, with gross margins reaching 48%. DS employs 7000 people, amongst which 3000 are R&D engineers (1,700 of them are located just outside Paris, in Suresnes).

Let’s add to it some corporate bullshit: DS’s vision is that “3D opens the door to the world we imagine“, and its mission is to “enable people to create innovative products & experience the whole life cycle to build a better environment for the future“.

Last but not least, Dassault Systèmes has always led market trends: I take the company’s ability to drive strategic shifts successfully very seriously. Check this out: in the 1970s, DS was in 2D CAD; it turned to 3D CAD in 1985. It turned to process modeling in 1995, and packaged the whole thing into PLM solutions in early 2000. Now the company’s been focusing on integrating more client knowledge into its products. Its roadmap include turning to realistic simulation and 3D collaborative tools at the 2010 horizon.

Dassault Systèmes has always operated in the B-to-B market, leaving a share of the pie to its value-added resellers. At Capital IT in Paris recently, CEO Bernard Charlès announced Dassault Systèmes was to turn in the short term to the consumer market. In Bernard Charlès own words, DS is to come out very soon not with a Second Life-like, but with a “First Life”. The underlying rationale of this strategy being to provide a tri-dimensional environment to everyone. Turning to B-to-C is so exciting! Considering the tradition of the company to deliver top quality products, I hardly see any market adoption risk.

Needless to say, I purchased 50 Dassault Systèmes shares @ a EUR 40.55 price each, after running the company numbers thoroughly. I’m confident on the company’s long term potential, and I’m holding the stock until it reaches EUR 65 – which according to my financial forecast & crash test should occur within a 24 months time line.

Like

Unlike

If you plan on joining a B-to-B software company (or ISV, independent software vendor) or investing in one, here are 2 success factors I noticed while watching the start up market that will help you make a decision. You want to join a winner, right?

1. The shorter the sales cycle, the better. I know it’s obvious, but on top of finding it harder to keep one’s sales force motivated, a short sales cycle show the market is mature for a product and needn’t be evangelized. An ISV may shorten its sales cycle through doing its marketing homework: thoroughly measure ROI and express the result of it in payback will do. For instance, in their presentation, fast deal makers don’t write “our software will improve your operations by 10%” but “ROI = 9 months” rather. Clients don’t want to listen to an outsider telling them how to run their business, but what value for money you offer them. And of course, top-tier pre-sales guys and sales reps are prepared to show the appropriate backup as potential clients will ask for it for sure.
2. Deployment should be as seamless as possible to enhance scalability. The less consulting work (interfacing, parameterizing, etc.) is needed to install your solution, the better. Heavy deployment interventions are a real constraint to developing fast. Why? The rationale behind it is crystal-clear: clients will of course look at the value the ISV solution will create on their business, but also at the start up capacity to deliver. And since it’s really hard to seize consulting teams in today’s job market, tedious deployment requirements will harm the capacity of the ISV to deliver on schedule. Consequently, the ability of the software company to close deals with clients, in other words Sales, will be harmed as well. Seamless deployment is key to a fast development.

Hope this will help you pick up your horse!

Like

Unlike

13 out of my last 15 posts didn’t get any comment. But you know what? I don’t care about comments anymore.

I used to think the quality of a blog wasn’t measured by traffic, but by the number of comments your visitors leave rather. My point used to be: if people leave a comment, it means you have managed to embrace a turn-the-table approach that fosters interest, curiosity & will to debate.

I was wrong. Maybe I’ve been maturing towards a better understanding of the blogosphere, I don’t know. All I know is that the only metric I’ll be using from now on is “am I having fun or learning something dedicating 40 minutes a day blogging?”.

As of now, I am having fun trying to make use of my brains, and learning as well, as my new approach of blogging relies on taking notes to keep track of ideas & theories I may have had and my current state of mind. Put it that way: this blog is a personal knowledge management platform made public.

Hope my fellow co-bloggers will approve…

Like

Unlike

Everyone working close to high tech hears the word “XML” at least thrice a day. Back in 2001 when XML was in the process of democratizing, everyone became crazy about it. Some venture capitalists exclusively wanted to invest in start ups that “used XML” – hence the famous dummy investor question: “does your product use XML?” (see an occurrence here in a Paul Graham essay). I was sort of taking part of a conversation this week that included at some point a question very similar to what used to happen with XML: “do you have Ajax on your website?”. I immediately thought I would very quickly draw a very simple historical vision linking these 2 technologies to lower the risk of hearing such things again (focus on the use, not the technology).

XML (Extensible Markup Language) introduced a major change vs. put-and-get-between-client-and-web server HTML.

XML allows for tearing apart data & the actual layout. Structured content ease applications when communicating together, without having humans interact in this whole process. On top of being conceptually interesting, XML making a difference between content & form help limit the load of data circulating on the network. Consequently, it is now possible to access the same data from different terminal devices (PCs, TVs, PDAs, mobile phones, pagers, watches, showers, etc.). Sending data through XML messages is called “parsing”.

Although I’m not going to give any better explanation on XML than Wikipedia, O’Reilly and W3, I see 2 reasons why XML is a long term thing on the Web:

1. XML is both readable by a human and a machine;
2. XML is text, the most widespread standard in the world (no proprietary format).

XML helped give birth to Ajax, an asynchronous combination of script language Javascript & XML.

Ajax basically allows, through on-the-fly data parsing, for refreshing part of a web page. Thanks to Ajax, you don’t need to reload the page and send the same requests all over again everytime you breathe. In other words, Ajax saves bandwidth – hence the device portability potential of such a technology (ex. Google Reader on a Smartphone).

Ajax is one of the technologies behind the web app takeoff: a good Ajax programmer can now build applications that compete in performance against fat-client, more traditional software.

Like

Unlike

Tonight, I moved all my stuff from Paris outskirts Ecole Centrale campus back to Paris

4 hours of class to go (and a few more skipped, but shhhhhh) and I won’t be a student anymore. That’s SO weird. I can’t say anything else than “I’m a student” when introducing myself. I’ll have to come up with something new I guess.

I had a great time in all the institutions I had a chance enough to occupy a lecture room chair, and had a lot of fun everywhere I went to.

I thought I wouldn’t feel bad leaving my student status, but actually I am sad.

Like

Unlike