Unless you’ve been operating without the Internet, a mobile phone or any connection to the outside world for the last week, by now you should have heard/seen the news. Announced on June 14th, Dassault Systèmes has entered into an agreement to acquire a majority stake in Centric Software. Taking the industry by storm (and, in most cases, surprise) this topic has been a popular one indeed. In fact, over the last seven days, it’s been the most read content here on WhichPLM, above even our homepage.
Eager to dive into the grit of this deal, WhichPLM was thankful to have been invited to attend the “Partners & Analysts Briefing”, hosted on 19th June by Centric Software’s SVP of Global Sales, Fabrice Canonge. The information shared here, and in additional conversations we’ve had with the businesses, has helped us gain a better understanding of just what this deal will mean going forward – to both businesses involved, as well as the wider market.
Firstly, let’s quickly break down the respective companies. Based out of Silicon Valley, Centric Software is a well-known provider of PLM solutions for retail, footwear and apparel, with popular customers like ASICS, Bestseller, Kate Spade, Louis Vuitton, Michael Kors, Ted Baker, and Tommy Hilfiger. Their RFA PLM platform is used for merchandise planning, product specifications, materials management, product sourcing, cost scenarios, collection management, calendar management and quality management, on desktop and also optimized for mobile devices, to increase efficiency, accelerate time to market, and improve sales and product margins. The business has become an industry leader – when we look at number of PLM sales – in recent years.
Dassault Systèmes, headquartered in Vèlizy-Villacoublay in France, is their own success story. Also a provider of PLM, Dassault Systèmes is a world leader in 3D, serving 220,000 customers, with a €32 billion market capitalisation, and €3 billion cash. The business operates 11 brands (and readers will likely be most familiar with ENOVIA, SOLIDWORKS, CATIA, and 3DEXCITE) powered by its 3DEXPERIENCE platform, with 5 sitting at number one in the world. Dassault Systèmes is traditionally known for being a successful development company across a broad range of businesses. Centric Software has proven via multi-year sales records that, when compared to other leading RFA PLM companies, they are particularly strong with PLM sales. Acquiring a majority stake in Centric means adding another worldwide brand leader to Dassault Systèmes’ portfolio, in terms of number of PLM sales for RFA. By coming together with Centric, Dassault Systèmes will be reinforcing their position in the strategic RFA industry, as well as opening up sales opportunities in other business sectors that will increase their market share. Indeed, Centric’s annual growth average over the last five years is stated at 60%.
Dassault Systèmes have a very successful model with their CAD offering, SOLIDWORKS, and are now revered as a CAD leader around the world – and not just for Fashion. They are likely looking to duplicate this success story with Centric, and dominate the full CG market. Dassault Systèmes’ financial backup will allow Centric to truly innovate. But it’s not all about money. The Centric sales team can benefit from Dassault Systèmes’ strong 3DEXCITE and Artificial Intelligence solutions, adding significant value to Centric’s offering. Beyond new software, the Centric 8 team could imagine cross selling to Dassault Systèmes’ existing ENOVIA PLM customer base. (More on the PLM specifics shortly.)
Further benefits for Centric lie in other markets; Dassault has a successful track record with CG solutions and sales, and Centric will likely delve into other industry verticals. In short, this investment will allow Centric to accelerate global expansion and innovation, all the while with long-term financial backing. “Innovation is part of our DNA,” shares Fabrice Canonge, and both businesses “have a culture of innovation”. This deal, then, will act as an innovation boost, and a global growth accelerator.
Let’s talk predictions
So what will this deal look like, in the near future?
In the immediate we aren’t likely to see too much change. Although Dassault Systèmes has acquired a majority stake in Centric Software, the Centric name will remain the same, and both businesses will continue to operate autonomously. The ‘day to day’ will not change, but there will be a new joint board of directors coming from existing directors of both businesses. The businesses fit together on their views around “management, focus and innovation,” says Fabrice Canonge, but there will be no imminent relationship between their two product lines or their daily operations.
So, for now, much will remain the same, but over time one could imagine seeing more connection. Both businesses are ambitious in their roadmap objectives. Centric are looking to accelerate into new geographies and verticals hoping to eventually dominate cosmetics, and food.
What about PLM?
Of course, it’s a little too early to be discussing / sharing the minutiae of this deal with the general public, but the million-dollar question for most of our readers is, “what does this mean for PLM?”
In the longer-term, we wonder if Dassault could cease selling PLM to the Fashion industry, and, if this happened, would Centric’s solution become the de facto PLM offering for Fashion & CG from both businesses?
Existing customers of both businesses will no doubt have questions in the early days, but we would expect all concerned to benefit from the exciting innovations to come. We would also expect that the process of gaining a clear understanding of solutions will take time to decipher.
Opening up the industry
This deal marks a milestone for RFA PLM. Historically, this is an area that has been relatively closed off, and only in recent years have we begun to adapt to the changing, collaborative landscape. We know that many vendors, including Centric Software and particularly Dassault Systèmes, have been entering into more and more partnerships year after year. Opening up to new partners is a way of evolving, adapting and innovating. And it’s something we believe will accelerate in the years to come.