CAD/CAM/CAE/GIS Worldwide, 1993
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Dataquest Vendor Profile Gnfttaioro INFORMATION RESOURCE CENTER > donware DATAQUEST [NCORPORATED 1290 Rsdder Park Drive San Jose, CA 95131-2398 (408) 437-8600 CAD/CAM/CAE/GIS Worldwide 14 IBM Corporation Corporate Statistics 'IT, Location , •- Armonk, New York CEO (acting). President, and Oiairman John F. Akers Number of Employees 344,396 • Number of IBM CAD/CAM/CAE Specialist and Marketing Personnel More than 9,500 worldwide The winds of change are blowing in Armonk at gale force 9. John F. Akers has resigned as CEO after seven years at tiie helm, and the hot seat is scheduled to be filled before ttie end of May. President Jack Kuehler and GFO Frank Metz also have stepped aside. More cuts in head count are expected, mostly targeted in the sales, general, and administrative areas. For the first time, hardware revenue has dropped below 50 percent of total revenue, with a decline in revenue growth of » 10 percent. Fortvmately, the nonhardware-related revenue is increasing and the growth rate is positive. The rate of change in this company is beyond imagination, but the company is weathering the storm and will evolve into a more agile and aggressive operation. The next six months will define the future of 3M as a world leader in the computer business. The software component of IBM business is aimed at the full spectrum of business and technical applications. IBM's $15 billion operation, about five times the size of Microsoft in software sales, is difficult to character ize. The organizational chart (see Figure 1) illtistrates some of the com plexity and diverse nature of this business. The GAD/GAM/CAE portion of this business is estimated at just less than $2 billion in hard ware, software, and services revenue in 1992. This is a strategic business area supporting other ventures in the shop floor, data processing, and enterprisewide computing services. In a recent interview, Mr. Akers said, "Our financial results are not acceptable to us or to our shareholders." He then went on to add> "We are taking aggressive actions to improve :Our competitiveness and .j;i profitability by addressing ttie accelerating changes that are sweeping our industry, while adjusting for weakened business conditions liurough- out the world. These actions include reallocating resources to growth businesses, increasing the autonomy of our businesses, and reducing Program: CAD/CAM/CAE/GIS WorldwicJe Daftaqjjest^ Product Code: CCM/l-WW-VP-9301 ISn acornpffnyof liml 'rhcDunV»xtiimtCovfHKaiH Publication Date: February 22,1993 CAD/CAM/CATOtS Worldwide I'igare 1:^ • it o'^C'/isnsqx'^ sirnsvei IBM Corporatibii^ExecutiAPeM^^fa^Meritfte Sector •'^JS f 3I/;TV John F. Akers 1' -i"^ -^!.K/ir .-ij. ijirif 3,: Chairman of the Boarard I T. R. Lutenbach 0l ;<'?f ^f/riiv; a 3. Senior Vide-President, Management Cornmittee l\/1ember *i>t"f t ) X •?! 1 Bernard IVI. Pucl<ett rs. R.J. LaBant IBM Vice President and General Mai^a^er, IBM Vice President and General Manager, Appfications Solutions IBM North America (IBM US) ——-j Edward J. Kfoury J. Michael Lawrie IBM Vice President and President, Vice President and Area General Manager, | Great Lakes Area 4 : ••(:-i.^ .•'!•!Of C2ii*- I U1 '.. -'rtOA? sn*-:" «Oi,f' Daniel R. Colby ;; ^- "•^'AUg JjTfi'>itJ:.gW *?. .• ; Assistant General Manager, ; i ^^ar^-Eq^jiid jisssc Industrial Sector Marketing ,_.rri'- q*; j7 -^loni - Source: IBM Corporation G3000175 bsrs t-ioF: vL"»;rD< iemt^!^'(Dit&^ii@ktbelie^&r^at the IBM strategy of investment in growth ;• "s- r' • ,r • ;i ^^btfeiifessis wilJ^imcludef CAD/CAM/CAE/GIS. This technology is a fun- pi ;£ vt-i/L iSaMen^fiOiripctfient 0>f'the,'reengineering taking place in the United StM^'^and atrotaid the wbildn ^•iii•^ . :c ar • ;Bi s,fL nllliis.jvend0r profile is fccuSeH on several primary issues. The result of A 61 r .' aiii_. j . 'massive organizatfonMxhanges (still in progress) is shown with the ',•'-• • .; ,' .;':}^5iinija(Ei©rt GAD/CAM/CAE business. Most of the significant changes in •; -, ,:r!> hh~i jf ; ,^tf© GA0/iCi^^/CAEaEea-appear to have been made. A complete analy- o , J.' sfii f ;si«>of;theirievenu€ profilean.tiie GAD/GAM/GAE business is given with growth analysis. And .finally, we provide a description of the partnership arrangements with strategic direction assessment in the major •. , 'Of ^ .•.^.= •(TAD/CAM/CAE applii&tion areas. • '* t •-.. i.r.'f'- -'^ "'^ -^ -y 2inhns'^ •:j, • • ;"i: , •^iii '•< Corpotate Overview -^ ^^^^ ^ ^^ ^^ ^^vi^^ a^^f-;, t^ *{r ^: 'jye^^^^ ifslfeSrW^^i^'Sjlarg^t supplier of information technology to business and gov^erppTent ent^p^s^s. IBM designs, manufacturers, sells, and sup ports a wide range of information processing systems, including main frames, systems •.' r 'J>:!-':, i ,• -ns ren i,:coiniminiicati0rvs:9ys$temii54'rinters, typewriters, educational and training 'fe: .•;-!ii(^isi<">:!; j-anatppialsj^aHdrelatedsuppides and services. '^^€GAM-\lm•-wmQ^ bsxi^tsgs DataqtfeSt Incorporated :FeBflM^22, 1993 IBM Cofpctfition IBM's corporate revenue experienced a 0.6 percent decrease bfetw^ri " 1991 and 1992, frD??^f ^4i§f|^^%J<?4644;ibillior|..(s?&:Table l>..,In most areas of its businesses, IBM experienced tough competition and felt the impact of a slumpfir^-world eGdrMSff^The company"response to this ' increased competitions and economic piressure is to streamline operations, reorganize into functional business units, and reduce overhead. Table 1 — - " IBM Total and CAD/CAM/CAE Revenue, 1991 to 1992 - ^r3t :_f^^.. V. IBlT '^CAD/CAM/CAE CAD/CAM/CAE Fiscal Year Total Total jFactoiy Total Software (January to December) "($B)' ($M) 1991 : 64.8. / ..-ns-.,.• - • 1-71 379 1992 64.4 n: -lU i^fs »'••"•. 1.77 418 Percentage Change '0;5 ic^-^- -.i^- ..— -3J; -"••"^ "" 10.4 Source: IBM Corporation IBM was one of the first computer compaMes to g^t'mvolved with CAD/CAM/CAE applications, beginning m the early 1970s. The first mainframe installations using CAD AM software have been the founda .T3* tion of this growing and significant business activity for IBM. With this early success, IBM began supplying a large set of design, documentation, and manufacturing tools with almost every major manufacturing company. IBM strengthened its position by first acquiring CAD AM Inc., then sell ing a part of the company to dassaafltClysteEf^ (CADAM Host and d' VSO Professional CADAM) in retunt'lor ajvaqui^ position. This agreement yrsi J : has been further complemented by; a feeiy^wtee^nexclusive marketing arrangement withSDRC for the last dl yeaiJS. -jjsyi Other business relationships have been made in the last several years to At di; further strengthen the overall tool, set available to users of the IBM, _>r':il" CATIA, and CADAMl^nvirohrhwit. Eadt.of/these products is bundled '-/ish) • with interface and integration supplied by" BBM, and each brings a world "•Y/x;i • class component of software technology toj assist the engineer or njic- designer in everyday;work probtems..< ni'. r' A.\. The unbundled side (^th%bu^es§,'^S) developed relationships with many of the other leading software vendors to further expand the IBM hardware business opportunities. This has the ^enefit of','^rii\giBg a larger set of software tools into the IBM camp and reducing the potential •>i of .-.• loss of hardware r^vehlie due tb <^tist6"mer pr^eference for a software product other than CATIA or CADAM.'^-: '•••'' ^li^iy r::t • ~ :'; ..ni>:. •. ivr •-, *':'y~ Corpiifdte Organization 3 - ,: .-*-:;.. • ** .r,". '.uijfi'J-ii ^cjt; f:''". ^fP's ,,-. ii brtfc M The CAD/CAM/Cf^pjfesHiSaiesSfkistia'tyiis^dev.eloped and marketed by I two separate business4entiti^.'.^Thetdevel0pment responsibility falls in CCAM-VW=!VP-9301 ©1993 Dataquest in®)TpGrated /February 22,1993 CAD/CAM/CAE/GIS- Worldwide the Applications Solutions Business, which is one of nine worldSwade manufaetuxing-srlcfaievelopatient businesses. The marketing rdtois taken by IBM United States, which is one of five marketing and services com panies. Both are led by the management committee comprised of four members, including Mr. Akers. Figure 1 illustrates the highest levels of the corporate structure for the CAD/CAM/CAE business. Significant changes are taking place at all senior levels bf managemeht. Bernard Puckett is responsible for the Applications Solutions group, which manages worldwide market seg ments, including all industry market segments such as finance, insur ance, manufacturing, and other selected segments such as image and technical coinputing. This group also develops offerings for those seg ments, including application software and specialized hardware; sup ports the development of new businesses, such as multimedia and con sulting practices; and leads IBM's services businesses worldwide. The Industrial Sector division, led by Edward J. Kfoury, has development responsibility for all applications in the industrial sector. The group responsible for marketing is led by R. J. LaBant. This organi zation includes. Areas/Trading Areas, Federal Systems Co., National Distribution Division, Integrated Systems Solutions Corporation, Employment Solutions Corporation, and EduQuest. From a martagement standpoint, this organization is chartered with the sales and support activity for all IBM GAEMC^AM/CAE customers. This group, i^hich is centered in the Midwest, is close to the critical mass of CATIA/^ild CAD AM users in the United States and works closely with dassault systemes services to service the installed base. Table 2 shows bom the development and marketing organization for the IndiistiSal Sector Division. The development group, led by Robert'M^^'VMlliams, is responsible for all internal product development, for developing; and maintaining all business relationships with outside software developers. Strategic Development Partners, and other potential partners. The mai-keting group, led by Daniel R. Colby, is chartered with the task of strategic direction, implementation strategies, and bringing the mes sage to the marketplace as' the focal point for all IBM-driven CAD/ CAM/CAE. This group works closely with other CIM marketing efforts to develop a working relationship of capability as more IBM users evolve into concurrent engineering operations.