ESI seeks to reinvent PLM by moving to PPL
ESI hopes to move manufacturing beyond PLM, and into what it calls PPL, Product Performance Lifecycle. The company defines traditional PLM as “product development until commercial launch” while PPL addresses the product’s “whole ‘post-development’ lifecycle, i.e. the way it is integrated into and performs within its operational environment, including operational maintenance, until the end of its useful life”.
That’s a tall order, especially when other vendors and the market as a whole simply keep shoehorning more into the definition of PLM as their portfolios grow. ESI, too, is expanding its offering via acquisition but feels this change is necessary because that’s how customers think about what they bring to market — increasingly, not just products but services as well. CTO Vincent Chaillou explained it this way: virtual prototyping is no longer of just the physical object, but of the complex systems of which the product is made. Hardware, software, sensors, big data – all extending from conceptual design to operations; using real-world data to truly understand how a product might be used and anticipate misuse, aging and, ultimately, failure and disposal.
Dr. Chaillou told me that customers used to use PLM to “manage data coming from technical departments. PPL is a massive disruption that puts the prototype at the core of the company. The concept of a digital twin is correct, but there’s more: we add big data, connected to and collected from the product. We can play with past and future and use combinations to say, what can I learn from past data to get to a better [future] design? Or, how do I anticipate that the product will be used, based on past data? We wanted a new term to show that this is a major disruption and we are convinced that we have to change the wording to pass on the message that we are different.”
This strategy is being rolled out, and will likely be seen in ESI’s market-facing materials as the year goes on. But first, results for the last quarter. Total revenue in Q1 was €27.4 million, up 14% as reported (and up 14% in constant currencies), with organic growth of 7%. ITI GmbH, acquired in January 2016, added €1.6 million in Q1. Dr. Chaillou said this was “solid” performance by ITI that will only accelerate as ITI and ESI begin to work together more, especially in territories where ITI doesn’t currently have a presence.
- License revenue was €20 million, up 14% as reported and in cc, with organic growth of 8%
- New license revenue was up 43% (and up 27% organically). ESI cited wins in the electronics, marine and heavy industry sectors
- Maintenance revenue was up 9% (and up 4% organically)
- Services revenue was €8 million, up 12% (and up 5% organically)
- By geography, revenue from Asia was €13 million, driven by automotive, aerospace and energy, with growth in Japan especially noted. China finished strong in 2015, so Q1 2016 was a bit tepid in comparison — not exceptional but still encouraging
- Revenue from Europe was €10 million, up 6%
- Revenue from the Americas €4 million, down 8% on a tough comparable in 2015. Deals slipped from Q4 2014 into Q1 201515; that wasn’t repeated in Q1 2016 which makes for a tough comparison. Dr Chaillou said Q1 2016 was actually a good quarter in the Americas.
ESI doesn’t give guidance but the Financial Times has the analyst consensus at €148 million for the 2016/2017 fiscal year, which would be growth of 18%. [UPDATE on 22 June 2016: The Times has updated its forecast consensus to €144 million for fiscal 2016/2017, a year/year increase of 9%. That’s a more reasonable target given historical patterns.]