The technology used to conceive, design and fabricate the objects around us is complicated. It may be difficult to understand if you're not a practitioner, yet businesses routinely entrust their most important processes to these tools. Our Hot Topics blog tries to clear up some of the confusion.

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Siemens Automation Summit: Big data is a big goal

I’m in hot hot hot Las Vegas for the 20th annual Siemens Automation Summit and hear it’s the best yet. The typical “we’re all getting older” grumbling is mixed with quite a bit of “I used to know everyone, but I don’t recognize these young folks” and a lot, a LOT, of electrical engineering-speak. I’m a software person but I’m beginning to understand how critical automation technologies are in controlling and monitoring the modern manufacturing plant.

Lessons from day 1:

  • The vast majority of manufacturing plants are not new, and use technology that is 20 or 30 years old to run the production process. That means these motors, actuators and so on aren’t easily retrofitted to be Internet of Things-ready. Jagannath Rao, President of the Customer Services Division at Siemens Industry US, said that this is a real barrier to broader adoption of big data analytics, and its predictive maintenance, improved utilization and other benefits.
  • Doing something big data is high on many people’s priorities but only 5% actually have a strategy to do so. Raj Batra, President of Siemens Digital Factory Division in the US, cited stats from the Industrial Internet Insights Report for 2015 that said that 87% of survey respondents see it as a top 3 priority for their business, and half of those have it as a top priority — why isn’t there more action?
  • One possible reason: it’s hard to quantify costs and returns. Many of the customers sessions focussed on implementing Siemens automation technologies in existing facilities since connecting everything is the first step in gathering this operational data. The business cases tended to be more focused on meeting production targets for throughput and quality, with no real view (yet) to using any captured data for analysis. Only one presenting company specifically included analytics in the goals for a project that’s due to come online next month; they’re going to report back at the next Automation Summit about results.
  • It’s perhaps easier for new businesses. Mr. Batra said that he recently spoke with someone who built a small chain of car washes, all using Siemens automation gear, where everything is quantified and analyzed. If you start with this goal in mind, you approach the design and purchasing for your asset differently.
  • But all of this connectivity carries risk. That’s a big topic for today’s sessions, but Mr. Rao told me that manufacturers have either been hacked and know it or been hacked and don’t know it. It’s that common. Some of it is bad actors, industrial or international espionage, but a lot of it is viruses that enter when someone brings in pictures of their grandkids on a USB drive. It used to be that if your company was fenced (cyber-speak for no external Internet connections at all), didn’t allow USB drives and so on, it was thought safe. That’s not true today: someone innocently using a USB port to charge their cellphone can introduce malware. Siemens just launched a services offering to help companies identify their risks, mitigate known holes and figure out how to monitor and respond to threats. It’s an unfortunate cost of doing business today, that doesn’t seem to be waning any time soon.
  • Siemens PLM (my usual peeps) is a huge part of Siemens’ overall digitalization strategy. The company could have done a better job explaining how it all fits, but Mr. Batra did briefly flash this slide to explain how it all comes together as Siemens ties product design to production engineering:

2015-06-23 08.44.27

I also took a class to learn how to program a motor. My lab mate was marvelous, explaining to me what we were doing and how he would do this back at the plant. First, our instructor went over the parts of the SINAMICS G120: operator panel, controller and power module in this image from Siemens, attached to a motor and brake in our class setup.


The operator panel is used to cycle through hundreds of setup parameters, everything from what an operator sees to PROFIBUS or EtherNet/IP connection to safety. There’s a 700 page manual that goes over it all — so we learned how to use Siemens’ setup software, called STARTER. My lab mate told me that he usually uses the operator panel because he knows which 20 or so parameters he needs to worry about, but if it’s more complicated, he uses STARTER.

STARTER is as user-friendly as CFD setup used to be: not very. Luckily, there’s a configuration wizard that recognizes the device hooked up to the laptop running STARTER that then walks through the relevant subset of parameters. From here, it was smooth sailing, setting up what type of motor (induction, in our case) and its rated voltage, current, speed and so on. After the setup, STARTER compiled and downloaded the control parameters to the operator panel and controller. And we got to try it. Luckily, our setup came with a brake, so we could create fault codes (and generally make squealy noises).

It was fun, but here’s the lesson: a typical manufacturing facility may have hundreds of motors, power supplies and controllers, among lots of other equipment related to production and monitoring. My lab mate told me that his job involved initial programming of all of these devices but also reconfiguring for changing production, when a piece of equipment is swapped out, and so on. He uses STARTER for the first of a series of the same devices, loads that setup onto the operator panel and then walks the operator panel from device to device, updating each. Much simpler than hooking each individually up to a laptop for programming. He needs the speed and flexibility which the dual approach gives him, and he knows exactly which parameters matter, so programming a device with a tiny human-machine interface isn’t as daunting as it seems.

That’s it for now. Off to day 2 and cyber-security. By the way: follow along on Twitter with the hashtag #AutomationSummit.

Image credits: SINAMICS image courtesy of Siemens, photo of slide taken by Monica Schnitger

Note: Siemens graciously covered some of the expenses associated with my participation at the event but did not in any way influence the content of this post.

Q&A: AVEVA AVEVA AVEVA, revenue recognition and more

5471047557_4dc13f5376_n-300x300Once again, we’re opening the Google and answering questions that led searchers to the Schnitger Corp. website. It’s not clear that there’s a theme or even a pattern, but it’s certainly an interesting mix of business- and product-related questions.

You continue to be fascinated by AVEVA, whether it’s acquired, who might be involved and the timing of any possible deal.

AVEVA acquired? AVEVA + AspenTech?

Nope. Not as of noon ET on 18 May, 2015.There was again an article published in the UK that hinted at a possible acquisition of AVEVA. This one said that the company had hired an investment bank to help evaluate potential international suitors and mentioned AspenTech as one possibility.

I know no more than you do so can’t say if the report is true or not. Hiring a banker makes sense even if nothing is imminent, simply to protect the interests of current shareholders. If you own a house and many of  your neighbors are selling, you might want to investigate real estate agents to help you in a possible transaction. Does hiring help mean a sale is imminent? Not necessarily.

ANSYS revenue recognition

Not sure what the question is here, but US software companies typically follow FASB rules for revenue recognition. FASB is the Financial Accounting Standards Board, a private sector group that establishes accounting standards for companies filing with the Securities and Exchange Commission. Similar groups in other parts of the world have their own rules, but I think they’re similar.

A software vendor typically has 4 sources of revenue:

  • perpetual licenses and maintenance, where each amount is recognized in the period in which it is paid. So if you spend $1,000 on a license and pay the first year’s maintenance of $250 in June 2015, the full $1,250 is recognized in June. Next year, $250 will be recognized when you pay it
  • software leases or rentals are periodic subscriptions that may be prepaid but only applied (recognized) as the term progresses. Think magazines; if you buy a 3 year subscription with a single check, the revenue for the current issue is recognized by the publisher now, and the rest is put into deferred revenue, to be drawn down over time. Why would a buyer prepay? Because of the sweet deal you might get for giving the publisher your money upfront — in essence, you’re making a loan that puts real cash into the company’s bank accounts
  • services or consulting revenue is recognized as project milestones are met. When the report is delivered, some number of users are live or some other goal is satisfied, that portion of the revenue for the project is recognized. Again, it may be billed in the period or, like subscriptions, be taken out of pre-paid sums in deferred revenue
  • training revenue is typically billed, paid and recognized as it happens.

Why does this matter? Because getting the cash isn’t the same as recognizing the revenue and that can be confusing since most of us live is a cash accounting world. Public companies are struggling to come up with ways to show that lower recognized revenue (from a time-based subscription instead of a bigger perpetual payment) isn’t a bad thing –and may actually be a good thing– as their revenue models change.


It’s hard to know where to begin with this one. PDMS comes from AVEVA and is typically (though not exclusively) used for plant/ship design on large and mega projects. It’s got modules and role-based user interfaces for piping, electrical, drafting and other disciplines and is not, generally, considered inexpensive. AutoCAD, however, comes from Autodesk. The vanilla version is used to model everything from piping to buildings to desk chairs. The plant-specific AutoCAD Plant 3D lets piping designers create 3D models and some of the tricky 2D drawing deliverables that are unique to this world. Presuming that the “vs” in the question means, “which is better?”, that’s completely dependent upon the use case. For large projects, with distributed teams and complex workflows, PDMS with the AVEVA Global and AVEVA Net underpinnings may be more appropriate; for smaller projects, with simpler collaboration and control needs, AutoCAD Plant may be more suitable. A lot of teams use both on a project: PDMS for the project overall, AutoCAD (Plant 3D or vanilla) for locally generated content, equipment and/or detailed drawing generation.

MSC and Elliott & “letter”

In 2009, MSC Software was a public company. One of the shareholders was Elliott Associates, an activist company that wanted MSC to sell itself, to buy something or do anything else it could think of to increase shareholder value and told MSC this in a letter that was later published in formal filings with the SEC. I wrote a lot about it at the time, for example, here. All of the agida created by that letter eventually led to MSC’s sale to Symphony Technology Group,  which still owns MSC today.

Shareholder activism is really important — remember that while Elliott Associates, Warren Buffet or Carl Icahn may own (some, part, all) of a company, they don’t actually run it. In the case of MSC, Elliott wanted to sell the company to a larger entity because they felt it was too small to go it alone. More recently, Exa was told it needed sell itself to a bigger player or do something to create interest in the share to boost its price. These activists are in it for the money: they see a company they think is undervalued and want to force changes that will increase the value of their investment. But that’s not always the case: activists helped end Apartheid in South Africa by forcing changes to how companies did business in Africa; others focus on environmental, labor rights or other societal issues.

HxGN Live: where software, data, sensors meet

2015-06-01 17.49.50Hexagon shepherds to market such diverse offerings as Vero’s CAM software, Intergraph Process, Power and Marine’s SmartPlant, CADWorx and plant-specific simulation solutions, Leica laser scanners and Hexagon Metrology optical probes (for manufacturing tolerance measurement), mine operations software, and much more. The annual HxGN Live user conference is a mash-up of global challenges, industry solutions, hardware pitches, software releases and implementation stories. It’s a lot to grab hold of, but let’s try to make some sense of it all.

Every presentation I attended, whether customer or company, centered on how to create, manage and use data more effectively. In plant design, this could mean reusing model components to save time and money and to standardize across facilities. In the geospatial world, this might be combining data from many sensor sources for analysis and action — is the water level different and should we evacuate the town downstream? All of this requires data consistency, access across disciplines but in a form that makes sense to the user, collaboration across sites and function — and each of these spawns its own technology issues.

Hexagon CEO Ola Rollén kicked things off with “Human Ingenuity: An Ambitious Plot. An Evolving Tale”. His point was that technology enables invention, especially as applied to the big problems in the world today. How to we feed a hungry, growing population? How does our progress shape the world? Like many keynote speakers this conference season, Mr. Rollén drew parallels between the digital and physical worlds; connected by sensors. He sees the world moving away from isolated points of data or technology and towards collaborative processes, visualization and the growth of intelligent, connected devices. For Hexagon, Mr. Rollén says this means focusing on

  • the smart, connected factory where production robots will incorporate metrology so that we can know quickly whether finished goods meet quality standards (and, presumably, correct if they do not)
  • more intelligent management of construction. To him, this means building with the end in mind and connecting the real and digital with sensors to bring dynamic data back into SmartPlant
  • autonomous intelligence gathering for public safety and security, using robotic intelligence gathering for dangerous or repetitive tasks
  • crowd-sourced maps, to capture more details and more frequent updates to feed our insatiable need for smart phone map data
  • autonomous everything –farms, mines, cars, etc.— to make more efficient use of existing assets and perhaps change the way we think about our needs going forward. I didn’t know this: there are 800 million cars in the world, most used less than 10% on any given day. What could we do if we connected them in some sort of network, sharing them as needed? Perhaps having them (autonomously) drive us and position themselves for the next user?

The data centricity message was a big part of Intergraph PP&M’s sessions, too, centering on the importance of reducing risk, increasing efficiency in design through construction and into operations — a needed evolution as engineering companies (EPCs) seek to offer more services to their owner clients. PP&M CEO Gerhard Sallinger spoke  about the stresses placed on capital expenditure programs in the oil and gas world, with project cancellations or postponements affecting the EPCs’ order book and staffing levels. The answer: rely on technology to increase productivity and cut cost for those projects that do continue.* Mr. Sallinger highlighted PP&M’s portfolio, spanning conceptual design, front-end engineering (where the basic parameters of the plant are laid out, costed and planned), detailed design, procurement, fabrication, construction and operations over the 30, 40 or 50-year life of the plant. All of these solutions, he said, can be integrated over the cloud — as are 25 customers** so far on a number of projects with more customers investigating the cloud offering.

Mr. Sallinger gave a brief business overview, saying that PP&M’s 2014 revenue was roughly $544 million, up 7% or so year/year. By geo, the Americas accounted for 34%, Europe, 30% and Asia, 36% of total revenue. Keep in mind that these are all percentages of percentages; on that basis, revenue from the Americas was up 5%, over last year, from Europe, down 2% and from Asia, up 21%. Mr. Sallinger said that 2014 was the first year that Asia was the largest region for PP&M, that it did “super good” while other regions did “great”. On the research & development front, Mr. Sallinger said that PP&M’s R&D investment has doubled since 2004, in dollar terms. A bit of digging through old data and some math leads to a total R&D spend in 2014 of around $85 million, or 16% of revenue. That’s coincidentally dead-equal to the percent spent on R&D by arch-rival AVEVA and just a bit behind Dassault Systemes at 17%.

PP&M’s keynote also announced that Hexagon is entering the building information management (BIM) market by applying existing PP&M technology to airports, building complexes and other built asset projects. Mr. Sallinger was quick to reassure oil and gas customers that this wouldn’t divert resources from their needs, but expands current technology for a new market. He said that SmartPlant Materials, Construction and Foundation could be used by BIM projects to reduce material costs and eliminate excess materials, ensure schedule adherence and improve efficiency — leading to better project outcomes in the BIM world as well.PP&M is trialling what’s code-named SmartBuilding now but doesn’t see an imminent release.***

There were no other major announcement from PP&M at HxGN Live this year, just the calm sense that everything is continuing, evolving to plan. That’s a good thing, as a lot of the EPCs and owners in the audience are still working to implement SmartPlant’s many modules across their projects.

HxGN Live showed off how sometimes 1 plus 1 is more than 2. Solutions that span companies or divisions for manufacturing, mining, water and other verticals are starting to show that Mr. Rollén’s seeming grab bag of companies was created very carefully and with quite a bit of logic. Take Vero. Vero was added to the Hexagon family last year, bringing computer-aided manufacturing (CAM) into the fold. Combining CAM with metrology (measured quality control) enables manufacturers create proactive manufacturing processes, possibly avoid problems before they occur and certainly resolve them quickly when they do occur. It also brings Hexagon from the back-end of the process, after the item is made, to the front end: helping program and control the machine tools that make the parts themselves. It’s early days yet, but programming the metrology probe and the production tool together, and feeding the data from the probe back into CAM to adjust production could lead to new levels of quality for a lot of manufacturers.

Auto, aero, oil, gas, mining, machining, surveying … One thing became clearer and clearer over the week: we’re just at the very early stages of living in a data-centric world. We might be able to connect a quality measurement to the machine that’s making the widget; we might be able to tell that our construction project is 4 hours behind schedule, or that a truck in a mine is idling too long. But we’re just getting to the point where we can take action as a result of that data. That’s exciting.

*Many EPCs still have plenty of work, on maintenance projects or at the cheaper end of the CAPEX spectrum. Cancellations and postponements seem to be centered on the risky, expensive projects that wouldn’t, at today’s price of oil, yield sufficient profit — projects in the arctic, very deep water, or those that are very large and, therefore, risky at any price.

**I’m not sure how many customers PP&M has these days, but Mr. Sallinger said that over 700 were in attendance at HxGN LIVE. Saying that 25 have started working on SmartPlant Cloud implies a relatively low penetration rate but it’s actually pretty good. This product is new and many PP&M customers have long said “never” to the cloud and are very resistant to change; getting 25 to try it and more to consider it is a solid start.

***Given how many EPCs work across plant, building, civil and other disciplines, expanding the Smart portfolio to BIM makes sense. But there will be roadblocks: Smart is not considered to be an inexpensive alternative; the built asset world outside plant often has much lower margins, so pricing will be an issue. Too, any BIM offering will have to meet standards such as the UK’s Construction Operations Building Information Exchange (COBie) and that’s clearly not a plant/oil & gas kind of thing. Finally, Hexagon said that it has no plans to create a CAD solution for BIM; its focus is on 4D/5D/6D and so will have some of the same integration issues as other non-CAD BIM offerings.

Image credits: Photo of Ole Rollén taken by Monica Schnitger

Note: Hexagon graciously covered some of the expenses associated with my participation at the event but did not in any way influence the content of this post.

Siemens PLM CONX ties together users, systems and products

2015-05-18 08.34.08I’ve been on a quest to find out where designs come from and one thing is clear: nothing is ever created in a vacuum. A good industrial designer will look at what else the prospective buyer might have on his desk, so that the new ergonomic mouse fits into the landscape; an eyewear designer will make sure her concepts fit with the colors and clothing styles that will predominate for the next few seasons; and a furniture designer will use new, cutting edge materials (or traditional materials in new ways) to create an attractive blend of form and function. Cars that blend new body shapes with classic looks established by a brand over decades. OK, you say, those industries cater to buyers looking for cool and are all examples related to exterior appearance. But what about mechanisms? Or industrial machinery? Where’s the design thinking?

It turns out, everywhere. Ergonomic instrument panels and hand controls. Refined assemblies that use less material, weigh less and yet meet every requirement for strength and fit-for-purpose. Medical implants that are uniquely designed for their patient, yet based on the best, newest research. Crowd-sourcing designs with Local Motors or Quirky. Incorporating the results of big data analytics to optimize the product for how it’s actually used, rather than the designer’s conceived uses. New products that start with connectivity and re-imagine how products and services can be bundled to monitor air conditioning or production processes.

It’s a huge new world out there, with challenging buyer expectations regardless of what product you make. How can you keep up? And how can PLMish technologies help?

I was fortunate to attend PLM Connection a few weeks ago and heard from Siemens PLM and its customers how look for competitive advantage through design and manufacturing. While many of the customers who spoke represented the biggest companies in the world, their lessons are equally applicable to our smaller enterprises:

  • connect people with the right information — don’t make them hunt for it because they might give up
  • visual information is best — most people are quicker to understand an image than to read page after page in a report
  • make decisions with the customer in mind — what do they want or need?
  • analysis should lead design — why waste time on a variant that won’t meet spec?
  • apply robustness studies everywhere, from manufacturing variations to design components
  • the world is not going to get simpler; create an approach/architecture that lets you be responsive and limber.

Siemens PLM’s CEO Chuck Grindstaff kicked things off by discussing how everything is moving faster: Beating the competition often means reducing the time to market. That, in turn, means shorter innovation cycles. At the same time, we’re building in more electronics and combining unitaskers into multifunctional products. That’s added complexity. But buyers are picky, and often want semi-customized products, which means more agile, responsive designs and manufacturing. And, of course, it’s all got to be cheap and energy/inputs friendly. Net result: at 8:30 AM on a Monday, we were all already stressed and depressed (no, not really) until Mr. Grindstaff brought it home, telling us that digitalization will smooth these edges, making it easier to find both product and process innovations. Digitalization is Siemens AG-speak for tying together ideation, realization and utilization within an enterprise —it’s been called digital twinning, creating a digital asset for every physical one and many other things, if digitalization isn’t a familiar term.

How does Siemens PLM help with this? Mr. Grindstaff said that his team is working along four basic themes:

Screen Shot 2015-06-15 at 10.29.07 AM

In essence, Siemens PLM wants to help customers ensure that

  • everyone in the innovation process has access to up-to-date information to make the best decisions in the shortest time. This involves everything from a user interface geared to a specific role or task to desktop/cloud/mobile access
  • designs meet customer needs by leveraging simulation of many different types: modeling the system architecture very early on, multi-domain 3D simulation, managing test article manufacturing and verification, virtual and physical test execution — all tied back to design requirements
  • manufacturing and design work together, by connecting the digital and physical worlds of product and production. This one is tough: it requires integrating PLM and manufacturing operations management systems, often on a global scale. (At this point in his presentation, Mr. Grindstaff showed off the integration of Bentley’s point clouds of an existing factory with Siemens PLM’s factory model — so cool.)
  • they will have access to leading technology at all times. This point was inward-facing: Siemens PLM needs to reassure customers that it is building solutions that deliver value now and are flexible enough to incorporate new technologies as they arise, and be delivered as customers want, say via the cloud or on a subscription.

The company presentations following Mr. Grindstaff’s were all keyed to filling in the details of this vision, for the various CAD, CAM, PLM and other solutions under the umbrella.

Siemens PLM’s big announcement at PLM Connection was Solid Edge ST8, the latest release of its mid-range CAD/CAM product. VP Dan Staples once again ran through the dozens of enhancements and new features (read more here at the Solid Edge website and here at Develop3D); my big takeaways were

  • cool improvements to sketching that make it a more natural process
  • better handling of assemblies, especially complex hierarchies
  • it actually runs on a tablet! The full version of Solid Edge ST8 runs on Surface tablets, which means design tasks can move as people move. I’ve been skeptical of doing CAD on a small device; all that panning and zooming would make me lose the thread of my overall design too quickly. But the demos we saw were very natural, with the designer naturally moving back and forth between keyboard, stylus and touch
  • the debut of the Solid Edge App Marketplace. There’s quite a bit already available and it will be interesting to see how this develops over time. Will customers buying Solid Edge subscriptions want to buy apps this way? Will people buying in a traditional perpetual/maintenance come here for add-ons? We’ll find out.

One more very interesting bit of news: the release of Omneo Performance Analytics (Omneo PA), acquired in last year’s Camstar deal. Omneo PA is Siemens PLM’s entry into big data analytics, monitoring data across an entire supply chain to analyze billions of data combinations in seconds. Siemens PLM SVP, Cloud Services, Steve Bashada told us that “Omneo PA changes the way companies understand their products, by combining data from field service, real-time monitoring (aka IoT), manufacturing, CRM, ERP and other sources”. Mr. Bashada also pointed out that not all big data is new — there are years of un-analyzed data sitting around, often terabytes of the stuff, waiting to create value. What happens when you look at that data, from design systems, factories, suppliers, customer call centers, field services, after-market repairs & more, to see what happened and why ? You can learn from the past, expose emerging trends and, if appropriate, quickly drill down further to see what you can to do correct the problem before it spirals out of control.

We also saw a tease for Catchbook, a purpose-built sketching app for tablets that’s coming out this Fall. Take a look — what do you think?

The last word goes to a true hero: Captain Eugene Cernan was the non-PLMish keynote speaker for the event. Capt. Cernan flew 3 missions in space: he was the pilot of Gemini IX and the Lunar Module for Apollo X, and the Commander of Apollo XVII. He is, perhaps most famously, the last man to have left footprints on the moon. (I’m doing a happy dance as I type that. The MOON.) Capt. Cernan told us that technology is a tool, not a crutch, and that we, as engineers, must take personal responsibility for the products we create. He said that the astronauts were well aware of the work done by thousands of others to make the missions possible: “The engineers and other behind-the-scenes support took responsibility for the technology that took us to the moon. When we went [to the moon], we went with half a million people who took ownership of the task — what we took ownership of was that we were not going to fail.” You and I may not be sending someone to the moon, but let us not forget that what we create is just as important to someone, somewhere.

Bottom line: Siemens PLM and its customers seem well aligned in how they view the complexity of their products, manufacturing processes and after-sales support opportunities. Technology is a tool, and an important one, but does not supersede the human’s ability to be creative, to solve problems, to think in new ways. Use technology to connect dots in a big data world. To serve information to whoever needs it, in a context they can quickly absorb for decision-making. Wherever they may be.

Image credits: Slide courtesy of Siemens PLM Software, photo of Chuck Grindstaff taken by Monica Schnitger

Note: Siemens graciously covered some of the expenses associated with my participation at the event but did not in any way influence the content of this post.

Q&A: VARs, AspenTech, Nastran and more

5471047557_4dc13f5376_n-300x300It’s always fascinating to see what brings people to the Schnitger Corp. website. Some of it makes sense: I write about PLM and you want to know about PLM — boom! Sometimes, though, it’s not so obvious … Do you really want me to write more about Steve MacDonald and CD-adapco’s 35th year birthday cake? I’ve probably said all that can be said: it was blue and white; Mr. MacDonald liked the frosting. Perhaps you just can’t get enough of the photo?

In any case,here are today’s top queries and some quick answers:

Stratasys VARs
Stratasys has a lot of partners, which you can reach here on Stratasys’ website or by typing something like “Stratasys reseller Andover MA” into your favorite search engine. If there’s another question in there, ask again!

AspenTech revenue
AspenTech doesn’t get enough attention because it’s a very specific solution provider: chemical reaction modeling for the process industries, along with oil and gas supply chain modeling. The first is about thermodynamics, moles and milliliters: how much of what stuff added to what other stuff in what quantity and at what pressure/temperature do I need to get to my desired output? Whether it’s Cheez Whiz* or a specific grade of heating oil, many people use AspenTech’s solutions to model the chemistry and manufacturing process as the start of a plant design project. Other solutions for process optimization, operator training, cost trade-off and performance analyses round out aspenONE’s engineering offering; aspenONE’s oil and gas supply chain solutions are intended to help model gasoline production from well-head to neighborhood filling station.

But about revenue. The most recent quarter, FQ3 2015, had reported revenue up 7% to $111 million on software revenue growth of 12%. AspenTech has been moving its customers to subscriptions, causing some hiccups that seem to have smoothed out. For the year so far, 9 months ending March 31, 2015, total reported revenue is $326 million, up 13%.

When should a company provide earnings preannouncement?
I’ve written about this a lot —here and here, for starters– so won’t repeat it all again. Why does it fascinate people so? Perhaps because publicly traded companies can be opaque when they’re supposed to, by law, be at least somewhat transparent. They often lump bad things together, to take a hit once rather than several times as news trickles out.

Public companies really have three constituencies: customers, employees and shareholders. A single message (“We’re cutting costs!”) may make investors happy but not the other two groups; employees may hear management say “no more free pizza” while customers may think it means “reducing our support desk hours”.  Managing these messages and their impact is hard and uncertain. Getting ahead of the news is often the only real alternative.

Did Autodesk buy Nastran?
Yes, sort of, a while ago. Autodesk acquired NEi (used to be Noran Engineering Inc.) which had a product called NEi NASTRAN. You probably know that “NASTRAN” is really “NASA STRucture ANalysis”, a solver first created by Dr. Richard MacNeal under contract for NASA in the 1960s and made available to just about anyone who wanted to create a commercial offering from/around it. MacNeil Schwendler (now MSC) created a variant as did others; in 2002 (?) the US Federal Trade Commission made MSC give a copy of its evolved code to UGS (now Siemens) to settle an unfair trade practices suit. All the while, NEi had been working on a similar solution that was often benchmarked against the NASA-originated NASTRANs and that it called NASTRAN and that may or may not have its origins in the Cosmic licensing of the original public domain code. It’s confusing and depends on whom you ask. But no, as far as I know, Autodesk has not acquired MSC nor has it acquired NX Nastran from Siemens PLM.

*Actually, I’m guessing on the Cheez Whiz; aspenONE may not be able to model processed cheese foods. But wouldn’t it be cool if it could?

PLMish focus on big data continues: ANSYS snaps up Gear Design

EarningsANSYS just announced that it is merging with Gear Design Solutions, Inc., a provider of big data analytics to the electronics industry. Gear is tiny, with “more than 10 employees”, so it’s not clear why this is a merger and not an outright acquisition; have asked for clarification and will update when I learn the reason.

Gear created a purpose-built big data platform for the semiconductor and electronic system design world, which (says ANSYS) “scales elastically across any high performance compute fabric” — implying that it may have applicability in other verticals, too.

Even if the focus remains on electronics, that market is enormous and increasingly important in ancillary industries. ANSYS says that the combination of Gear’s data analytics and its own CAE apps can help customers deliver validated designs for earlier sign-off and faster decision-making.

ANSYS CEO Jim Cashman said in a press release that “Gear is an exciting addition to ANSYS that will complement our industry-standard offerings for low-power design simulation.”

John Lee, CEO of Gear said, “System-on-chip and associated electronic systems are naturally big data problems – the interrelated nature of the billions of unknowns align with the core technologies inherent in Gear’s simulation and analytics platform. We are excited to become part of the ANSYS family with its rich 45-year history of helping customers realize their product promise. We look forward to adding great value to the ANSYS simulation platform and to ANSYS customers.”

Details weren’t announced, but the transaction is expected to close in the third quarter 2015.

Update 8 June: ANSYS’ Annette Arribas says Gear “is a tech tuck-in acquisition that we are going to merge into our electronics business unit.” Now we know why it’s referred to as a merger.

ESI’s new services strategy pays off; Q1 up 20% as reported

EarningsESI yesterday reported that Q1 revenue was up 20% as reported, with a healthy boost from currency effects. Even so, constant currency growth was strong, with license and services revenue each up 10%.

The company doesn’t offer much color on its results, but this appears to be a significant and positive change from a year ago. Recall that ESI shifted its services focus to helping customers add more simulation into their product development processes. That seems to have led to increased services engagements and to higher license revenue, reversing the Q1 stall seen a year ago to solid growth in Q1 2015/6.

The details for the quarter just ended:

  • Total revenue was €24 million, up 19.5% as reported and up 10% in constant currency (cc). Remember that ESI reports in Euros, which weakened against the US dollar and the Japanese Ye over the last year — as a result, ESI see the inverse effect of US companies.
  • License revenue was €17 million, up 20% as reported (up 10% in cc). ESI reports recurring revenue continues to be strong, but that new license revenue was down 19% as reported (down 24% cc) because a number of large contracts signed last year are now in maintenance and what the company characterizes as “an unchanged adverse situation in Russia.” In general, said CEO Alain de Rouvray “licenses activity showed an especially high rate of repeat business on the installed base, and grew in every geographic area”.
  • Services revenue was €7 million, up 17% as reported (up 10% cc). ESI says this is a direct result of the strategic shift in the US implements last year; ESI wants now to focus on high value-added projects related to its vision of “the art of realistic modeling”, where ESI builds and operates multi-domain predictive simulation models for customers’ products and processes.
  • By geo, revenue from Asia was €9.7 million, up 24%; from the Americas, €4.2 million, also up 24% and from Europe, €10.1 million, up 14% on gains in Germany and the United Kingdom.

CEO Alain de Rouvray commented in the press release that Q1’s “very good performance, in line with our expectations, attests to the solid sales momentum at the beginning of the fiscal year across all our business activities … Our disruptive offer enables simultaneous multi-domain optimization all the way to the virtual pre-certification of our customers’ innovative products. The continued rollout of our virtual engineering products, combined with our recent, future-oriented acquisitions, gives us confidence in the success
of our short- and medium-term corporate development plans.”

About those acquisitions: ESI announced that it had snapped up Ciespace, CIVITEC and Picviz during the quarter. I’ve asked how these companies contributed, if at all, to the reported growth and will update later with what I find out.

UPDATE 8 June: The acquisitions will be consolidated into the Q2 financial reports.

AVEVA grows its steel fab offerings, acquires FabTrol

EarningsIt’s not even dawn here in Boston and I’m at the airport, waiting to board a flight to Las Vegas and the Hexagon user conference — and this comes into the inbox on my phone:

AVEVA will acquire FabTrol Systems, Inc. from the Dowco Group of Companies later in June. I’m not familiar with FabTrol, but a quick Google says it’s fabrication management software for steel fabrication. It’s an interesting addition to the Bocad structural steel detailing software, which was acquired a couple of years ago. Bocad is all about the detailing –fabrication instructions– while it appears that FabTrol is more on the business end: estimating, material management and production control. According to AVEVA, “the benefits of the FabTrol software include faster bid preparation, more accurate and consistent estimating, reduced material and labour costs and improved end-product quality”.

AVEVA will pay $6.5 million in cash for FabTrol, using existing cash resources. FabTrol is a US company, with 1400 customers globally.

More soon.

CV Shoutout: CAD to the Bone

Last week I mentioned that Computervision (my alma mater, work-wise), also known as CV, used the tagline “Known by the companies we keep”. That caused some ex-CVers to reach out — thank you! It’s been great walking down memory lane. There are a surprising number of us still in the industry; I do think this stuff gets in your blood.

One thing we reminisced about was the over-the-top nature of life at CV when times were good. For example, we rented out an amusement park for a day so that employees and their families could cavort. With food. And, we think, beer. Then there was the VP who flew to work in his own helicopters and the CEO who had a Penske race car, painted just like Mr. Penske’s. A sales team that had a tiny alligator in a fish tank to commemorate a Florida gathering; there were limos and fancy dinners and late nights. We also had chocolate chip cookie aroma, as one CEO’s secretary liked to bake when under stress. Was it the catering kitchen off one of the fancy conference rooms? No matter. It smelled heavenly.

And then there’s this:

(If you can’t see it, go here.)

Was that fun or what? This was for a sales meeting and not meant to be customer-facing. But it was so … us: loud, tough, a bit arrogant and convinced of our own superiority, splashing customer names around, truly CAD to the Bone. CAD/CAM do or die. Hah! I know I’ve got the cassette tape somewhere, and possibly a T-shirt. Were there jackets? Oh, I hope so —

Not sure if you caught it but of the competitors Bob listed at around 5:50 only PTC and Intergraph are still standing, and only PTC is still going it alone. But they bought CV in the 1990s, so perhaps it all makes sense somehow …

If you have time, also take a look at I’m the Only One, for a sales meeting in 1996. Not as over-the-top but dynamite lip synching. The videos companies produce these days are so serious, focusing on solving the world’s big problems; that’s important, but not nearly as much fun.

What are you going to create this week that will put a smile on someone’s face in 20 years? Get cracking!

Exa’s Q1 up 7% as reported, up 18% in cc

EarningsExa Corp. just reported that FQ1 revenue was up a strong 7% as reported and up 18% in constant currencies to $14.8 million, right in the middle of the earlier forecast of $14.5 million to $15.1 million and ever so slightly ahead of Wall Street’s consensus.

More after I listen to the earnings call, but these are the high-level breakdowns:

  • Total revenue was $14.8 million, up 7% as reported and up 18% in constant currency (cc)
  • License revenue was up 5% to $12 million (up 16% in cc)
  • Project revenue was up 20% as reported and up 33% in cc to $2.5
  • Even with the revenue increase, Exa reported a GAAP loss from operations of $1.8 million, slightly larger than the $1.6 million GAAP loss from ops reported a year ago, leading to a GAAP net loss of $1.9 million in the first quarter of fiscal 2016
  • Included in last year’s GAAP net loss  for Q1 are $15.2 million related to non-cash charges and write-offs related tax assets. Why am I telling you this? Because you’ll see news reports that the net loss shrank substantially from last year’s $17.2 million in Q1. It’s true — but don’t be fooled.

Given Q1, Exa is sticking to its fiscal 2016 forecasts. For Q2, Exa expects total revenue of $15.0 million to $15.8 million, or an increase of 1% to 7% as reported; and for the year, Exa still expects total revenue between $64.7 million and $67.0 million, an increase of 5% to 9% as reported. The company still anticipates a GAAP net loss in the range of $5.9 million to $5.2 million. [It’s a loss, so we’re going from -5.9 to -5.2. — Ed.]

During the day today, investors sent Exa’s share price down 5%, perhaps in anticipation of slower growth than was reported here. Let’s see what happens in after-hours trading and when the market opens tomorrow …