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PP&M: Solving Complex Problems

My head is spinning after 2+ days at Hexagon’s first user conference since the close of the Intergraph acquisition. This is one complicated company!  First, a couple of general impressions, then some detail from the PP&M keynotes.

I attended Monday’s investor event, which foreshadowed much of the company presentations on Tuesday and Wednesday. For most attendees, things kicked off Tuesday morning with a Hexagon keynote featuring CEO Ola Rollén, delivering the message that global change requires “actionable information”. The company’s divisional heads introduced their business lines and, described how their products and solutions addresses the problems highlighted by Mr. Rollén and then it was on to a musical troupe, the Water Coolers, which poked gentle fun at Hexagon’s acronym-laden product offerings.

The Hexagon vibe is very Euro, hip and colorful. You can get a bit of the flavor from Hexagon’s video of Mr. Rollén’s keynote ( What you can’t really see are the stunning visuals that accompanied the speakers, morphing from one statement to another in a spare, clear way. It was a great help to those in the audience struggling to understand the spoken content. Hexagon clearly put a lot of thought and effort into creating an attendee experience that mirrors how the company wants to be perceived: young, energetic and on the cutting edge of technology.

After the Water Coolers, attendees could choose to attend a massive number of sessions targeted at each user population within the Hexagon umbrella. I tried to get to each business unit’s keynote and I hope to sometime write about what I learned there, since much of it was new to me and likely is to you, too. But since most of you are interested in Intergraph’s PP&M division, I’m going to focus on that for the rest of this post.

PP&M content started Tuesday, with some terrific user presentations describing how companies around the world are using Intergraph’s solutions to solve real-world problems. The division’s keynotes started Wednesday, when PP&M President Gerhard Sallinger opened with a business update.  Total revenue in 2010 was $371 million, up 17% on both organic and acquired growth. (This compares well to AVEVA, which also reported 17% revenue growth from March 2010 to March 2011 and Bentley, which grew 7% in 2010.)

In an unusual move, Mr. Sallinger also showed PP&M’s revenue by quarter since Q2 2009. This view shows that growth is accelerating: Q1 2011 revenue is up 15% sequentially and up 23% over a year ago in what is typically a slow quarter after the Q4 budget flush.  Working backwards through 2010, revenue was up 14%, 23%, 20% and 12% (Q4 to Q1) — reflecting both the impact of the Q1 2010 COADE acquisition and the effects of the economic recovery in many of PP&M’s end-markets. Neither PP&M nor Hexagon said how profitable PP&M was in 2010, but it is regularly cited by Hexagon as being “above the group average”.

Interesting, too, was that Mr. Sallinger showed the year over year (year to date through April 2011) revenue growth rates for PP&M’s main products. To take just three from this list because of their significance:

• CADWorx, up 52%. According to Patrick Holcomb, PP&M EVP of Business Development, many COADE customers were concerned about Intergraph’s intentions around this AutoCAD-based plant design product. Once Intergraph signaled that it was serious about this business and started releasing updates as promised, wallets opened and buying picked up. Earlier today I saw a quick demo of how well Intergraph has integrated CADWorx into workflows across its product lines, making it a good complement to the Smart solutions for smaller projects — I would imagine growth will continue at an impressive rate, though perhaps not quite this high.

• Smart 3D (SmartPlant 3D and SmartMarine 3D), is Intergraph’s answer for the design of complex plants and marine structures. Mr. Sallinger reports that revenue was up 34% for the year to date. Exact comparables are hard to come by, but this is roughly equal to the growth rates reported by CAD solutions for other markets, many of which were not as affected by economic turmoil as the process and marine industries. It would appear that Smart 3D’s database-driven rules and data management capability continues to be attractive to large project stakeholders.

• PDS, Intergraph’s legacy plant design CAD solution, grew 5% through April 2011- reflecting the fact that change in the plant industry happens very, very slowly since projects started on one design platform must typically finish there.

Mr. Sallinger concluded his remarks by talking about how today’s mega-projects require ever-more sophisticated solutions – and how this creates a market for Intergraph’s solutions. A perfect segue into the following presentations by PP&M staffers who showcased some recent and coming product innovations. Support for modular construction resonated especially with me, since pipes which are designed in a plant-wide 3D model must be divided into modules for construction — a very expensive undertaking if it’s all manual. The mining and materials handling solution was of great interest to the people sitting around me — check for a complete list of press releases covering product introductions/unveilings this week. The coolest thing shown was a sneak peek at technology PP&M is working on to quickly automate capture and indexing of information created with non-Intergraph products to enable new, visual ways to search, filter, navigate, and retrieve information.

I sat in on a dozen or so sessions since that keynote, mostly by customers. It’s been brought home again to me how complex the problems of this industry are. Thirty year old plants that are far from true to original designs (Barbara Migl of Dow told of a plant in Louisiana that has sunken 15 feet into the ground over time); very complicated networks of owners/partners/regulators/employees; data that comes from CAD, laser scans, supplier PDFs, and other forms and is stored in databases, document repositories and file directories all over the enterprise; concerns about just how dangerous it is to work in these plants and efforts to use technology to plan and train workers to minimize exposure … Real and overwhelming if you think about them too long.

This is my second user conference in three weeks and I think I’ve realized something important. The people who attend these events are enthusiasts. They are excited about what they do, look to their vendor and peers for help in solving serious problems and are passionate about their ability to do things better and smarter. Hexagon and Intergraph PP&M gave attendees a lot to think about this week — and that’s not even considering all of the possible ways that Hexagon’s many business will someday provide more integrated solutions.

Note: Intergraph graciously covered expenses and registration for the event but did not in any way influence the content of this post.

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