Dassault Systèmes in 2023: nothing but potential
I recently spent a few days with the Dassault Systèmes team in Paris. I’m still digesting it all — there was a LOT, and since my job is to find patterns, make comparisons, and note contrasts, I still much to ponder— so this post will cover some general thoughts about what I learned at the event; I hope to get to specifics later.
In no particular order:
- Last week, DS formally announced that Deputy CEO Pascal Daloz would become CEO as of 1 January 2024 — this shouldn’t come as a surprise since current CEO Bernard Charlès said this was imminent. M. Daloz spent a lot of time at the analyst event, answering our questions and explaining his vision for the future of DS. Something else that shouldn’t come as a surprise: it’s continuing the last 40 years’ focus on technology, platforms, and workflows and expanding its user base. M. Charles will continue as Chairman of the Board of DS and seems to be crisscrossing the globe, speaking with customers and investors.
- My main takeaway from the analyst event is a two-fer: DS has so many brands, products, offerings, target industries, and sales channels that, in totality, are confusing. But, as EVP Industry, Marketing & Sustainability Florence Verzelen explained, that’s never how they approach a customer. When speaking with a specific customer, DS proposes a particular solution (set), a subset of the gigantic list of products/roles targeted to the buyer’s situation. I would love DS to present to analysts that way — understandably, since DS had our attention for a limited time, they threw everything at us, from mining to personalized medicine, and that’s… a lot.
- It was also interesting that there was almost no discussion of brands. DS is famous for CATIA, SolidWorks, and SIMULIA … yet today, these are all buried inside the industry solutions the company is selling. Yet, ask a user what they do, and they say, “I model in CATIA” or “I use Abaqus to …”. The one exception was Medidata, which DS is justifiably proud of and which was featured at the event. A few weeks before, I was at PTC LiveWorx, where Creo and Windchill were prominent. This week, I’ll be at Siemens Realize LIVE, where I bet NX, Teamcenter, et al. will be singled out, even as Siemens also looks to platform-ize everything onto Xcelerator. DS is innovating at the product level, as well as in workflow/role/process levels, and I think that gets lost with the current marketing focus.
- Sustainability was featured in many DS presentations, as their customers rethink the design process to make related decisions early, manage sourcing data, and manufacture as economically as possible. DS had many customer examples, and I wonder how far behind will be too far — when can a manufacturer no longer catch up? In the US, it seems more about greenwashing than real change, but it feels like the US design/manufacturing community needs to move much more quickly than it appears to be or risk being left behind.
- One of the advantages of being a DS-sized company (2023 sales forecast is something like €6 billion) means there’s money for philanthropic activities. DS bused the analysts to a museum near the Eiffel Tower to show us a virtual reality recreation of the caves at Lascaux. Lascaux has hundreds of prehistoric paintings covering the cave’s walls and ceilings. Scholars continue to study the caves but believe the paintings were made around 17,000 years — they are fragile and precious, so access is limited. Using VR makes these artifacts accessible to so many more people — and they are very, very cool. See here for more on DS’ work: https://compassmag.3ds.com/lascaux-cave/
- DS used Lascaux to set the stage for a more modern, 21st-century problem: a poorly performing shop floor. Using our virtual reality headsets, we toured a replica of the factory that was created in minutes using laser scanning. We examined alternative configurations, looked at the possible flow of people and materials, and then all decided the best part of that particular work cell was the very realistic coffee maker in the corner. (Analysts are a demanding audience.) But the demo was really instructive: I don’t think it’s cheap enough yet, but perhaps the Apple Vision Pro announcement last week will bring down prices in the near term and make this technology accessible to many more people.
- Acquisitions came up at the analyst event and at last week’s Capital Markets Day. M. Daloz told us that DS is always thinking about where it can leverage make or buy decisions — speed to market, access to talent, and what gaps in the current offering most need filling all play a part. M. Charles added that DS makes very frequent acquisitions that don’t ever hit the news wires because they are too small to require disclosure. Then last week, DS formally told investors that they can model “€600/€650” million in operating income contribution from acquisitions by 2028. That’s not a lot in the overall 2028 revenue assumption of €9.5 billion — but it does imply a large or several not-small acquisitions in the next few years. And if we take the thought experiment a bit further: who might that be? Of course, DS isn’t saying (though M. Charles did say that DS has a very active acquisition pipeline building process), but we can try to guess on directions if not specific companies. DS is very interested in its life sciences verticals — so perhaps another acquisition in personalized medicine development/innovation? As I understood DS, those would be smaller companies since it’s such a new field —or a giant biopharma, unlikely to be interested in a DS takeover. But there is also the adjacent tack: someone develops those gene therapies, say —a scientist— and then someone else has to scale that to a production process that might be in a hospital, close to the patient. Hospitals don’t do that today; what kind of technology might that require? Services to install/operate that technology?
I think DS’ options are vast, and they have more potential directions to choose from than ever before. In this quick post, I didn’t even get to virtual twins, the explosion of Centric into retail and related industries, the importance of Outscale to the DS vision … More soon.
Note: Dassault Systèmes graciously covered some of the expenses associated with my participation in the event but did not in any way influence the content of this post. The cover picture is of the Eiffel Tower; it was built to showcase French ingenuity and engineering for the 1889 World’s Fair. It was never meant to stay up after the Fair since many people hated it because it was nothing like the lovely architecture in that part of Paris. But it has survived wars and demonstrations and still stands tall and proud. And because WordPress can be weird, here’s the entirety of the photo — isn’t that a gorgeous structure?