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Arena Runs The PLM Collaboration Race

Arena Solutions is set to add collaboration tools to its on-demand product lifecycle management (PLM) application. In doing so, it is throwing in with heavyweights IBM , Dassault Systemes  and UGS, which have been focusing on the collaborative aspects of product development and lifecycle management.

They are trying to make the case that PLM should be used as a tactical tool for driving innovation.

PLM applications allow customers to see the entire bill of materials and related documents like blueprints, cost and sourcing information and other metadata associated with making a product.

Arena's new collaboration layer will allow customers to track deliverables, such as project dependencies, the status of components expected from other parts of the supply chain and expected ship dates for a new product introduction.

Customers can thus tie project plans to the product record by linking task, milestone and deadline information directly to each individual item included in a project. These links streamline project planning and execution and allow manufacturers to plan for and launch marketing plans with a greater degree of precision than they are currently able to do.

"We've created a rich interaction between the project and the individual components that make up a product," said Michael Topolovac, Arena CEO.

Topolovac also told internetnews.com that Arena's on-demand delivery model allows greater collaboration among all parties, both inside and outside company walls.

The reason for the interest in this space isn't difficult to figure: PLM is a $65 billion market growing at double digits, and is expected to be worth $90 billion next year.

Dassault Systemes is the leading PLM applications vendor, with about $1.2 billion in revenues in 2005, according to AMR Research. UGS, which recently agreed to be acquired by Siemens for $3.5 billion in cash, is a close second at $1.15 billion.

Dassault Systemes recently demonstrated a plug-in for IBM's Lotus Sametime 7.5 client that allows manufacturers to pull sub-contractors into a real-time discussion around a 3-D design drawing by clicking on the components they're responsible for delivering.

Philippe Forrestier, president of Dassault Systemes Americas, said PLM is becoming a more strategic option for customers as a result of new collaboration tools.

"Purchasing and marketing departments can watch the evolution of the project, and that extends its use beyond the traditional engineering community," which was the early buyer for these tools.

UGS has also added a collaborative product data management (cPDM) component to its suite of PLM applications.

John Clendening, senior vice president of marketing for UGS, said that "now that PLM is driven by the Internet, it's become much more of a C-level purchase and is being looked at as a category of enterprise software along with ERP  and CRM."

Once its deal with Siemens closes, UGS will be integrated with the German company's Automation and Drives group.

Clendening explained that "the vision driving this is that Siemens would become the first hardware and software vendor of product lifecycle stuff."

He said the combination of the two companies' expertise will allow customers to build virtual factories to ensure that the production line will work smoothly for every given product.

"The ultimate customer benefit is you save time and money because you can build all of these things digitally before you spend a dime," he told internetnews.com.

Dassault's Forrestier was, of course, quick to say that Siemens and UGS make a poor fit. "Siemens is a company with no reputation in this domain," he said. Nonetheless, he said the acquisition validates the strategies adopted by UGS and Dassault.

Analysts praised the deal, but expressed reservations about whether UGS would be swallowed by the larger company.

AMR Research analyst Michael Burkett wrote that "UGS struggled with focus and execution when it was part of the $23 billion EDS organization, so this will remain a concern under Siemens' ownership."

Richard Ptak, principal analyst with Ptak, Noel & Associates, said that the companies complement each other's strengths. They should be able to "get to market more quickly with focused products they can both benefit from," he told internetnews.com.

On the same day that the Siemens-UGS deal was announced, IBM announced that it is strengthening its ties to Dassault Systemes by reselling a greater number of the PLM vendor's products.

The Arena collaboration features will be available to customers on Feb. 8.