Dassault Systèmes (OTCPK:DASTY) Capital Markets Day Conference Call June 15, 2012 12:00 PM ET
Bernard Charlès - President & CEO
Monica Menghini - EVP, Industry, Marketing & Corporate Communications
Pascal Daloz - EVP, Corporate Strategy & Market Development
Olivier Sappin - VP Industry, Transportation & Mobility
Susan Olivier - VP Consumer Goods & Retail
Philippe Bartissol - VP Industry, Industrial Equipment
Laurent Couillard - CEO EXALEAD
Stefan Lechere - VP, Business Development Netvibes EMEA
Thibault de Tersant - Senior EVP & CFO
Unidentified Company Representative
Thank you very much for coming here at Vélizy with this beautiful June day. Many thing happens after our last Capital Market Day in 2010. The acquisition of EXALEAD, Netvibes, Gemcom, the introduction of our new strategy 3D Experience, so it’s very useful to meet again; becoming a 3D Experience company will be something we will explain in more detail and be sure that we already have many complaints of this strategy.
During this Capital Market Day we would like to share with you also insight in industries in consumer goods and retail, transportation, mobility, natural resources and also new brands like in social industry, like 3DSwym, EXALEAD and Netvibes. We will propose you some reason to believe finally we will work on one of our client, Jaguar Land Rover with Paul Davies and in conclusion Thibault will provide you with some more financially oriented views.
Thank you very much and we are delighted to welcome you in Vélizy. Bernard the floor is yours.
(Inaudible) welcome, two years ago, when you think about two years on the moves we have done since then in terms of number of technology and the number of moves many people have been asking us question why are you doing EXALEAD, why are you doing Netvibes whatever, what are you doing Elsys and many of those, but well spotted technology acquisition and also product and competency acquisition.
I think what we want to do today is to reveal to you the 3D Experience platform which as at the very core of where we want to go and what we are doing right now for the next 10 years at least. So it’s a new cycle for us. And why that, because I think that there is a lot of technology and capabilities with the products and the brands we have, they are very strong differentiators.
However, it’s not always perceived that way on the market and it’s not necessarily seen that way; why so; because there is a big gap between capabilities differentiation and the business use of, so what we want to do is and what we have launched a year ago with Pascal Daloz, Dominique Florack here and Monica Menghini is to transform the way we express, target, formulate, deliver on support our solutions to the market.
So it’s a difference between what you have seen with many rich capable phones; on an iPhone you get the experience. That’s what we’re doing. Revealing the V6 architecture and capabilities that we’ve been investing on for so many years, and revealing it in a way where we kind of laid to a very clear business value to the communities we are serving and it is changing the way we are interacting with customers, with partners, with the way we distribute to our three channels. Remember two years ago, together we were just about confirming the acquisition of the IBM sales force which is now our sales force. So in the last two years we have put a lot of strategic elements together to make this happen.
So let’s start, I don’t know how to say a click, I have a computer there. I am used to use the iPad now. So Dassault Systèmes, a few things that I believe will be persistent and relevant for a very long term. Difference with the science, inside the software we do; difference with dedicated, extremely focused teams, small teams. I spent more time with small teams than I spend with the big organization. It works.
The focus on new type of customer engagement, we’ll discuss that. And of course, the very out of part of witness what we have seen with this compass, which represent the 3D Experience platform. We will continue and expand our partner network in a big way, in multiple forms, of volume, of our value selling and of course the long-term foundation of our company as always been there and I think going to be there long term.
Our belief is very clear. We believe that this very fundamental in all the economy to expand physical goods with virtual services everywhere in the economy. So the virtual world expand the physical world from the fact that it has to provide kind of new services to citizens, users, consumers and businesses and you will see some illustration of that today.
The second thing is I think in any company is important to formulate every 10 or 15 years what are the new dream of the company. And we have; I think it’s not only necessary in start-ups; maybe some of you have been investing in start-ups, you formulate the dream, the strategy, we do have one. We think that now we are at the stage where things are coming together to help with our software with the capability of 3D Experience, increase on harmonized product nature on life.
The move with Gemcom creating GEOVIA was probably a surprise for many of you, we had not expected, but the reason is very clear plan. Natural resources is a big issue. It's creating so many needs in terms of special equipment; special collaboration around the world that we believe it's a driver where the virtual world of modeling and simulation can serve as one example and life science, we talked about it two years ago.
Now we have formulated also in very high precision of what we want to do. We want to deliver a business and please notice on people with 3D Experience universe to imagine sustainable innovation capable of harmonizing product nature on life. Why business, why people? The decision-makers look at the business value. The users are people. We want our users to fall in love with our products provided the attention, the aesthetic, the quality of each of our brands at a level of the consumer goods product, at a level of the quality of consumer goods product, because we believe that decisions are not only done with business people and companies, they are also done with users.
Today you notice that people are coming with the computer at work and they tell you can you please fix this so I can get my email; it is the opposite, the other way around and this is part of our strategy. We have created a legacy over this last 30 years and the legacy calls for continues investment in basic 3D model. We believe that what many observers thought was commodity, we are building differentiation in making 3D modeling so easy to use that it will become quite easy fast medium, but there is a lot of some degree of technology inside and the entry point is very high.
We think also that this is a more cost sequent year to be essential for the digitalization of the manufacturing of any kind of goods; we do digital work even for packaging today, first one of true, second one of true simulation. PLM; that came out in 1999; we were the first to formulate the difference between PBM, Product Data Management on PLM, Product Lifecycle Management and I think it has been a good driver for us and I think it is obviously going on. We increased our market share in the last years; sounds good.
You will notice that each of the steps that don’t replace the previous one, they expand the perspective of the previous one, as a matter of fact not only that, but we believe that the statement for a new horizon provides a new definition to what was the previous one. And what we believe is the next-step is 3D Experience; so why so? Simply said, we believe that the products of the future will be defined. Having defined first, how those not understood products will be used, what kind of service do you want to offer? If you know the experience of a product, you can imagine which is the right product to deliver this experience on this service, so we believe the universe that we can do now in terms of modeling and simulation, the representation of the future can indeed be the driver to create more competitive products for our customers.
Alan Mulally from Ford, a good friend for the last 28 years told me then I got it, you are suggesting that we move from vehicle attribute to vehicle experience. That's it. Moving on vehicle attributes to vehicle experience, that is a big way, a big difference in value to consumers to deliver at all, mobility, with a lot of functions versus creating a great experience; connectivity, music, mobility, whatever. And that's the move which we believe is unstoppable; what do you need for that is not only product design, its understanding the experience that we drive the product design production delivery and servicing in the right way. Smart mobility is an example.
So to do so we started the investment in V6 in 2004. Dominique and I spent a lot of time with the teams here with a secret project, it was called at time convergence, how can we converge everything in such a way that one day, one day we could beat a digital experience as opposed to digital products to understand how these products work. From that we believe we have all the elements in place to create a platform that will be on line or on-premise whereby this platform can connect people, the power of imagination, the power of simulation, is these virtual thing I see, can it become real, can I produce it, the power of big data analytics, what is available on the web right now that I could use because I am in this creation process of new services or products.
I just went through the compass. People on the north, imaginations 3D for ways of design, sketching, easy way to communicate and collaborate, V plus R stands for virtual plus real simulation, compliancy with real life. And II stands for Intelligent Information. Another middle piece show me the experience.
So when you think all our brands, 10 brands now in the company; how do they fit there? On the people’s side ENOVIA is the world’s best solution for structural collaboration, work flow program management, supply chain, cost analysis. This is what we sell to all cross sector of activities. We are building this 3D suite online on the Cloud solution for collaborative software. We use it massively in Dassault Systèmes now.
On the west side of the compass you have CATIA, SolidWorks, no need to describe too much there and in cable dynamic, amazing technology there to really go mobility, online, make it easy from simple to complex things. And GEOVIA the new brand of in ways to represent the on the ramp capabilities. So all those are on the west side of the compass.
And then on the south is really, how can I produce DELMIA production, how can I make sure it does not crash or crunch the SIMULIA world of multi-discipline and of course 3DVIA because how I do a store experience, how do I put my product the shelf experience for P&G or Carrefour. This kind of example that we have taken already which are very big example in terms of what is needed when a company is going to vacate on one store and to open 500 stores in the world, how do they do that? Do they send pictures, none of the stores have the same, they want to do the brand experience, they want to understand how the product will be displayed; we have now the technology to do that.
On the east side EXALEAD, I can index the data inside the company, outside the company and I can create dashboard, intelligent dashboard. This is where it fits; this is why we did the moves we did. I will not go through all this, the only message I want to share with you here with this precise page is to tell you that in each of the brands we have technology that no one else has been able to develop and we measure that, it’s like on the iPad, the screen has something, you have to have some technology.
It’s the difference between an iPhone and other one; look at the quality of the selection when you type in, they are very precise things in those kind of products and they are very precise things in each of the product we do where we can demonstrate that the technology will take years for our competitors to solve. This is the science part of it.
With that, this is the background, the message Dassault Systèmes wants to become the 3D Experience platform. We want to reveal the capability in a way where it can be related to the business and with that I call Monica Menghini, I am going to share this presentation by the way I should have said that at the beginning with Monica and with Pascal Daloz, who are going to tell you about the strategy. Monica?
Thank you Bernard, good morning. So you have seen that we started from asking ourselves what we do want to spend for in the future; and I know that many of you have not heard that for the very first time in the history of Dassault Systèmes and we are no more using an acronym. I have nothing against the 3D, because 3D is actually probably the only acronym that the human being are understanding everywhere because there is a meaning in our real life and our real application as the normal people and not as a business people.
Now when we go and start talking about DMU, PLM, CAB, M&A, it is something that actually as a business first I don’t really like very much. I think that what is important in the complex world of technology of today, if you want to add our client, navigate their business, they used to be clear, they used to understandable and therefore the relevancy comes first from the understanding of them as such. That is the reason why we want to stand for the very experience company.
The compass, it is the best of simplification of this. And the sign, I adore, no matter the winch, because it was a genius and our system engineer, a copy writer and whatever you want to define him, but the best of the best of the sentence that he has ever pronounced, it was that the simplicity is the ultimate sophistication. This is what drives us.
This is the reason why the symbolism of the compass, it is a compass, because we want to help our client and navigate the complex world of technology. It is technology at the service of business and not as adorned to many other type of problematics or challenges that they need to face. It is important that we simplify and especially that we harmonize. If you want the way that we do our products and why do we do our products which is the reason why actually as you can imagine, every single company as a strategy, a strategy has been defined in three keywords and why, because keywords are things that can inspire people, are clear and are memorable.
So that everything with discipline in Dassault Systèmes can think today keywords of the strategy and remind every single all day, why am I working in Dassault Systèmes, what do I need to do and why Dassault Systèmes wants me to do this? It is something that is relevant as well for the customer which is the reason why actually we are going everywhere in the world in the Mega Road Show from North Europe to Asia to US to Australia in every single country where there are our customer, we go there and we explain them what is the strategy. They have the right to know because of that strategy would set well the product and solution that we will have in the future.
So our strategy is defined by three keywords. Social Industry Experiences. Why social? Here is not about social media. Social media has been the one of the main factor that has changed the life of every single in the industry. There is not even one marketing department in the world whether they are selling the cars or they are selling the financial products that they do not struggle to understanding how to navigate the social media, whether do I need to make advertising in Facebook. But this is not the point.
The point is that because of the race of social media there was this change. It is now 15 years that the consumers spoke to us and the they either destroy us actually or help us understanding what do they want. So social is a keyword, why because social is the new way of doing business. Social application coupled with the collaborative application is the way that the industry needs to work today.
Why? Simply because, in a company there are not just engineers and this is something that we need to take into account because Dassault Systèmes is creating a lot of value in those type of jobs that are related to engineering and software, but it is, if you want limited by the fact that the value creation that is the product, that is every single company as in size it is not then just the engineers. It is not about discipline collaboration; it is much more; it is what we call experience management.
Marketing assessment, the designers, the stylist are not persons that allows us being at safe stage. Collaborative application are meant to put order in the process of how do I bring or how do I create a project or a product. But the point is that what every single company wants us to innovate; the innovation it is not a statutory process. Innovation is creativity; creativity is cause; the creation came from the cause; so we need to respect the type of thinking and the type of, if you won’t pull it across, it could be, but there are no process.
So social is a new way of doing this business coupling a collaborative innovation application and social innovation application, we can better serve exactly the innovation process. How do marketing exchanges design us, how do I tackle this with sales, how do I become inter-discipline and not in the sense of structured way of doing and how do I respect the person and the job in the company.
And if I am an economist or if I am a commercial or if I am a marketing person I need to exchange ideas; because ideas comes from everywhere. It is the cloud sourcing of the company. We have been talking for ages about the cloud sourcing outside the enterprise and lets start from the enterprise, because today they do not talk to each other, one of the biggest obstacle it is how do I funnel the ideas of management since the moment of creation, field, the consumer value that I want to bring to the market; that is social. And social means as well therefore that the type of application needs to be democratic. I am not going to tell you that CATIA is going to become as easy as Google Sketch but it is where we go. It is a matter of providing interfaces and type of usability that are best of internet.
That is the future of software. It is when we can really unleash the innovation flow within the company and it is social, it is done by people. So respecting the people profiling, it is the way of working together. Industry is the second key word, and why so because as Bernard said the users are at the end of working within an industry.
Looking at the word and thinking on designer as undistinguished type of target it is no more the way of doing that. The human being that is behind the profile of a designer it is different for every single person and it is dramatically different whether you work in a company that produces the end packaging or financial products versus the company which does airplane, which means that the type of product that you need to provide them it is radically different.
One of the best example that I can give you in order to be extremely pragmatic is that the CATIA it is the same product that Proctor & Gamble or other client, the Coca Cola use for making their packaging. But they need, that they have as user in Coca Cola it is not the same that's user of airplane. Am I talking about system engineering, yes and no but I am talking as well of simple things that are extremely valuable when you create a product.
A user in Coca Cola or in L'Oreal or in P&G is looking at type of rendering and the rendering is that you want to when you create a packaging it is not the rendering that a user uses or wants in transportation and mobility because the fact of seeing the car as it is in real time it is not what needs to be done, it is printing rendering that is important for them.
How my product will look like once we will print. So you see that by looking with the eyes of business rather than looking at the eyes of product features and function, the platter of different advances of our product becomes incredibly powerful, we can do this, we are doing this so this is the reason why actually we are penetrating a different market because we got the difference between end user in industry A or being a user in industry B and that is true for everything or brand application or that platform.
Industry is also a way of saying that we don’t serve the business having complexity of the business. There are our campaign, advertising campaign actually that says if we ask that I question we can change the world it is provocative, it is bold that’s to be shocking if you want to cater to the class. But the real point it is business is all a matter of asking ourselves a direct question. Our clients do that, so we do the same.
The key question in industries of what my industry value the most and why so? Because only by understanding of what they value the most, we can better serve them and enable them to create the consumer value that they want to create. It is not by asking ourselves at which type of software do I need. So it is a shift in as well in terms of how do we design the platform and how do we provide within the platform and the brand application and to serve the last keyword of the social, industry, experience strategy is experience and why experience Bernard you if you want (inaudible) for that I think it is one of the best example that I can use it because probably has moving consumer goods it is their everyday language. It would be strange that just them I am talking about that because it means we are the only intelligent industry in the world, which is not. The every single industry has intelligence. So, if the Ford CEO were right, arrives to that last you are right. We do not have to look at the product attributes.
It is much more that is needed, our product experiences. And why experiences are different from product? First of all because consumer do not buy products buy experiences. And these are learning that is coming from consumer goods markets and why so because they have the most commoditized market in the world. When you sell product at $5 there and you have a billion type of consumer population everywhere in the world where you need to win against competitors and despite these being a price premium, you need how to know and to master the creation of experiences. An experience is not a product. It is bigger than a product. It is a mix of intelligence and even emotional type of things that goes from how do they look, how much it is likeable, how much it is usable, what is the usefulness, what is the relevancy, what is the total experience around the product.
iPhone, it is one of the best example. It is not a product. They crash the market of Smartphone and in spite having probably one of the last, because they understood that they have to do an experience to change in that category, it is a product, is a service and a content all at once.
And experience, it is much more than a product and every single industry in the world knows this. Not that there are not engineers who knows this, or the other components of the company knows this. Call it commercial, call it marketing, call it strategy, they all know that when they brief an engineering department is to create an experience and not just a product. This is the only way of staying competitive in a market where consumers buy experiences and it is as well that the three words that we want to use. Social, industry, experience are the three keywords that are actually helping us assisting the direction for every single discipline in Dassault Systemes.
What is important that is how the different discipline as being powered up thanks to the fact of this change and simplification of the strategy and therefore the new direction. The strategic operational element that we have are just identified if you want are shown in this chart. The brands, the industry and the channel. These are the three key elements that are getting powered in order to power the platform across the world. Brands are now 10. A go-to-market that is done through each of the brand you can imagine that makes a little bit of disorder. So simplification it is as well in terms of which strategy needs to follow the brands and which channel needs to be activated on what.
And this is an engineered process. We are not just putting a symbolism to the chart. The chart – the mission of the brand is to create a magic user experience and again the point it is any user in any industry. It is not a job role. It is a designer in packaging for CPG or designer in industrial achievement. It is the user as a person understanding what are not only the technical bonding that we need to create but as well the emotional bonding.
We are going faster towards a world of video games. It is not a matter of doing a video game, but it is matter of how much the engineers of tomorrow will be completely different. They are coming to us so we are an engineering company. We do see engineer every single day. We are recruiting engineers everywhere in the world. Those guys that are with the [iPad]. Those guys want to see and look and make their complex work because they are those are creating the complex work that when you see into CATIA into SIMULIA into any of our brand but then look at the ordinary front way.
We have this, our client are facing the same challenge. So that is all about for recreating the right flow in terms of strategic that each of the disciplined brands stands for magic user experience and it is all about these are ability of the software, it is about the statics of the software of that, it is the use of DDT, it is the scalability of the software and the sociality of the software.
All engineers today are becoming much more social and this in not just related to collaborative application. It is the mentality that this social and social means as very different type of usability. This is what our friends are there to provide us with. They power the user. How do I power the business as said, it is through industries. We are now 12 industries. For sure, there are still revenues for that extremely focused on the core business and luckily it is still growing at the great pace.
But the point is that every single industry at the end has the same challenges. Innovation and value creation is the key issue of every single business everywhere in the world. So understanding we are being this value to most and not just one but 12 industries is how we direct the product strategy that needs to be down within the industry and as well the good market strategy.
And therefore we arrive to the magic triangle of the distribution centers. The direct trade, the indirect trade, the professional trade, this is three way that we penetrate the market and industries there as well to organize an engineer in the good market specifically putting priorities worldwide in terms of industry and in terms of brand, where to penetrate, how to penetrate, which kind of offer that needs to be done. And last, how is it helping us if you want this new approach.
This is something naturally that we are making since January. But the point is that we started working in this way in 2011. And we do have the results in that because not only we have realized the core industries business but we have further penetrated the industry of different industry, just in 2011 we have added more than 18,000 new clients worldwide.
Today with the acquisition of Gemcom actually I had to open 12 industry and natural resources is extremely important, its not just about the mining for gold or for diamond, it is the modeling and simulation of our planet, the modeling and simulation of the underground, the monitoring and simulation as well of the ocean, of the sky, these are all elements that are in perfect realistic simulation are needed to create better products tomorrow.
A better reality environment which is not compliant with a scientific world, with a real world, despite the behavior of the products are done in CATIA it isn't useful. The better reality environment has to become the more and more scientific and we know how to do it. The planet modeling simulation will better serve our transportation and mobility industry and why so? Because what today I'm doing with few of the clients will become for everyone and I could really simulate the ground so that the pure consumption of simulation is going to be extremely realistic at the 0.1 if you want difference among virtual world, the real world.
This is as well, mining is important for us. And then there is the third bowl as I call it of the sphere of interest this life. You see that the life science we are still progressing and we are progressing faster actually than other companies, why so? Because we are serving our company again with what this industry value the most, and what this industry value the most, it is different the answer that you get by asking yourself the same exact question 12 times for each of the industry and each of the segment of the industry. I think now I would invite Pascal Daloz to give us a little bit of brief and that’s for our numbers because at the end what is important when you set a new strategy it is that this strategy is going to drive me towards a bigger market potential and therefore a bigger market share potential for the application of Dassault Systemes.
Thank you, Monica. So it's quite unusual to see us in the middle of those players because you can imagine that you would probably put us much more, these are our traditional usual aspects Siemens, PTC and others. You can see this as a little bit provocative but I want you to remind that this is where we want to go. We want to play and to compete against those guys of course with different value part but this is where we want to go. So let's put numbers behind this. So I want to position. First, I would like to share with you at least our industry landscape and maybe you've seen this chart before, I do not remember if I shared it before, but anyway it's still accurate. I marked the 125 larger software big company on this chart and the first one you can notice is review concentration is still going on because you've seen much more points between 75 million to 500 million than you have after 5 billion. So there is first league in this industry, this industry and the first league is all the company being able to achieve more than 5 billion revenue. So I can declare to you that we have the ambition to be in this first league.
My second comment when you look at this chart there is an infliction point the $3 billion infliction point and this is shown by this green line representing the operating margin and the operating margin is skyrocketing as soon as you exceed the $3 billion revenue. And why that it’s because you have a huge economy of scales on sales and marketing. So we are little bit bigger than 2 billion so we are not so far from this. But I will not tell you when we will achieve this I will let you both to answer to this question after.
So do we have the market to do that? Once again, I want you to have the big picture because most of you concentrate on knowing PLM and you forget that we are a little bit outside of PLM now. But let’s start with the beginning, we are in the software business and software is today's aspect of the market.
Software is capturing a significant market share right now against the hardware; you see that Google acquiring hardware business, why? Because the value is here. When you zoom on to software and by the way today it’s representing the two-third of the hardware and the most of the analysts predict that in five years from now software will be much bigger than the hardware business. If you zoom some of the software, you have different sub-segments but the application by far is the largest with almost half of this market and we are an application company.
If you zoom on the applications, you will notice that the business hubs much bigger than the consumer hubs and we are the business application software. And if you zoom again, first of all, PLM is not a tiny market, it is the third-largest market in the software business, just after ERP and Office but much more and by the way, this market is all for it’s a highest gross potential and with almost 25% market share, we still have the gross revenue in front of us. If we just stick to this market but today with all the recent moves, all the diversification we made, we are addressing all the segments outside of the PLM boundaries. So, few examples, with EXALEAD with our search based applications, we are addressing the BI markets.
We are asking is the office business, targeting the enterprise software market. With ENOVIA, we are now starting to crunch ERPs and especially at the (inaudible). With ENOVIA, we are akin, with 3DVIA we are akin to [failure] of the games. So I do not want to basically mention all of them but you have to keep in mind that we are outside of the PLM market now.
So, if you combine those two together, what is a size of this market, I can’t tell you and if you compute the number, you would be able to do, you need to check yourself, but it is a $30 billion market and this year we believe, what the experience platform, with the 3D experience, we can achieve as a market size and you can notice that over the last 30 years, that Dassault Systemes lead the market redefinitions increasing the market size and at each step we are basically almost doubling the size of the market.
And unless the competitions, we provide breakthrough visions to do that. So, how this market the $32 billion US market is split, so here you have basically the weight between the different sub-segments. So the 3D [linear] is still representing the core because not only we want to modernize the products but keep in mind we also want to modernize the planet as well as the life.
So this is significant to the larger – the second largest is every single ready to collaboration. Whatever is less collaboration of social collaborations. It is becoming a very, very big market. Simulation most of you consider simulation as a niche market because you know its collection of very specialized applications. Yes and no because when you compute everything it's starting to become significant and if you had the content piece because simulation when you combine with contents is becoming knowledge.
Content in this case mean library for example material library or system libraries. And in the information and intelligence it's still very unique for us, but we continue to use that we are almost able to tackle the $2 billion market with the analytics.
So the question is now you know we are starting from 16 billion how to expand to the 30 billion. So I tried to put some numbers rated to the strategic elements. So first if you look at whole of our brands, let's take CATIA. Expanding CATIA into system engineering is basically doubling the market; extending works into new segments like AC, it's almost doubling this market as well.
DELMIA today really adds at the engineering level, we want DELMIA to be key and to play a significant role on the stock flow. Once again you double the market. ENOVIA, you know ENOVIA while most of you believe that ENOVIA is still PDM system to manage technical data. But you know we have a lot of customers using ENOVIA right now to manage enterprises.
And the shift from engineering to enterprise once again doubling the markets for ENOVIA. I can take all of them and do demonstrations. If you shift to the industry you know there is still untapped industry for us and life sciences, energy, business services, finance you know I can mention lot of them and if you combine those two together it's a 4 billion market we can achieve.
So, the next one is the platform. Today you know that the core of what we do is product oriented and we modernize the products and we manage lifecycle of the products. The extension to the life and nature is adding 4 billion market. And as a reach level at the channel level there is still country where our presence is that’s so huge and we still have a discrepancy in terms of market share between the share we have in the large OEM is a supply chain.
So we believe that we still have growth opportunity market size of 2 billion. So this is where it is coming from and to conclude this piece on the number, I want to draw also your attention on this. We -- most of you once again believe that we are addressing in, term of users, engineering spaces, mechanical designers and stimulation analysts. But when you look at today all the people we are addressing, we are far from that.
Let's take a company like Netvibes. Their core business is the TrendWatcher, the marketing folks. ENOVIA, more and more ENOVIA is used by the supply chain people, by the purchasing departments. It's not only in model engineering. So if you combine all those user expansion, we are convinced that we will be able to touch 25 million users in the next few years. So that's it for the number. Now, I guess it's time for you to see the 3DEXPERIENCE Platform in action.
Thank you very much. Monica and your team, it's now your turn for industries.
I'm back again and that will be short. We're going to begin to how do we work through this new social industry experience approach. And therefore, I would start by telling you that we have powered up the organization. Industries group that were already existing since now five years, if you want, in the Dassault Systèmes but this is a total new way of doing the business for the industry so that we want to know.
So complying with the social industry experience, we wanted to create actually the new experience as well for Dassault Systèmes. What I've been doing is that I started recruiting business experts everywhere in order to take the Vice President position of what I call the Industry organization. So you see the faces. We now have 12 industries. We do have 12 Vice Presidents that are responsible of several things.
And I will explain you what they are responsible about by this chart. It's a simplification of what is the Industry organization. Every single industry is structured in four blocks that represent or cover, if you want, the discipline of Dassault Systèmes. You can recognize in what you see the blocks that when you do market and business strategy intelligence, the solution and enablement, you are actually talking about the global business unit.
It is a global business unit approach. These are global persons that are responsible to activate the different discipline that are, therefore, the discipline of the company. Every single Vice President of the industry, you will see three of them today that will talk about specifically the strategy of their own industries, just to give you an example, because going through the strategy and the solution both that we have for the 12 industries will take probably three years.
Therefore, it would just be a little bit of example of how do they work. So what do they do? They first ask themselves the right question, which is that of what the industry values the most. This is the business strategy. It is a matter of analytics. It is a matter of market analysis. It is a matter of segmentation within the industry. It is a matter of competition, as well intelligence, within every single segment of the industry.
So it is the analytical data at the service of the strategy. And for sure, we do use our platforms to gather all these information. So the industry, every single industry has its own community. We do work in a social way. We do use, whether ENOVIA, when we enter into the (inaudible) process with the Dominique group, so with the R&D group actually, in order to control and order the engineering of the product that needs to developed.
What is extremely important is actually the center as well, that is the solution experience team. Every single Vice President has a team that we call solution experience team. What are they? They are persons that look at the world through different eyes, and they are there actually to unleash the power of the platform for the industry. They think in terms of bringing business value. They do not think in terms of softer composure.
So starting from what the industry values the most, what the consumer of the industry values the most, we are capable of marking exactly what are the business value that we want to bring in each of the single industry. The solution experience, it is a key block within the process of the industry. Why so? Because it is the moment that where we power up our thinking tanks to the 3DEXPERIENCE Platform.
This team works with Dominique Florack. With Florack, with every single person in the R&D, there is an industry R&D that is dedicated. Those guys are those that are doing, if you want, the pre-thinking of the solution experience that we want to bring to the market. What is the solution experience? It is not just a product. What we do with brands, it is we increase the user appealing in this.
And these are the ability of products for specific specialized type of jobs. And therefore, we do have a portfolio of solution that we called brand solution. On the other side, as we look at the world of business and, therefore, we search for business solutions. Why are they called experience, because they are bigger than a product. I am not taking one brand for doing an experience. I am always taking multi-brand approach.
That can be at the molecular level because I'm not just adding. I'm packaging the brand in a nice marketing way. It is just the opposite. I'm not Madam Siemens, I'm not Madam Oracle, I'm Madam Dassault Systèmes, and we do the things differently. We think differently for business. We take every single technological component that is provided by the 3D Experience Platform to follow our business thinking for our client.
And we are packaging our solution and giving them the consulting of what is our experience and expertise in each of the industry. This is the reason why the Vice Presidents are persons that are experts of their own business. What is as well important is the enablement team. In the enablement team, every single Vice President has a team of sales enablers.
You call it a sales director, business consultant, service manager, customer value manager; those are the persons that are specifically thinking to an industry to ensure that from the moment of the value proposition till the deployment and the happiness of the client, everything is perfectly fluid. And why so, because we adopt what I call the value creation chain.
At the end a company, it is done by different persons, it is done by different discipline. And what is important for Dassault Systèmes and for our clients is to understand that actually this is the today the way that we can work with them, and we do work internally. There are -- in the value creation chain, I exemplify the different steps, because the value creation chain, it is a framework actually that we want to adopt.
And this is the way that the industry actually engineers the way that we will do business for Dassault Systèmes. Every single industry is having at the moment of the value proposition not in terms of marketing sentences, but again in terms of market analysis and identification of what that these industries value the most, in every single market segmentation, in every single geography.
In the value definition moment is where we start defining what has to be the right solution experience for any of our clients, and therefore, is the moment where we interlock. And we activate the power of the R&D that will go through the value creation moment in order to delivering portfolio, the offers and the solution that we need to have.
The value network, the value planning, the value engagement, the value delivery and value relationship are all key steps that the industry deems it is actually activating. We do not do the work for the companies. We do work the driving or the activation, I would say the kick-start of every single processes. So the reason why we are completely transversal to the macro process of the company.
We are the glue, if you want, of every single discipline in Dassault Systèmes, because this is the industry approach. It is looking at the things in order to achieve, prioritize what needs to be done, and then activate the discipline that therefore will amplify the strategy for the market. Why is it important, because value creation is a chain. And it is a chain not only in Dassault Systèmes.
It is a way of doing business of every single client in the world. Every single businessperson would tell you the same. But the point is that, that what is the biggest of the challenge that every single business has, is to never interact to this chain. So adding a framework, adding process, and therefore adding a person like us that thinks in terms of helping you clients do not interacting the value creation chain, it is an enormous value for our client.
When we think in terms of solution, we do not think in terms of what is the attribute or the business process I need to digitize. It is what is the business value that I need to digitize. You are not going to transportation and mobility client, telling them in order to resolve the planet impact type of challenge they have to their client, you need to use a (inaudible). It is not the right answer because it is not the right question.
If my client needs to think in terms of sustainable type of vehicle, I need to pre-think and consult him through the power of the platform, matching up exactly the right components that will permit his value creation flow to start from the moment of his management, till the moment of the consumer response. That is the point. Now let's see, I will invite three Vice Presidents of the industry.
I think I would start with Olivier Sappin. Olivier Sappin, please join me on stage. Olivier is the Vice President of Transportation & Mobility, and therefore we'll talk about the new approach that we have for T&M (inaudible).
Thank you, Monica. Good morning. Welcome to this 3D Experience session for Transportation & Mobility.
So we are going to talk about cars but not just about cars. As you understood, 3D Experience is more than just a product, more than just a car. It's actually the car usage, how the car is being used by the final consumer. So one of our dreams will be that we provide value not only for our customer, carmakers, suppliers, but we would provide value even to the final consumer, the driver, the passenger.
So this is a challenge today because if you look at this industry, it faces today one of the most important challenge ever, the world population. Most of families live in big cities. Traffic is an issue. Pollution is an issue. Accident is an issue. So the way we want to sail this industry is really to help our customer to create cars which are smarter, safer, and maybe to redefine a new mobility experience.
So in terms of mobility experience today, I would like to address one topic, the topic of safety. As a consumer if you are driving cars, of course when we think about safety we could think about something like the number of stars on the crash test, or we could think about how to avoid a pedestrian when we have to brake into an emergency situation.
So my very specific topic today would be like to show you how the 3D Experience Platform can help our customer to address such a complex topic of safety in the case of braking distance. By braking distance I mean I'm going with my car at 130 kilometers per hour, I am in an emergency situation where I need to stop the car, and how long do I need to do that.
Now it looks like an engineering topic but in fact it's not. The real topic is that it makes sense for my consumer to have a car performing like this. So the way 'am going to -- I would like to tell you the story is going to the hall of innovation, which for me would start from the consumer, the final consumer and end with the final consumer.
So I'm going to do social listening because I want to know, from a consumer standpoint, what kind of braking experience they want to get and what do they think about that? As a company, I want to know where my competitors stand in terms of performance, if I'm better or if I need to improve. Then of course, I need to settle my target. I need to look at my products.
I need to discuss with my engineers to know what kind of systems they can do. I need to look at the impact on the manufacturing. And then I need to close the loop to come back to my consumer to explain what it is about to create such a new system. And maybe I want to experience it. I want to actually sit in a virtual car to test what this new system is about.
All what you see here is shared on our social innovation platform because this is the way for us to connect the dots. Let's imagine that in a company you could have a marketer doing social listening, talking to engineering. Let's imagine you could have safety for talking to manufacturing. This is why created this 3D Experience Platform, making sure that we connect the dots between every discipline.
So let's start with social listening. Here is what we call Dashboard Intelligence. We want to learn about what consumers are thinking about safety. So with this simple dashboard we access about everything on the Internet in terms of what my consumer are thinking about my brand, about my product, about safety, in China, France, U.S. And I can access even to the detail equal to know what they are thinking about.
Do we have positive statements? Do we have negative statements? Is braking distance an important criteria for them in order to buy their new cars. This is what I want to know in order to manage, monitor my product and brand for my company. Now, if you look at one of these articles actually, we detect that all over the world braking distance is an important factor to the consumer.
So it's becoming a criteria when actually you need to buy a new car. So it means that as a company, I need to look at this in order to make sure that I can position my product and my car experience to make sure that I enter to this customer. So what are the key takeaways for this third step? If we know what consumers are expecting about car safety, can you influence engineering with that requirement.
Before doing that, because we are (inaudible), it's about benchmarking because once you know what the consumers are thinking about, you absolutely need to know where are your competitors in terms of performance. This is what here we want to make sure that using a simple search-based application you could access open database on the Internet where you could find all performance of car data available.
Let's take an example of [homologation] database, and very quickly you can search into, for example, small cars, where you access on the top-right all the braking distance. You're going to select 75 meters, which means I need to stop my car in 75 meters when I'm running at 130 kilometer per hour. And immediately you find all the vehicles in this category.
Let's imagine that you can compare them like you compare camera on a website. This is what we want to provide to all marketers in car companies in order to have a simple way to look at all cars on the market and quickly select the one where you want to compete with. Now what is the link between this and everything we were doing for engineering and manufacturing?
The link is that the way to filter and to analyze benchmarks data is to feed engineering with the highest requirements. Here you are back to our 3D Experience Platform where you are actually managing every requirement. You can see that as an input we took the requirement that I keep on the benchmark analysis, which connects the dots between marketing and engineering.
So the key takeaway here is if you could connect the dots between marketing and engineering. So the key takeaway here is if you could analyze all these big data because these are big data from databases which connects the dots between marketing and engineering. So the key takeaway here is you could analyze all these big data because these are big data from databases available on the Internet but sometimes it's complex.
So can you get a 360 degree view of your computer? The answer is yes, and to do what? To do design to target, to better specify the product. How are we going to do that? Well, you need to make sure then that looking at these requirements you need to understand wherever your actual car can perform with to fit to these requirements. So you need to do a complete virtual test on the car experience.
So how can you stimulate a car experience? You need to make sure that you must have the product definition with your requirement, your function, your architecture, and your digital market. You can actually take a virtual test drive. And on this virtual test drive, you can use the 3D Experience Platform not only to describe the product in terms of its 3D presentation, but the behavior of this product.
So, using the power of virtual system on our 3D Experience Platform to actually simulate the entire braking distance behavior of the car. What does it mean? If you would like to do this today, most of our customers are spending amazing amount of money in order to develop physical prototype.
We want to make sure that we can reduce and, in some case, eliminate the physical prototype with our virtual product, virtual test track, and to replace the complete experience to show how to stop the car in such a situation. Here you see in this example that we still have work to do because we are not yet touched 75 meter distance requirement that has been set for our systems.
So the key takeaway here is that if I can really master the product and system definition, I can replace the experience on a virtual test track and reduce costs. Now it's nice to look at what is the status today. Now I need to do innovation. I need to make sure that I can make engineering, manufacturing, marketing working together to find the right solution. And for this, I need to look first at products, portfolio, balance of my car.
In order to do that, I need a 3D Experience platform where I can connect to everybody on my global organization, everybody should have access to all program, the milestone, the phases, the deliverable to know exactly what kind of decision they could take to implement a new system on the actual curve.
So this is made available with the 3D Experience platform and what I would like to show you now is if we select the program which we take and see every act of involving this program, so we’re working on it, what is the objectivity of this program, what are the key milestones and if I back, if I am reluctant of this program, what kind of information I need to deliver for each decision and you see the differences here, you see the different gates, gate one, two and three and you can see for each of them the different gate, everything available for engineers. Now if we go to gate number three and if you are aware we are at under program, we can just look at key alternatives that have been defined by engineering.
So the next step would be to look at engineering alternatives. Now what I would like to do here is not talking too much about engineering itself, but making sure we can provide the high tool for engineers in order to take the high decision; because you know if you are to solve an issue like braking distance issue, reducing the distance you need to stop the car, you may have different alternatives.
Alternative number one can be I made the tire larger for sure; it will make my car stop in a shorter way. You can have a second solution, alternative to that is about making the brake disk larger, but in this case you may have some impact to make the brake disk larger, you could get the temperature too hot and then you need a special system to cool down the brake disk. The third soft solution could be to actually have a [Console Damper], a suspension that will optimize the weight of my car in case I am braking in an emergency situation.
So what do I want to do here? I want to make sure that I am looking at KPI, at least for a moment here. I want to make sure that taking the right decision is not only about engineering expertise; if you ask a mechanical engineer to solve this kind of problem, it’s likely that you will find a mechanical solution. If you ask the same thing to an electrical engineer, it’s likely that you will find an electrical solution.
So this are not the height indicator, your height indicator is the one for the business. What is the cost? What is impact on the cost on the weight? What is the impact on the energy consumption, on the recycling ratio, on the attractiveness of the car? For example, on this alternative you could see that there is a great impact on energy, because you make the tire larger, the V6 platform will show you by your full simulation of energy management of the car that the energy consumption is greatly impacted.
If you go on alternative number two which is remember that brake disk larger; you would have a huge impact on cost because we detected with the simulation that you have too much oil temperature on the braking, so you need the special system to cool down the engine. So let’s look and focus on alternative number three now which is quite good, but what it is about? It is about a new suspension what we call Console Damper that is actually changing the behavior of the suspension in case of emergency braking.
Why do you need if you want to make sure, you define such a system; you need to define for the function; what are the function when you want to define such a system. The function is simple. We are going to exit this in a few seconds. The function of, first of all you push the brake pedal; then it sends a signal. Then this signal is being optimized with software and control. Then this optimized signal is sending to the brake disk so that you can actually stop the car.
So these are the function that you need to optimize. Then to define how to implement such a function, you need a logical architecture. What is a logical architecture about? This is about know-how. You need a mechanical system, like for example tire, brake disc, wheel, suspension, and you need to put software and electronics. Like for example, electronic control unit embedded software and so on.
So you need to fit this logical architecture so that you could simulate the entire experience. So you have two trucks now. The left track is about the actual performance. The right side of the truck is with the new system, where we actually implement this new logical architecture with the damper and the suspension.
So again, you can avoid here a big amount of cost in terms of physical prototype. You can see how the caveat, not only actually stops in 75 meters in this case, you can see that the [DAG] of the car is much better. In the third case, you can see the truck going to the left a little bit in terms of strength performance and then it’s much better on the final case. So again, we have all elements in order to fully simulate the experience on the 3D Experience platform and to close as what will be the usage of the final system there.
So what are the key takeaways for that? If you can get the impact of engineering choices on key performance indicator which are business indicator, then you can take the right decision. It’s not about having a technical decision; it is making sure you can test the maximum number of alternatives, making the decision from a business standpoint. Of course business standpoint means cost and means manufacturing. You want to assess as well where ever you could implement such a system in the existing plant.
You have an existing plant which means that you fully model the product in context of the assembly line, you know for each station, what are the resources, what are the workers, for the all the workers you know what is the cycle time, you know that time of the plant that is about how many, every seconds you’re going to make a new car, you obviously do not want to impact this overall cycle time. So you want to make sure for these specifications where you are going to implement a new suspension. Do you have enough time to put the wires for the new control damper; you want to make sure the impact as such that it does not make the cost too high.
So if you can identify the impact on the manufacturing process, you can make sure, you can keep the plant flexible and you will not impact the time. So back to the consumer now. You may have defined a nice experience on the marketing, from an engineering standpoint, you still need to explain that to the final consumer; you seem to make sure that you go back to them and you realize what they think about that.
So let’s see when you get into your car and instead of the huge printed copy of the car owner manual you find an iPad. And destinations on this iPad you find all experiences available so that you could explain if you have a dealership, if you are sales guys, if you are service guys you could explain exactly what it is about to expand the new franchise on the car and to expand the maintenance. So you can really explain these claims only to the consumers here.
So if you could provide the owner manual into the car, I am sure you can put system back in communication because not only we’ll have a data communication to consumer, but also you will be more to get it back. Now the very last step you want to enjoy; you want to get a driving experience. Now to get a driving experience is fair enough, but it could also be to reduce the number of accidents; it could be to enforce the safety when you drive the car into a real situation; so what we did here is we said okay, we improved something on the braking distance now I need to learn how to brake, how to stop the car into an emergency situation?
So I put the final product in this for sure just to make sure I feel like it is almost there on the car. I want to test it, I want to get a real driving experience and I want to take driving lessons; I want to take driving lesson where I could take the joy pad and that is most of the time I do it myself and not to-date and I am actually driving the car on my joy pad on the virtual track for lesson on how to brake in an emergency situation.
You see some goals, very simple to understand, I am driving my car, I am going through the cone, I need to avoid the cone obviously which are obstacles, pedestrians, and you see this yellow zone on the floor which means I need to brake into an emergency situation and I want the car to behave like it was defined by my engineer. I need to have the real experience on the test ride and you can see that in such a situation whatever the performance of the car, you cannot stop.
So in total, how to go full speed, how to brake and going the driving wheel straight ahead and turning at the right time. So here you see that with such experience we could actually be in an environment where you could train car driver with this game and it could be a way to help to reduce accidents. So with this you can see that we closed the loop, we stuffed it with the consumer to know what this customer in terms of capacity and we go back to them to finally know what is the experience about to make sure they can get the experience and drive the car like it is what with very well on the virtual test drive.
Thank you for your attention. Now I think I need to welcome on stage my colleague Susan Olivier, Vice President for Consumer Goods and Retail. Welcome Susan.
Thank you. Good morning. So good morning everyone and not too much longer to go before the break, so hopefully everybody can hold on. Thank you all for being here today. As Olivier introduced Susan Olivier, VP for Consumer Goods and Industry; delighted to be here and delighted to be with DS after 30 years in the consumer goods and retail industry. I'm very excited about the things that are going on.
First of all I want to thank everyone for being a consumer here today. I noticed no one showed up naked, so you are all wearing half of our universe which is the fashion of soft goods side and some of the questions I got asked last night were very much around the size of our market and is there really growth opportunity in these industries outside of core PLM and isn't everybody sort of already there.
And I think Dassault in our industry, is a very well kept secret and I think that our industry and the breadth of our industry and the potential is also a very well kept secret. So market size as you can see has a potential of 900 million and we are growing. We are a very much a growing industry at 12.6%. About 50% of our business today comes from the fashion and the soft goods side and again going back to some other questions I was asked last night, most of those companies came to us through ENOVIA and many of them have been our customers for a long time. There is a significant mix between fashion brands who also had a retail operation and retailers who also have fashion brands and they are becoming increasingly interested in the potential of what stores can do for them and you will see that a little bit further in the presentation.
The other half of our business comes from the hard goods side, whether isn't there much blurring between the brands and the retail environment, most of our customers came to us are on the brand side and they came through one of our design products, so either CATIA or SolidWorks and what's really happening what we are seeing now is that there is a significant convergence where both sides are trying to understand what can this concept of a solution experience bring to me. I am happy with what I have, what else can you do to expand the potential within my business.
Talking about some of the key players in our field, many names that you would recognize, many of these are also some of our good long standing customers. So GAP, Guess, Gucci on the apparel side, s.Oliver, H&M here in Europe, on the footwear Adidas, Nautica, Jockey and VF and Infinite, so we have a very broad range and again most of those also have a retail presence; many of the names are our customers as well.
On the hard goods side you would recognize Staples, you would recognize perhaps Black & Decker; we also have Mizuno for Golf Club, Kärcher for power washers; MobiToys again many other names that are not on this chart and many names that you would recognize. And what they are really interested in is again what can the power of 3D Experience do for me. What drives them there is what’s changing in our industry and the biggest change we are seeing is that really the consumers at the heart of everything that we do, they always has been that’s not new. What’s new and what’s different is how much power that consumer wield. How much information she has about the products she is interested in long before she ever encounter those products whether that’s in physical environment or online to purchase them, she has researched them, she has talked to her friends.
So the idea that consumers are sharing information increasingly with each other and the sad reality of human behavior is we are far more likely to share negative information than we are to share positive information. And so when talk about social listening and wanting to understand what consumers are saying, it’s not just about, did I make a sale of something, but it’s also about what didn’t I sell, what didn’t the customer find that they might have wanted from me, from my brand, from my store experience.
Customer is also, so that’s the cusp of consumer communities; viral marketing; 74% of consumers no longer trust advertising. They trust what they hear from their friends or they trust what they hear from loosely connected communities on Twitter, on Facebook, people that perhaps have never met and don’t have closer lives to, but they trust that personal relationship more than they trust what they perceive as a long distance relationship with a brand or a company.
They bring new values to their purchase decisions. They want to know where are you with the same ability, with corporate, social responsibility, with fair trade; they want to be able to reach for the products that they’re interested in through multiple channels and they want a consistent experience in all of those channels. They want their product to be personalized and to speak to them in some way and they are very, very willing to participate and provide user generated content.
There is many designer reality shows on TV today; many people think that they are designers. They don’t necessarily want those products to come to life. They want to enjoy the experience of participating in creativity and the winning brands and whichever that are the ones that are figuring out, how to participate with them in that and bring that information back inside to potentially improve the product that are provided or the experience or the next category of products that might be suitable for that brand.
And so when we look at the challenges in our industry landscape, what we’re seeing is the rise of the consumer on the outside. Inside we’re seeing people come to work with their smart devices and the ability to work 24/7 wherever they feel like it, whenever they feel like it and they want technology that is intuitive and comfortable to use. We’re finding the supply chains are increasingly global, regardless of the products being produced and the opportunities to sell globally are changing as well.
So when you think about the BRIC countries, the China and India used to be inexpensive sources of supply. There are now 35 million middle class potential consumers in China for our products. The product sizes that are sold in the US are different than Europe, are different in Asia, the colors that are most important can be different. There might be slight differences in fit and finish between the smaller and larger size in the US versus China for example or Japan.
And yet I as a brand manufacturer I am essentially making one dress, but I might be selling 40 variations of that globally between my size eight black in the US and my size 44 black in Europe or red or pink or purple or whatever is important. How do I manage at the master and only handle what’s different unique on the product variations below that.
So I am dealing with geopolitical change not just in how I buy products but and how I sell product and the kind of complexity that that introduces for me. At the same time, I am dealing with countries that maybe at risk for their banking system, for their infrastructure, at risk of interruptions in power from natural sources and yet I still have a responsibility to deliver operational excellence for my shareholder. And at the end of the day all of our companies are being watched for what are they doing from a sustainability perspective and am I delivering on my promise of people and product, people and planet as well as product and profitability.
So what that does for us is we begin to ask ourselves different questions as Monica mentioned early, the power of ‘If We’ statement is about thinking differently. So it’s not just about how do I help you make that portion of your product job easier. It’s about how do I fulfill your entire experience of understanding your market, bringing product to life, bringing it to the point of sale and ensuring the satisfactory consumer experience at the end of the day.
If we can understand consumer demand earlier in the lifecycle and yet make decisions later in the life cycle how much more profitable could we be; those are kind of questions our companies are asking themselves. If we can provide more intuitive and natural design experiences for our internal users how much more could we attract young talent and how much more creativity could we unlock within our firms if we can deliver that kind of an experience. Those are the questions our customers are asking and those are questions we are asking ourselves to deliver those experiences.
And finally, if I could simulate the impact of cost versus speed versus supply chain constrains and potentially sustainability within my total supply chain decision making process, how much more profitable could I be, how much more close to the consumer could I get at the same time; what really the blend of costumes be.
And so we take this back into our class spiral how we think about serving our customers in their needs. They want to dream and understand their market; they want to design the life of product, they want to be able to test and simulate that those products are going to be fit for purpose, with the consumer needs.
They want to understand potentially what is the environment in which they are going to make them and simulate them; now that may not be a critical need for soft apparel, where most things are outsourced, but if you are dealing with jewelry, precious metals, you are getting into very expensive situation, you really don’t want to be making a lot of samples and discarding them, you want to be able to simulate your jewelry or watches, your footwear, your power tools before you go into that environment.
And as we are getting into increasing variations of information and increasing complexity and speed, you want to be able to manage all that data in one place and we are known for working with aerospace and transportation and mobility and you might have 3 million parts in an individual airplane and you do manage them to a great deal of precision but you don't bring on a new airplane every four weeks and in the apparel industry our lifecycle can be four weeks long and over the course of the year our customers can be dealing with 20,000 different styles, and each of those styles can come in 20 different size and color variations.
Now you are into millions of individual stock keeping units with the velocity of four weeks. That's the kind of complexity that we bring into our world and then we always have the case of the consumer on the cell side, what is that experience like, are they enjoying the experience, because let's face it, retail is entertainment, people do not go to shop just because they need something.
They do it to socialize, they always look to socialize. Now they are also doing it online as part of that social experience. So when we translate that into how do we serve the needs of our industry thinking about the concepts of the social industry solution experience, we said there's two axis on which we are going to be able to serve the needs of consumer goods and retail.
One is really all about the product and we tend to think about product in grouping, in collections and things that relate together and again fashion is an easy example but since there's a great deal of men in the room I will use golf club, you typically want your golf clubs to work together in some way with each other. So if you find a brand that you like you want to know what else does that brand have to offer you, what else is in the same grouping of material. So golf club companies or power tool companies when they bring their products’ concepts to life are also thinking about collections that share properties of either materials or a price range or fit for purpose or even color scheme, there are yellow tools and there are blue tools.
So there is a certain fashionability in a certain collection in grouping to all the products that we make. And then the other side is my store, customers encounter products through a store environment whether that is a physical brick and motor environment or an online experience or a social channel such as the Facebook page. How is the customer seeing and perceiving my product? Are they having a pleasant experience with it? Are they perceiving my brand quality consistently regardless of the channel, regardless of the country I sell in. Gap self hand bags in many countries around the world first of all they want to know that they are all legitimate, so they are watchful of brand reputation, but they are also watchful brand equity. If the customer who buys my bag anywhere going to have the quality experience with it that they wanted.
And so we translate that even further into two detailed solution experiences, my collection starts with the social listening, the social innovation whether that's understanding external sentiment about the customers or being able to internally collaborate around bringing product ideas to life. How can I share and collaborate informally around ideas I don’t even have yet.
One of our customers that I was working with this week they are very good at launching new product concepts, they are excellent at understanding the market. They are brainstorming around bright as a concept idea, can they create a whole brand or sub brand around [bright]. And all the products that could fulfill that, that’s not a structured conversation that’s kind of thing we mean by social innovation. How do I share that idea with my design teams around the world? How do I brainstorm around the products that might fall within that? And then when I am ready to design those products depending on what category I am in because again my collection could be anything. I am using either 2D design tool or a 3D design tool, for 2D design we have connectors for that. For 3D obviously we have a family of design tools.
I want to be able to house all my information in one place. We’re calling that my unified development and sourcing. That today is the classic single version of the truth. So, for some of you last night that were asking PLM questions, that is the small classic core space of PLM. Our industry is interested in everything. Even those today that own ENOVIA and came to us through ENOVIA want to know what else can you do for me to solve the problem with my space which is all about profitability and speed and consistency and sharing.
Packaging is not as important for our industry as it is for consumer package goods but we certainly provide solutions where there is packaging because again you want that consistent experience, you want to fit everything together.
3D modeling and simulation is becoming increasingly important. Now, maybe it only costs a $100 to bring a gene sample to life but when you get into more expensive materials, when you get in to footwear, when you get into accessories, when you get into hard goods, when you get into anything where there is tool, size and molding involved, you want to be able to make decisions, long before you make samples about what is likely to survive and so you want to simulate those products, look at them in 3D and understand how they’re going to behave and perform in the real world and I think one of the profound things that DS brings to the market that our competitors do not is the understanding of reality within that experience. So that’s an arbitrage you’re looking at, wearing fabric that is simulated in 3D.
It behaves realistically to gravity, when she moves, as she moves, not something that’s critical.
So we're already seeing adoption and we’re already seeing adoption in hard goods and we're seeing tremendous, tremendous interest in the softer apparel category. Our industry lags behind. So we’re fast followers. When we decide to adopt, we adopt wholeheartedly and now as I have got that 3D asset or if I have taken the 2D asset and rendered it into 3D which we can also do, I want to able to look at my assortment visually.
Now my collection is envisioned from the perspective of a brand that doesn't necessarily have a retail environment. So I'm not necessarily modeling it in context of my store but to have my assortment look and work together rather than wait until I get physical samples and have to hang them up and compare them or stack them on the floor.
And then if I am in an environment where I'm selling globally to other retailers or if I am in a franchise business, can I offer them the ability to buy from my collection virtually rather than having to make one customer goes up to 10,000 salesmen samples every season and there are four major seasons a year and ship those globally. If I can eliminate that by working globally and provide better visibility to my customers about what I have, what's in stock, what colors, what sizes let them sub-select range their assortment, send that to their purchase order system, very powerful concept.
And then lastly, with my analytics which is really a huge area for us and you will hear a lot more about that through the remainder of the day, but our customers want to understand what information is out there available to me outside my enterprise, not just I want to search within my existing system, my existing ENOVIA system. I want to search within my enterprise about sales; I want to search within my enterprise about orders, about supply chain information, about all my customer information.
I want to manage my customer relationships, I want to manage outside my enterprise, whether that's supply chain data or customer data and I want to be able to relate it in an intelligent way. I want to understand the semantics of what is being said, whether that's around social whether that's around geo location, whether that's how the weather relates to my sales in a given city or what my competitors are doing in a given city. It is absolutely critical and absolutely relevant to our customers today.
Similarly, my store we have the same kind of spiral that is anchored on social innovation. I may have store concepts I want to brainstorm about, I have a store design I want to bring to life. I have assets in collateral I want the store it centrally and again our idea is we want to build layers of value on what you already own.
So we are using that ENOVIA assets that you have as a central source of truth here as well. Being able to envision a store layer I don’t have to build the model store for my A size, my B size and my C size or my shop within shop. Let me do that virtually and let me experiment not just with space but with lighting, with positioning, with fixtures, what is the consumer traffic experience about. And I want to say thank you to [Olivier] for managing braking systems and cars that have the warning systems when you park here in Paris because it is very different than being in the US.
Space in retail space in traffic is very different in the countries that you go into. So our retailers should be able to model the space that they have and how they want to utilize that and then merchandise their products within those stores and so not just have to wait to get until you get physical samples and set up a model store that you have created in your warehouse and take photograph and send them globally.
But as soon as you have an asset whether you have generated in 3D or rendered it into 3D look at how that will work in your individual store environment, each individual space, how am I going to merchandise it? What's my best traffic, am I an urban store? Am I a rural store? What are my key categories? How do I compare the heat map within my store as I rearrange things that are going on? These are the kinds of questions that are being asked.
And then being able to take that asset and use it for early test marketing for the consumer shopping experience or even real life shopping online with the 3D assets for being able to do store windows, stores are closed on the weekend. I can see your 3D asset on the window, I can flash my credit card I can do purchasing and then lastly rounding out both how are my sales doing? How are my customers thinking and what's going on inside and outside of my universe with my analytics to re-inform my spiral around again. And lastly, I will close with a video from one of our designers. I think what's important here is not just how the products work together but the idea of being able to bring the mix of art and science together.
We are very much an emotionally driven industry even with the power tool, its still, there's still emotion involved in designing, developing, defining those products. And of course in the usage of different things. We always associate emotion to fashion and apparel but I think largely you don't just buy a golf club because it meets the specific criteria you wanted. You buy those things because of how you feel about the brand, about the product, about your experience time after time.
Thank you. That is what we are all about, bringing dreams to life. And with that I am going to introduce Philippe Bartissol for Industrial Equipment. Thank you.
Good morning. So I am Philippe Bartissol and I am leading the Industrial Equipment industry, after 15 years in the industrial packaging, machinery equipment business or rather after 15 years of leading business transformation project as a customer, I thought it was a good transition, it was time to join Dassault Systemes.
Our industry is very diverse made of very a lot of segments, but basically it is all type of machinery that makes products, from the very small one of the machine modules or machine parts to the very large ones, but also machines that moves themselves such as farm equipment or construction equipment.
Now what are the challenges that this industry across the many segment is facing, actually five of them and these are more than challenging, these challenges, these are revolutions that are really transforming the business. The first one is that our typical we have small and big customers but our typical customer is making probably a €1 billion to €5 billion in revenues has 3,000 to 15,000 staffs and such a customer will have typically five to 10 [entering] centers worldwide, 10 to 15 or 20 production centers worldwide and many more 30 to 50 service centers worldwide
And most of them do not have a unique product backbone that runs across or decides and that runs across all the different business units that they have and across the different roles. It is even more complex if these customers are actively acquiring new businesses because they don’t know how to integrate them industrially if they are lacking this product backbone.
The second, and maybe one of the more complex challenge that this industry is facing is complexity. There are up or mid-size market but the complexity they’re facing is huge because no customer is buying a standard machine. All machines are custom. So how do you deal with the fact that you do not want to create a lot of new products every year because creating new products cost money.
How do you manage complexity and this is made even more complex because our customers are moving from, they are forced by the market but their customers do offer complete solution not only standalone machines but complete lines or plants. So you have the machine level, than the complete line and the plant level. You see how the complexity is increasing. The sales force of these customers is not able anymore to make quotations quickly. Imagine a company headquarter in Germany. A sales guy in Argentina for example, how really know what type of pieces of the machinery has to put together. What is compatible, incompatible, what has changed from yesterday in the portfolio, way too complex.
The third challenge is more classic. It is just speeding up. It is not uncommon in this market to see delivery times that have been halved in three years, but also time to market from ideal to market launch how quickly can I bring my new machine, new piece of equipment to the market. The third one, it may sound technical, but actually it has profound ramification. This is no longer a mechanical business, it is completely mechatronic, actually it is even more tronic than mecha if I may say so.
We have a lot of electrical; we have a lot of motion control, just to give you an example. Let's take a rotating machine. 10 years ago it was powered by one engine, you had one large axis and all the other secondary axis were driven through belts from the first axis. Now one axis one motor and all motors are electronically synchronized, you can have as many as 70 axis on a machine.
So think about that think about the possibility that is opening up in terms of modularity. The machine is lighter and you can of course provide more services because the control of the machine is much more acute. And the last one is absolutely transforming the market. Most of our customers are no longer making good margin on the sell of the equipment. Some of them and an increasing number of them is not making any money on the equipment, but suppose our customer that makes 1 billion in sales, it increases this by 10% 1.1, if this 0.1 is in more equipment sale then his bottom line will not move, if this 0.1 is in the service business his service business then the bottom line will jump. So what is it that we at Dassault Systèmes can provide in order to boost the service activities of our customers?
So what they want to do, they want to spend very little time in quoting and then order fulfillment. They want to have everything ready, going light speed and for that they need to conceive modular platform first. They need to conceive modular platforms and platforms that are completely mechatronic because the automation part will allow the machines to be more flexible and provide more services and higher efficiency everything that we do. If you will a lot of things that we do is towards higher efficiency of our customers’ equipment at their customer site through what we call the OEE, Overall Equipment Efficiency.
So from a customer experience once you have your modular platform really mechatronic your customer wants you to be able to provide a quotation even if it’s very complex, very fast in a day and once they order they want you to deliver very quickly and anywhere in the world. Then when the machine is in the field, they want you to provide a lot of services if you are not able to provide these services they will go to somebody else, but if you are able to provide services, new services or more thorough services they will stay with you and you will increase your bottom line. And then as an OEM you need to be in control of your technical issues. So let’s look at the globe as in the R&D demo, the whole globe you have may be 7,000 machines on the globe.
Let's imagine if you could click on one of the point on the globe and see if what is your situation. Are you under fire at this customer site or this specific machine or is that okay? And then gather all your technical issues, solve them so that you stay in control of it.
In order to respond to the first and third challenge that was many sites and the splitting up, we put together our first -- it is actually the first Dassault Systemes industry experience that was launched on May 29th internally, and it will be externally on July 12th. It is a Single Source of Speed. And a Single Source of Speed, the motor is designed, sourced, produced and serviced fast anywhere.
And it will start with engineering, but not only the product creation engineering, also the product care or sustaining or lifetime maintenance, whatever you want to call it, which is once I have introduced my machine on the market, this machine will have a life of maybe 15, 20 years. So I need to produce a number of engineering actions throughout that lifetime.
And of course, product development, project management, our customers have maybe at any given time 20 to 100 R&D projects. And they have designed very clever processes, to educate processes but they do not always know how to make sure that every project is following that process. And therefore, it's safe and quick, and of course, production engineering.
The elevated pitch, if you will, for Single Source of Speed is the following. From all engineering disciplines, and when I say all engineering disciplines, we will provide in the same platform the mechanical, the piping, the tubing and the electrical schematics as of early next year. And this is absolutely new on the IE market. This will be -- this I think will bring us a great advantage.
Why? Because if you can have all your engineering disciplines in one platform, then your engineering chain, configurations and link to the ERP will be only one. So from all engineering disciplines to sourcing production and service, so that the four rules, engineering, production, sourcing, service, from west to east across all your product divisions, it will liberate and accelerate your product development.
The three major processes, product development, order fulfillment and service activities in any location for any of your product. And what we want to propose is we want to be our customers' unique product backbone. We believe that -- in fact, our customers need two backbone, a product backbone and a transactional backbone.
So let's look now at -- okay, seems there we have a slight issue with the demo. I think we are very proud to have introduced this first industry experience a few days ago. We already have a very good response from the market. Not only does the -- when we present the challenges and we present them our seven industry experiences, and then introduce Single Source of Speed with a dedicated packaging and pricing.
We are really getting the attention of the VP Engineering, the VP Production and the VP Service, and also the CIO. So we are making really inroads and changing the way we approach our industrial equipment customers. Thank you.
The floor is now to Pascal Daloz for another industry, which is Natural Resources. How long do you want to be to consume because we are already late? Okay, let's do it very rapidly. So here the topic is really related to the Gemcom acquisition we made a few weeks ago. So I'm representing Rick Moignard, who is the CEO of this company. He is flying over the world because he is doing the integration.
So I hope you will have a chance to meet with him because he's really an interesting guy to speak with. He has plenty of exciting and real stories of the mining industry. This industry is very interesting. So let me remind you what we announced on the 26th of April; three things. So the first one is we are intending to acquire Gemcom. The second one is the creation of new brand called GEOVIA to model and simulate our planet.
And the third one is our willingness to expand into the natural resources markets and industries. Those are the three topics I will cover. So, once again, quick reminder just for you to have this in mind. So the transaction is expecting to be closed in July this year. The price is approximately US$360 million. This will be -- the financial will be included in Q3 2012 numbers for us, and it's immediately accretive and neutral on the operating margin.
So who are they? So this company, if you remember, it's a US$90 million company, headquartered in Canada, Vancouver, 360 employees. And what they are? They are the leading market players in the mining software solutions. Who they serve? They serve the individual mines and the mining organization across all the commodities, gold, copper, bauxites, all the different commodities.
What they deliver? Software and services to discover major design and manage the mining operation from explorations to the processing. And how do they do that? They increase -- they improve the productivity and the profitability. So their portfolio, you have eight products. To go very rapidly on this, Surpac and GEMS are the leading product in the non-stratified deposits, to do exploration and evaluation of the resources.
Minex is a same product but for stratified deposits. Then you have -- and those three products are mainly targeted to geologists. Then you have the three other products targeting the mine engineers. So Whittle is by far the de facto standard for the industry to do a strategic planning and to be able to quantify the economics of a mine project.
So if maybe you are not aware, but a lot of investors are using this product as a way to do the selective check about that the merger has been done in a proper way. Block caving is a very specialized product for -- as it says the block caving type of method of extraction. So it's mainly for the diamonds. And then MineSched, MineSched is a scheduling system to do the planning short-term and long-term.
And I was amazed when I discovered this industry because they have very big equipment. It's a lot of people working on a mine. But they are doing the planning on a weekly basis. And then from an operations standpoint, a projection standpoint, and by the way, the people they are targeting are the mine manager or the head office.
So two key products, one is Mine Product Management, that is basically a dashboard real-time to monitor the performance of the mine. And then you have a data management solution called Hub. And why you have a data management solution? Because this industry is producing millions information per day, and that is massive set of data to manage.
And the fact that they are able to always have the accurate data to do the evaluations, to do the job is becoming very, very critical. From a customer standpoint, so clearly they are by far the largest players in this industry. So they are serving 2,200 customers with over 8,800 licenses. But much more important, they are the de facto standard for the top ten mining companies, and they have a significant presence in the 30-odd companies within the top 40.
They also have a global presence and it's a key competitive advantage compared to the competition because they are the only one being able to serve in more than 30 countries over the globe. I extracted some quotes from the customers, because those are interesting quotes. So the first one, Russian company. So basically, there is no doubt in this industry that these solutions are providing a huge ROI.
And in fact, the playback is almost a little less than six months. The second thing, which is De Beers, this is an interesting company because they have standardized on Gemcom solution for one reason. They want to sell the diamonds before to mine. And as you know, because we saw that in the previous presentations, it's like there is a trend and you need to be close to the trend for this market.
When you mine, you don't know what you will find. So they have developed specialized application in order to maximize their chance to find the appropriate diamonds in terms of quality and quantity to serve the market they want to address. And the last point, which is Centerra Gold, this is also an interesting case because it's a new entrant in this industry.
So -- but what they did is they act as a global company, and as I told you, they have a massive set of data to manage. And the fact that they can use the latest information reports is becoming so critical for them that they have decided really to have an infrastructure as a backbone like (inaudible). So I have a short video. It's a testimony also. Maybe we can just listen.
So from a market standpoint, so this market is really a double-digit growth market, and I'll highlight the main core drivers. So first one is really, there is a huge market for commodities right now. And just keep in mind, on BRIC, mainly China, India and Brazil represent half of the demand of the consumption right now. The second thing, which is maybe much more interesting is all the easy deposits are gone.
So now it's becoming much more complex to extract the same quality and the same volume. And this requires a lot of engineering to do to prepare things. The third one is the pipeline. Today, you have basically 50, 100 mines in operation on a worldwide, and you have 15,000 pre-production projects. So this does not mean we are talking about exploration projects, it's already pre-production.
Meaning that they already -- the mining industry has already made a significant investment to prepare things. So what is the net result of that. Let's assume that in the mining industry nobody is any more investing to find new mines. These 15,000 pre-production projects will drive the growth at least for the next 10 years at a double-digit growth. So the pipeline is really huge.
And the last piece, which is also very key and unique to this market, half of the people in this industry will be retired in 10 years. And we are not anymore training people at the sufficient level. So this is becoming a real bottleneck, and this is the reason why they need to also have software to encapsulate all the knowledge into the technology.
So if you combine those four drivers, I guarantee to you that this market will continue to grow at double-digit at least for the next five year, if not 10, years. From a competition standpoint, in maps I would say most of the niche players. So I didn't put all the player acting in the software industry tackling this market because you will find all people doing asset management, like ACP for example.
And you will also find people doing the plan like Bentley. Here I'm really focusing on who are the key competitors of Gemcom. So you see you have a bunch of names. But what I want you to keep in mind is few things. Gemcom is by far the leader, basically twice the size of the followers. They are basically growing much faster than the market, meaning that they are gaining much market share.
And they are basically gaining two to three point market share per year. And why is that? It's because they are the only one having the complete solutions from exploration to production for all the commodities, stratified deposits, non-stratified deposits, and also using the different mine methods, open pit or underground.
And the unique combinations is creating a huge competitive advantage for them, because no one on Earth in the mining industry can only be in one mining method or one type of deposits. The second thing, which in my view is a key differentiator, today, they are over 100 people, technicians, like geologists, metallurgists, surveyor, highly specialized people in this industry located in all the mine center, and they are only one having this local presence.
And that piece, which is also really key, if you remember the skill shortage, they are the de facto standard in the education market for the mine. So clearly, they have built a very strong competitive advantage and we are willing to tackle this market entirely in the next coming years. So the growth strategy, I put a few drivers. The first one is geographic expansion. Just to remind you that they have a significant presence.
But today they are also uniquely positioned in the emerging countries like Mongolia, Kazakhstan, India also where the mine is really ticking up. Second thing is have a loyal and large installed base. And today, they have trust of the people. So they are able to cross-sell in many, very different manner.
First one is really we want to provide an integrated solution for the top 40 mine companies on a worldwide basis, bundling all the different products. Two, they also have leading position in non-stratified deposits. We can expand to the rest. And also, we are seeing more and more demand for analytics and preparation process planning to prepare the proper way of the operation.
Service expansion due to the skill shortage is having outsource services is a way to offset the problem for the customers and just because they have by far the largest outsourcing engineering services for this industry, they are uniquely positioned also to be able to I would say work hand-by-hand with the customers.
Product line expansion and this is probably where the synergy they play rapidly with us, definitively there is domain where there is obvious combinations between Dassault Systèmes and Gemcom. The first one is collaboration, because those big giants mining companies, they are global and they hatch globally and vis-à-vis to be able to collaborate from the head office to the mining site. And ENOVIA is the platform to do that.
Constantly, they are seeing more and more attraction as I told you in the analytics and in this industry it’s a big data, because it’s a big data industry because they have millions records and they need to store these records because using statistics is also helping them to guide the way that we mine for the future of the project. So the combination of EXALEAD and Netvibes is providing also unique advantage.
And the last piece is all the operation preparation so DELMIA is – all that DELMIA could be also easily used to do that. So the net of that is really, we believe we can also increase the market share, but not only against the key players, the niche players I would say with a specialized players in modeling and simulations, but also more broadly against companies that are doing for example assess management.
So big step, the acquisition is definitely a step forward to fulfill our purpose because if you remember we spend the last 30 years to increase the way to develop products to better serve the society and there are now claims few years ago that we want to expand decisions to the life and also to the nature.
So life we started with a bio-intelligent project few years ago and by the way we are starting to see the results. So this move is really the first step in the order tied in a nature strategy and this is a reason why we have decided to create a new brand, a unique and I want you to see GEOVIA not Gemcom, and why, because GEOVIA is for the Planet with sketch-eye for the product; the virtual planet. And with GEOVIA we do not want to target only the geologists, but we want to target all the people being involved in the resource; natural resources. I put some example like botanists, ecologists, environmental regulators, so this is the ambition of this brand behind that.
The second thing, so this for the world, so what is of course just like CATIA we want to provide modeling and simulation capability and to create significant gap compared to the competition and how we want to do that; by improving the productivity, the efficiency and safety and safety is really key in this industry because attracting resources is dangerous.
And so that piece which is also really a foundation to create a brand, we want the management team to be in the leading positions to expand the scope of what we do outside the mining industry and outside also the underground, because with GEOVIA as Monica stated, we also want to consider oceans, atmosphere, forests, basically everything from the sky to the underground.
So the second thing is really as a consequence we are also ready to expand to this natural resources industry. So mining is the first step, but also we want to consider the adjacent markets and water is really an adjacent market. We believe we can tackle with existing technology we have.
For oil and gas probably will lead to organic development or maybe of the M&A move. And also we want to consider agriculture and forest and also landscape. So if you combine those all markets together, we’re talking about $2 billion to $6 billion market software. And I have put some example about software, we’re talking about. So mine planning you just read, but if you focus on water, acquifier storage and recovery, water flow simulation, water distribution is really something we can do.
If you look at the oil and gas, there were simulation, drilling software; geophysics is also something we can partially do. And soil sampling, record keeping and reporting, territory mapping is also something we believe we can do. So if you combine those two, really there is a significant market we can tackle and this is the reason why not only we’re creating a new brand, but we're creating also a new industry and a go-to-market to do that.
So in summary, and I position a bit into the system. So a new brand to model and simulate the virtual planet. A new market for an industry called natural resources, the new sets of applications dedicated to geological modeling and simulation, geo-statistics and mine planning, integrating into the 3D Experience platform and a new direction also for mining from exploration to production management and also an expansion of our presence in new locations like Kazakhstan or Mongolia where we do not have significant business right now.
It was very short, but I hope I conveyed the main messages to you. Thank you.
Unidentified Company Representative
Thank you very much Pascal. Now we are starting the first of our four Q&A session to which Bernard, Monica, Dominique, Pascal and their teams will be delighted to answer your questions and after we will take a well-deserved break.
Thanks very much and it's obviously a much broader product vision than we have seen from Dassault Systèmes before. Could you maybe talk about the challenges on two fronts, on the sales force first of all for taking people and making continued focus selling into different industries and getting them to sell a much broader product base in the social and innovation and sell them?
And then also from the customer side, you're going more into a backbone of the enterprise rather than just product design and I imagine you are kind of against the salesforce.com and SAPs of the world. How many of those customers do you convince then you know this is what Dassault Systèmes can do versus what you have been doing before and how do you change your contacts of those companies from VPs of engineering into I imagine most CIOs and even CEOs on that side?
I really thank you for the question. I would start with second and come back to the first because it has consequences of corresponding to it. Starting from the second aspect of the question, I think in the past year since we created in ENOVIA we have done a great progress I think starting from basically nowhere and doing anything under what you call in the second part of your question the so called backbone. That was one turning that when you look at the P&G and when you look at the customers in life science or in consumer goods we have been pushing ENOVIA that way. We want to stop that. We believe we are going to enter by the application on the usage. The platform will be the consequence.
So the key mix is here, when Susan was talking about my collection, my store it’s about really addressing the business problem whereby when users are depended on people in the company they decide to adopt those solutions because they have actually to do the job. They will go the CEO and say we need that. I don’t believe that -- I think the time to push big IT infrastructure for companies is over. This is my real belief; it’s going to be driven by consumer and users.
And that’s why you have seen the demo of the Experience platform that was presented ever since based on the user magic. I don’t think people will send pieces to companies anymore; I think users will tell the CIO what they need to provide. I think the consumerization of our decisions are made in companies is going to go to an accelerated shift and we need to take this into account and what you saw in the demo, in the presentation, the full amount of reason for the 3D Experience platform is to drive everything from the user perspective; what they value the most? What do they want? Because they would have the voice.
You know what is the biggest point in manufacturing today? Hiring people. You go to Germany, the drama I cannot find engineers; do you think engineers will come to companies when they have boring ERP system? Of course not, they don't care, they won’t, they walk away, they do something else; that's the reality. So it’s going to be driven by the users. So the user experience obviously in the Experience platform is why we are doing all of that
Putting things upside down, the consequences you can see it of how to because there are level of the structure in the dialogue engagement of the customers that we don't really want to take care much. We want to make sure we can go and talk to a CEO and tell him, you know we can save for you 200 million Euros or dollar per year on the non-recurring or developing products by doing that and by the way investment in this level. And by the way we can prove it, because we can save so many thousands of hours.
How do you prove that you can save so many thousands of hours? If the user tells to manage on system, you know what was taking eight hours is taking now one hour of supplement and that was presented with (inaudible) and so even our engagement process is being now splitted into two ways, the business story and then the proof that the people doing the job are doing it in a simple way. I think we learned this from others and going to apply everywhere. So with these prospects we’ll follow the application and not the opposite. So those are the two consequences from what do we do and Monica do you want to add something Monica or we can…..
Yeah, on your first question actually, are we going to invade the market there? How are we going to improve power outage wanted for the channel activities? We are recruiting. We are everywhere in the world that we have been creating a task force actually to recruit new ones. Scalability of penetration, it depends as well upon largely to the sales force that we have; so on BT channel which is our directory channel we have two years ago almost now both in today the PLM sales force of IBM, but I think the directory actually would be the biggest amount of business that are waiting for. We are really actively recruiting in all the single industries.
So by several engineer plan and putting the right priorities in those geographies are everywhere actually we are going into the recruitment in US and that is the first step actually that is developing every single day, because we do improved our footprint in terms of market so that everybody in the world at the same time and it is coupled with the safety program which I am responsible too, because I am as well as marketing, so the fact that I am not in the execution because it is me that is controlling if you want all the training program and the planning of how do we enable the (inaudible) everywhere and so and that these are the big chunk of businesses that we are powering up.
Other questions here.
If I sort of think about expanding strategy around sort of 3DVIA you with your sort of special sort of platform there is a lot of sort of outside and what about inside out if you take the digital product definition you are creating there are opportunities on personalization, there are opportunities around recommendation, there is content management, there is augmented reality; are these areas that 3DVIA and other products will move into or these areas where you need to acquire to take advantage of?
This is basically the promise of 3DVIA to use 3D as an easy way to communicate, why, to share ID, concepts to sell, educate. So this is really the center of gravity of what 3DVIA is. And if you look at, if you go on the website you will see a lot of experience in this line. So clearly, we want to position 3DVIA in such a way; it’s not an easy positioning because right now we are probably the only one following this path. But we are convinced that it’s a good bet for the future, because as you say, most of the people look at how to grab the web and put into the company, but there is also the opposite way and this is basically the cycle, the virtual cycle we want to put in place.
Yes coming back to the share of business generated by industry specific approach, could you specify what it is right now and how do you consider it to move in the future and all that generate a change of business model because probably industry specific approach will generate much higher commercial expenses in terms of specific solutions to be proposed to clients?
We give the initial baseline answer about where are we and Monica will complete for where we want to go. As we said, I think Thibault and I, roughly 24% of our total revenue is coming from what we call, so called new industry. So that has been achieved over the last four or five years, six years, by demonstrating, by finding out that we could bring a value to those new industry and we started what that project at the beginning, like a P&G at the beginning was a small more project, now it’s a very big one. H&M on many others that we have mentioned here.
So this is where we are. The way we are building that is by pushing products up to now. You know, ENOVIA can do that for you and that’s what the PDM function, the PLM function; CATIA can do that for packaging. So we’re pushing products. We think we have reached enough reasons to believe, demonstrations that it works, to fit this, to work the other way around and go with as Monica Menghini explained, solution, by collection, by store, single source of speed was presented.
In this case, we don’t come to the customer with let's have a CATIA like for design, let's do simulation of that or by the way let's do the technical data management. It is a total solution. Now it's not a package, we need to do that for simple reasons; what is the value? How much do we save in money or do we improve in capacity? And we are doing that even with our biggest customer, we are doing that now. We think we can save you $100 million for this kind of domain of activities, this is how it can go and then it’s easier to really put the proposal on the table.
You want to add something here, Monica?
Yeah probably to your question whether we have increased the expenses because of the new industry approach, that was your specific question, whether we increased cost? The answer is no. I mean not on product side, not on commercial, we are spending more than before. There has been a reshuffling of resources that we have done in terms of expenses, that is through from having decided for example what we are doing is that we are not inventing the new things; we are, if you want just a recomposing a jigsaw because we have the best technology already in them and through the help of partners we are packaging or inventing if you want a new type of solution. We are not necessarily creating things that are more expensive that what we would have done. And in commercial, by the fact of assuming or if you want to add being the VARs, at the same time we are rebalancing as well the way that we pay the money in terms of royalties. So it is a very well rebalancing of the way of doing the things.
One example of that in rebalancing, if you remember when – I am sure you remember two years ago when we got through the transaction to integrate the sales force from the partnership with IBM, we mentioned two things to people, we said there is a lot of packing today and there is a lot of people engaging with customers at the multiple level and we use the word we are going un-stack, in the traditional way we have the IBM sales force, we were supporting the IBM sales force so there were pack of people addressing the same customer and then we added because of course IBM was selling only a sub part of our product, we went over all US sales force to also engage with the same customer.
So the virtue of un-stacking and unifying the customer engagement provides the same expenses new ways to allocate; that’s what we have been doing and I think there is more room to really increase the size of transactions for sales people by a significant way. We don’t communicate that, but to track.
The second aspect of it is of course looking at the effect of capacity, but also the effect of being able to replicate on the efficiency. And the efficiency comes with simplicity of the case; if the base is simple and clear, it is there. So there are a lot of conjunction of factors here and the people who were asking me yesterday how could you set up, Monica Menghini in the organization with almost a 1000 people and have been able to improve the margin, because we started here; well the reality, the people who are there but they were doing something else and very often not doing the most efficient way of doing things and there is a lot of scale and capacity in the company, but they have to be redirected towards the business value; almost 1,000 people, but we have not just been crazy and went out and an addition of 1,000 people on top of everything else, so that’s been approached a different way. You see the new leaders in the industries are coming from the industry. They know the business. They know the case. They know how to compute the cost of developing a car, developing a collect. And that's what we need because we have everything else. In the company we have everything else.
And maybe continue to back on that, and measuring too many guest presentations with a slide on the four pillars and the different rules for enablement solutions and the designs and so on. How ready are you yet across the 12 industries I guess it was pretty easy to reach for those resources you just referred than out in the [utility] and some big sectors that you have had historically. But in the new industries you are still work in progress. Would you consider that you are already there with this organization and second question, would you consider it will have an impact on the sale cycles because it is a much more fascinating but difficult business to manage customers and have unities in lengthening of the sales cycle even if at the end of the day, the transaction is much bigger and then how much stronger it is versus maybe two or three years ago when it was much more product driven?
It is actually the opposite irrespective from your last point it is quicker. The moment that we put the first interface solution is an experience in portfolio the day after or 48 hours after (inaudible) 65, it was the first one of all the
industries who has created this new approach the industry solution, same day we had the first transaction why? Because it is not complex, it is actually exactly the opposite. So the sales cycle is going to reduce dramatically because the industry solution experience if I can make an horrible comparison at point solution back but they are the only point solution that are strategic for the customers because by adding several point solution you create and digitize the whole company.
So it is much easier if you want to even towards brand approach. You need to make a much more selling time with the brand than not within the industry solution experience despite having a full cycle inside the aspect of business value and therefore even in [shibinari] type of solution. It is incredible that there is a secret if you want.
And so on the readiness they don’t want you to go since your boys are becoming nervous now when you t statement you are going to do all simulation your projection model it comes down, don’t do it because it's taking time for us to of course refer all the industry solutions, only a few will be delivered this year. But we have been there on building them and proving that they are values. So it is going to be faster and today they we have agencies selling highly sophisticated products like complex and sometimes customers don’t really understand exactly what, how they’re going, even themselves to transform their business. So if you are training business transformation of their own companies, do we organize what they have to organize and understand how they can use those fully developed capabilities is complex and industry solution provide a new simplicity, simplification. That’s what it takes and I think we’re, this is not a try, we are not trying, this is a way we’re going. There is no way back. We don’t plan to any to be planned. It’s the new process. There was a question here.
You showed us two years ago market shares in the automotive and aerospace supply chain and there was a focus to do a lot in this space and I was wondering to what extent you can give us an update where you stand today and it looks that many suppliers are redefining their role and to what extent is there really an acceleration and momentum for you?
You are asking a very (inaudible) question. I'll tell you because we have a strong position. So I will not give you a number and we would not communicate any more any number but we have grown our market shares significantly. That's the reality and then check, cross check, look everywhere. The reality is there. I think the parameter that you need to take into account is the scope of what we do. In the last three years, we are trying to completely of which users we serve.
Therefore one of the key thing for us is we are not positioning ourselves anymore in the group of existing 3D and PLM competitors. Because it's too small -- small number of players and the reality is the landscape and I think if there is one takeaway, the landscape of reach of the roles in companies with 3D Experience platform is completely different and much bigger than addressing engineering design or engineering production activities. This is important. It's very important because as Pascal presented, you cannot go too far in a small market.
And there are many factors that are inhibitors for that. You cannot go far; you will not see someone being in a sustainable world having a percentage market share for a certain scope which is far too high. It's not that it creates so many other products, so our priority is to increase the offering which is a reality. So we can be measured and compared with a much bigger scope of market size. That's what we are trying to communicate to you in a very precise way today. Many people said, this is probably very good, many people said do you have the risk of losing resources?
Are you not trying to do too much?
Well, I don’t think so because I think the world of engineering will never be like before, everything is changing. Since its being connected to marketing connected to what consumer thinks, what they value the most, it's unstoppable. Doing more of the same thing of this company is not of any interest.
Unfortunately it is not of any of my interest. We are going to change the game plan as we did three times to 3D digital mockup on PLM and we are going to do it the fourth time. And we believe that this creates a footprint for access which is much bigger and in that context you can understand that your question takes a completely different scope because I don’t want to comment about market share of (inaudible).You can check yourself. You can just check. Who is not using is the right question. So but it's is not (inaudible) because the scope of what we are going to do is much bigger and because and we think now we have reached a point where we want to be compare over the numbers of companies in the ERP those are big domains, but we'll go from the user's standpoint.
So it's a very strategic to challenge the landscape and I think it is happening and I think many customers are already uploading you would be astonished to see now executives coming to this company and saying can you help me manage my safe (inaudible) doing analytics, can you help me manage the 500 stores I am going to open in the world where there is no way or no system to let me do that today. In detail it’s a huge market but it’s a difficult market because you need to know what those stores are going to be and look at the way they work with little drawings, little pictures, that tell me, its cost them a fortune, they do rework, it’s a mess. Look at the millions spent by LVMH to open the stores, look at the cost of each of the stores and you get an idea that the game is changing from that standpoint and so much of opportunity that we need to expand to make sure we are smaller in a bigger market than too strong in one market. I think we are, our time is over. There will be a second Q&A so but I think we need to go for coffee or tea or whatever.
Unidentified Company Representative
We will take one last question and you will have another session for questions.
Okay, thank you, so just for the sake of illustration you presented to us two years ago a very nice demonstration of 3D virtual shopping to make sure you remember, that was two years ago and so could you tell us how well this product sold, was it running full steam or do you still have to educate your customers on this and the second question is very pragmatic so you said dual size could be bigger so could that imply that this would increase the volatility of your quarterly revenue items?
On the first question I think as you may know you remember one off that I think 18 months ago at the PLM forum in Europe, a very high level person came and presented what they were doing. This was not to be, we have signed a contract, a significant contract.
Contract that can be the size of the kind of contract we signed in additional industries. We are touching, you saw what we have on, we have mentioned publicly I am not revealing any confidential information that was an official conference because many of them don't want to share with all of us what they do.
You see you know so what we have been doing because it has been presented at many PLM forums and I call them PLM forums because it was before 2011 and now they are called 3DEXPERIENCE forums this year, and they are really focusing on 3DEXPERIENCE Forums. A presentation on PMG, a VP from PMG came and explained how they are doing their first launch of tools, how they are evaluating packaging on the shelf, and all of that.
So it was the right decision at the right time two years ago to mention that. I don't think you would have many reasons to believe that we are serious in retail if two years ago we didn't show you that. So it's having a nice traction on the retail market. When you look at all sectors growth and what's comparing to data of Monica a minute ago is probably one of the highest growth market in the world. But we are not going to do the cashier [ticket], we don't care about that. While we could do the analytics so we know what and how it should be done. So that's what occurred. The second about volatility. Please remember that the industry channels that month Monica came back to its 50%, 25%, 26% on the complementary on the three channels starting from the direct large customers who PLM and DS to be a solution.
So I think the sourcing of those is quite balanced and we believe that the three of them they have the opportunity to equally grow. So we are making sure we only select direct customer engagement when it’s meaningful because we want to increase the power as Monica just mentioned about the indirect channel.
So there is a good balance here and you see from quarter-to-quarter and I think throughout we may make additional comments later. It has been evolving from the different channel speed because the cycle time are not the same for each of the channels, the volume channel is three months and then you have something like nine months and then you have something like 12, 15 months, I mean rough ideas but for a direct channel large customer its not three months.
And for our volume channel it’s not 18 months, so it gives you some sizing and I think with that plus the geography effect we try to manage to I mean to deliver what we said we should deliver so we can do the real work which is to build the future of this company and get leverage. With that let’s have a short break. We will start again at 11.30. Thank you very much.
Excellent, I hope you have enjoyed your break your short break. I would like to call now Sophie Plante will present you 3DSwym and we’re now talking about new brands 3DSwym first then EXALEAD and Netvibes. Sophie, the floor is yours.
I am going to explain to you what is 3DSwym which is a new brand and 3DSwym is about social innovation. What means social innovation? It means that anyone as employee, user, customer, partner or citizen can be an active member in the innovation process. It means that innovation is not only an R&D. It’s everywhere within the company and it is coming also from outside the company. So this is very important because also it’s not only being able to have dedicated team in the company to work on innovation. It’s also to be able to have team and to be agile to set a [transferable] team in order to innovate and bring some new idea. What we have with that we go beyond the social business. You heard about social business. It's not only execution of processes. It’s also brainstorming and improving all the business processes.
3DSwym is not a generic platform. What we provide is unstructured value in order to transform the unstructured value into structure threshold industry experience, value to support the business process. So we don’t speak about the same experiences in retail for which they need to make collections, market watch, trend gathering or creation. They are different experiences that will provide with 3DSwym for the different industry.
And 3DSwym is not just an environment where people can just interact or have conversation around documents. It is much more than that; it is the power of the community that allows everyone to embark in order to address really social challenge and processes. So what we have put in the core of 3DSwym is this community based platform what where everyone defined clearly community objective, embark members and work together within the community with all the experiences relevant to address this challenge and be able to deliver results.
We have also accompaniment to provide with 3DSwym because some customers may not know how to start and their commitment in chain management and other to be able to transfer the company which means that we have defined people who shift communities, we have defined community management tools and we have defined also community lifecycle which is very important in order to be able to deploy successfully in a company as a community. So what we see here is an example of community and there is all the analytics also to being able to monitor all the activities that are going on with the members within the community.
I'm going to show you a video now explaining you what are the six fundamentals of 3DSwym. So we have six fundamentals and the first one of course is the human element which is the people, being able to have everyone to be able to share his skills and interest and be able also to be recognized by his contribution within several communities he is belonging to. So here you see that everyone is able to network, but also to see the contribution and to connect the dots between all the communities he is member with in order to be able to be more active.
The second fundamental is a context and the context is the community. It's now just as I mentioned interaction and conversation is context where the interaction and conversation are taking place in order to really deliver results and money for that. Within the community also you have events of the community that is available to customization that really provide the purpose and the sense of the community in way that people can really understand where are they going to.
We have field of contents of course. The contents which is either not only documents and videos and photos its also 3D experiences where people can share, react and provide feedbacks to improve those experiences. We have embedded also the EXALEAD search within its environment in order to be able to reveal information that is available within all communities, but also to be able to suggest contents and people to be connected within other tools in order to be part of new communities. All these platform is widget based with the technology, same technology Netvibes so it’s also to be customize, accessible of course through mobile devices and also to be able to make company being able to create its value and transform the enterprise to have all the people embarking into the vision.
I can show you or show some customer examples that we have in 3DSwym. This is one example for transportation and mobility 3DSwym. (inaudible) is using a 3DSwym in order to be able to create with their partners and deliver new products and services. Another example is [Wisnicki International] that is using 3DSwym in order to support their sales in their stores but also to build best practices that were on sales and marketing within the enterprise.
They use also 3D as a media in order to have all the [ambassadors] and designers dream about new glasses. The next example is the Coheris business, I believe it's a CRM company. Coheris is using 3DSwYm as intranet or extranet in order to support their customers and to collaboratively be intelligent within the company in order to have collective approach of addressing different products.
So that's what I wanted to share today.
Thank you very much. Now the floor is to Laurent Couillard from EXALEAD.
Good morning. So EXALEAD -- I want to start with what makes us unique.
In fact, we serve several markets B2C, enterprise and decision-making process with the SBAs. And if we look to each of those points, we are unique in the B2C providing to Internet publishers content. We have yellow pages. We've got real estate. We have Manpower, Randstand, where we enrich the content they want to publish on the web so that they can provide high value to the people that are connecting to their environment.
Second is enterprises, where we provide a high value of scalability. As you know, the digital information, the digital assets are growing at a very large speed, and enterprises are to cope with that. The scalability is then a major point to cope with. And we have scalability that can be directly demonstrated and visible and far better than any of the competition.
And the third one is about decision process. How search can help people to make decision. And more than that how search can help people and more people to take decisions. Decision is related to a few numbers of people who have the information. How you can propagate the best information, the best intelligent information to people so that you can define and take some more decisions.
And that's about the SBAs, by capturing the information and transforming that into a business process to enable to users to take power and to take the proper decision. And how do we that and what's the key value there is not only to assemble the information, not only to connect too many sources, it's also about the semantic that we can apply on the information so that you transform the information into real knowledge.
And this is a key part of that. And that's why we say EXALEAD is about transforming the digital assets into search intelligence or intelligent information. And I want to illustrate that into an application that is going to be visible behind me. And to explain this in here is we want to serve customer engagement. What our customers are looking for is how I can close a discussion with a prospect or customers as quick as possible.
And the problem today for those people is they've got multi-channels to deal with that. They can go -- their customers can go on Internet, they can go on the voice-to-voice call centers or whatever, and they can go in shops. So the multi-channels make the difficulties to find the information of the consumer and make it lock on the proper decision.
And what we do is what we call 'ii for Frontlines' is a layer that assembles most of the information you can know about your consumers so that when you are in touch with him, whatever it is on the Internet, wherever it is, in a call center or in a shop multi-channel, we can deliver the proper information. And that's about Frontlines and the value of that.
Not the CRM, but managing transactions with a customer is a real frontline where you assemble a CRM information, you can assemble the offers you want to deliver to these people, and you contextualize the offer depending on the profile of the person. You can have also open information like publication of the population, size of the population, age or average revenue in this region, so that you can propagate some ideas of offers on that.
This is about Frontlines. This is about how you can help people to decide, and help people to decide in the way they are going to engage to your product. This is critical for business like Telco. This is critical for business like insurance, finance, and even the automotive industries looking for that in order to know better their consumers.
Other example of SBAs, in the transportation and mobility environment, in the mica industry value solution and industry value experience. What is it about? Imagine that in your car, every time you drive, the car is recording all what you do. And by the way, that's the fact. You've got a record of all what you do and how the car behaves. This is sent by each time you go to the garage, this is sent to the OEM.
How can we use that? Those billions of records, how can it be used? It can be used to create quality assessment. You can define patterns of defect and you can go and detect what will be potentially issues in your system or defect into the specification, and then engage into a better design by composing with the information you get from the car.
By the way, you add the information you get from the car with the context of the car where it is. If you are in Sweden and you turn off the key and you press the accelerator very quickly, the engine may be damaged by the cold engine and so on, with the temperature at minus 4, and then you may damage your vehicle.
However, if we understand that pattern, the load of controlling the engine in Sweden might be different than the one in Spain. So how you can define those patterns in a real manner instead of projecting that in surveys or expectations or extrapolation of experiences. Here we can have the true-life experience.
We can have, in fact, the product in life defining a lot of digital information, and reposition those digital information into the virtual universe in order to develop better solutions. Same for humans, be it for humans. Imagine that every old people can be monitored for their health at home. Everybody wants to do that because of the hospitals and so on. But it's big data and it's how you can interpret and predict what will happen.
This is about the case here and you've got an example of an hospital that is using EXALEAD in order to track what the patient is doing from doctors to doctors for several disciplines because they have half time to assemble that information every year, (inaudible). This is about how we can help people to diagnose better and to organize and predict the environment. This is a human part on an SBA.
And the last one is about a real problem that has been expressed by utility companies. And this one is a real example of what we do in France. 30% of the fresh water, of the drinkable water produced never arrives to your tap. 30%. How you can help utility company to reduce the cost of natural resources of that pollution. It's not by them to do a better factory to produce more water, because anyway 30% will never arrive to your bathrooms at home.
So it is about smart metals, being able to establish the trends, detect patterns, and be alerted on what's not happening correctly and being able to monitor all of that. And also to offer, based on those alignments, the capacity to organize actions to what to do in case of a deviation from the normal trend. This is about that SBA, which is monitoring I think 600,000 residents.
And we deliver that both for the single habitants and for the people who are managing the real estate, and so that they can take the real action in order to better control and better engage into the corrective actions. So this is about EXALEAD. The key value is we can provide content. We have content. We've got exalead.com and we have access to the content.
We have a huge scalability that allows us to treat from very small set of documents or digital information to very large ones, very, very large ones. Lacoste is using a 6 billion item index running right now. And the third one is we are a decision-making tool as soon as we apply the proper objective there. All of that being said in a mode where the product in life is assembling all the digital production, and put that as an input of the virtual universe to help having the virtual display.
This is about EXALEAD. And now, I think we continue next with my friend of Netvibes, the newcomer, Stefan. Good to see you.
Stefan, the floor is yours.
We'll have after a short period of short Q&A.
Yes, I'm very pleased to be here, thank you.
We are glad we could harness time here because you saw already a lot of Dashboard Intelligence and UWA and application integration into the last presentation this morning. So I'm very happy to say that I will go very fast in the 37 slides that I have prepared for you. What I wanted to introduce to you today is what we call Dashboard Intelligence, and is the core of what is our activity for three years at Netvibes.
With the birth of the real-time web, we realized on the B2B market that most of the enterprise organizations need to adapt very quickly and react to very fast moving trend in the market conditions, new regulation, new competitive threats or emerging trends on the market coming from a social network or your reputation of when monitoring, you name it, or from an internal incidents.
So we call it Dashboard Intelligence to make sure we cover that aggregating everything from the inside and the outside of the enterprise, trying to make it intelligible and make sense out of all this maelstrom of information and exponentially growing information on social network that might be of interest for you, and then act as soon as you can. So react on the social network or act, make a decision, put a buy or sell order, you know this.
So we define Dashboard Intelligence, which is really focused on strength that we are developing or the strategy on listen to everything inside and outside from Facebook, Twitter, RSS, all your blogs of every medias, but also the PLM, SQL, SharePoint, Oracle, all your internal tools as well can be integrated in an application in a UWA format, which is a proprietary standard for universal web apps portability, not only on Netvibes but everywhere.
That's what you saw without noticing audio sometimes. So then learning is what we have introduced at Netvibes, what we call an adaptive analytics to make it very simple and short combination of human wisdom and machine algorithm. So that's long time story for the IT success and that's what we've developed for to fulfill or learn from everyone objectives that we have in front of us.
And then act on it depending on the business, the rules and the action that may be very different. So for this particular day, I opened a research analysis that we've done with the finance industry expert at Dassault Systemes a few weeks ago. So I would invite this is for you, the slide is not enough. You will have the links and the possibility to play around with it as a first dashboard experience on Dashboard Intelligence on the web, and which is much better than slide.
But this experience, we call it the New Social Ticker, gave us the possibility to learn a few things from how traditional financial institutions or banks that are (inaudible) are considered as more fast moving to innovation with and within social medias and with social contents. We have identified a few of them that are playing in that field. So I also can demo how we happen to find these insights, what we call insights.
So what we do here? We are creating a dashboard for a group. This is an example. We can create other ones. We have some other ideas probably for you guys in this room. And we have had a very interesting discussion also with some of you yesterday to, as I said, probably sustain the innovation or we have some also findings that I didn't know that.
But in some extent for some organization in your field, a regulation can act as a clear guiding principle for innovation and product development. And that is a way to monitor and track everything, not only on the bus mobile banking but everything that matters your own interest for as an investor or doing this kind of experimentation in finance with global IT situation monitoring or other kind of risks that is really important for them.
So the idea is once you have listened to everything, learned from everyone is to generate live reports, automated alerts, triggered by if there is a type of mention of risk identified on your sector or some discussion about a company or a sector or an industry, just to have an automated report sent to you on an alert by SMS or direct call or else where you're connected.
So as a takeaway, again, there is -- we've done that and selected in this short session. I'll give you an understanding of what Dashboard Intelligence in the easiest way. But you can imagine that we are committed to do that in every industry. At the system we have done that a few times already on life science, automotive, you saw that earlier, or FMCG, and all that can be seen on insights.netvibes.com. Thank you very much.
Thank you, Stefan. Please stay on the scene and may I call my friend Sophie and Laurent to answer to your questions. Don't be shy, come on.
Good morning. Question on Netvibes, just a clarification on what from the customer's point of view is the main business case or value here? Is it the programmability and customization of Netvibes during the creation of dashboards or what other elements are part of the business case for customers besides the display of data and the customization of the dashboards?
You mean in terms of outcome for the customer?
Well, we have 4 million of users for five years that are using Netvibes on a daily basis. With our customer and we do historically a 100% of our revenue on the B2B. And the last point, which is the outcome of Dashboard Intelligence action, triggering action or helping someone with a real-time dashboard or report to make decision with the relevant information, listening everything and learning from everyone, depends for every customer.
We have customers in the risk assessment. We have customers using that to create new kind or new type of press clippings sent to all the managers everywhere to make sure they have the real-time data coming from Twitter, Financial Times and blogs or an analyst directly where they are. So it's really helping to get the right decision, to make the right decision.
Yeah, we have clients where the idea is to collect a lot of expertise from inside and outside the companies and make sure for an industrial. We had this discussion with the industry earlier and that everyone in the deployment, everyone on the world has the right information about innovation. So -- but again, for specific industry and the outcome for life science, we have what we call pharmaco or [cosmeto regenence], which is key in that area. And we are sometimes using network dashboard integrations for that.
And Sophie, I was curious if you could share with us the number of customers that are using 3DSwYm and the number of users at the end of the day (inaudible), which is a big account. But beyond that, what has been the progress from a commercial standpoint?
So we have 50,000 users of 3DSwYm with different customers to-date. And there is also many customers that are coming that I cannot disclose today for larger deployments. So for the goal, I think Thibault, he might -- but yes, we have goals. We have large goals.
Well, thank you very much. Thank you, ladies and gentleman. We'd like now to have the call the one we are all expecting. The floor is to Thibault de Tersant.
Thibault de Tersant
Hello everyone. So I think I should set the expectations before I start the presentation. First of all, I know that some of you are expecting that today we would reveal a new five year plan and it’s not the case. It’s not the case because a couple of years ago we have initiated the current five year plan. If you remember well, at that time we did so not many of you were believing that we could achieve it; and I will not point to specific persons.
So what we are going to see that it’s in fact achievable and so what I heard yesterday that's its too easy though, so why do you keep it and why don't you switch to a new five year plan. So I think there is a sense of commitment to deliver the one we have announced in 2010 and for that reason you will have to wait until 2014 for us to reveal a new five year plan.
Having said that, I am going to now try to give you some perspective in my own way of what can be achieved with what you have seen this morning. And of course I am starting with a few disclaimers. So let's go back first a little bit. I have and I shared the frustration with a few executives and in fact probably essentially all of our employees and the affiliates which is that we generally are not seen as a growing company. I am reading reports saying that for the past 10 years the CAD market is mature and we will not deliver growth; CATIA is mature; the automotive industry is mature; sorry Paul, but it’s what they say. And so how come can we deliver any kind of growth?
So I like to do some flashback from time-to-time. And the first one is this chart that you very well know where you can see that when we look back now on the trajectory we in fact have been able to double the addressable market at each strategic step we have taken from 3D to DMU to PLM and we are going to repeat it again with 3D Experience and I am trying to show that in a few moments.
So based on the trajectory in US dollar because all of our competitors are briefing figures in US dollars, we grew in average per year at 14%. And when you look at the details CATIA grew by 10% in average per year; ENOVIA by 25% and the rest of our PLM offerings by 26% and SolidWorks by 18% which I believe is not far from what ideally you can consider based on our strategy can be achieved in terms of distribution of the growth across our different offerings.
I know you have a question, 14% in dollar, but in reality what is the growth in excluding currency impact; it is 12%. And you have a next question, and your next question is the organic growth. Here I am sorry but you have very different definitions of what is an organic growth, because for some in this room, our organic growth is CATIA growth. So this I have shared with you already.
So in my own definition, the organic growth simply excludes the done in the first year when you do an acquisition to compare the comparison base, right? When I do that, we have delivered a double-digit organic growth in the past 10 years, exactly 10%. It’s actually 9% point, but we can round it to 10%. So that’s the whole clarity on our growth for the past 10 years.
How does it compare? Well, I don’t think it compares so bad with other players in the software industry, you know, being SAP, but also of course our competitors to-date and other technology; it's harder to compare to [Xenon] (inaudible) because PLM division is not listed and they give fancy figures to industry consultants. But we’re doing our homework, so one day if you are nice with me, I can drive the curve and I think it is going to be relatively accurate on this chart.
So let’s now look forward. I am going to show a view of the market which is a pleasant view, you know Pascal show you the strategy view; mine is the pleasant. And here what you’ll find is the narrow definition of the PLM market, the one where we have offering. And on this very market which is the one we have been measuring against in terms of market share for the past 10 years, so we will need to change to the 3D Experience market, I appreciate that you know, but yet we have been measuring in this definition and so I think it's useful to show you that in this very definition, we are reaching 28% market share at the end of 2011. And of course that’s no discovery for you; we are the clear leader on this market. And we gained 13 points of market share in this 10 year period. Okay; and so this market is very you know design, data management, simulation and digital manufacturing and that's it.
So now and again you know that's the view not of the potential addressable market that Pascal shared with you, that’s the view where of how we grew you know from this $16 billion market which is the current PLM market; you know I measured our market share on the software portion of it to $32 billion. And what you can see here is that as where we are today based on the moves we have done in the form of two years plus less than two years, we already are playing with our product in a $21 billion market, so the $16 billion market has already been exceeded towards the peer-end market; it is already exceeded based on the organic and external moves that investments that we have done.
And of course Pascal was very clear in his demonstration that the $32 billion is already the one we had addressed, here I am speaking about products that we have you know, but certainly the potential in search based applications is larger than the one I have included in this current market etcetera. So do we feel confident; we are going to deliver you know this junk to a $32 billion market, absolutely; I don’t think there should be a doubt.
If you just consider other thing two years we have expanded our market in a very pragmatic manner you know with products that are portfolio and are sold today we have expanded it by $5 billion in two years and I don’t think there is a doubt on the ability to go through $32 billion with the 3D Experience platform.
So let’s give you that now in more detail. We have two axis right; one is the 3D Experience platform and the other is the diversification in industry. So if I start, you know we have to come back with ENOVIA, let’s start with ENOVIA and here I think that already well known that we can deploy ENOVIA to a population that is much broader than the engineering department and particularly the design population. In our current observation it is a multiplied by five to 10 times with an average of seven today. So there is a very significant expansion of the population.
The system engineering is another interesting expansion and here I am not speaking about the design of the system, but the gathering of specifications you know that Olivier presented and which is a very substantial expansion as well with at least in the given up number of engineers inside our customers working now on system engineering compared to the rest of the products. And then new professional users with 3DSwym, so here I think was relatively clear you know about the fact that we can now connect the dots, socialize the equations outside of engineering department with the customers, our customers and with many players inside the company.
So one example of this expansion of users that we can serve is a very recent value in our Tier 1 automotive supplier where we were selected especially for Mechatronics with actually 12,000 users that are willing to serve with ENOVIA in addition to the current user base we have at value and you can see again this ratio you know where we have today 1,800 users of CATIA. With this we go to 12,000 okay.
Now if we go west; we like to go west, and I think that's very clear that first of all 3D, that's an old story you know, but it’s still a very significant growth driver. We are not at the end of deploying 3D in the current world. If we just look at the mechanical engineers and we are now serving new populations in design, right. I hope you got that this morning. We are serving new populations with design, but in the mechanical engineering area, I think in the world you will find 5.5 million of them, more or less. Of those 37% are using 3D only 37%. And in our expectation if we project this to 2019 we should go easily to 52% you know there is a trend of migrating away from 2D and to 3D and this trend will continue.
The expansion to new professional users in marketing, in sales and advertising, 3D is more and more popular and useful. I think this is also something that was a clear message from this morning. And then system engineering; same remark, system engineering in an engineering department in automotive, half of the engineers are working in system engineering and the other half is working on the rest of the car, Paul said 60% at GLR; why because GLR is more advanced.
So the population is expanding quite a lot with system engineering. One example of this with the recent win of Astrium where you can see that our normal usual driver for installing our 3D tools, productivity increased by 25%. When you get that kind of productivity increase, do you continue to invest in the 3D systems? Maybe, I think so.
If we go south now, virtual plus real, here very clearly in manufacturing we have been enduring building the solution. And what we see to that is finally the ability to go outside of the few experts in manufacturing and go to short flow and quality engineer and when we do that with DELMIA and we complement DELMIA with interest which is one of the many acquisitions we did in the past two years, we can multiply easily by 10 the number of manufacturing engineers that we can serve.
And the supply chain is becoming a very important theme and the ability to have a digital model of all the production facilities of a given customer, you know how do you redirect production flow from a factory to another in an easy manner, how do you redirect the production flow from a supplier to another and you do that in a safe manner where you know what you do and you have a full dashboard of what you do and you can see freely exactly what is happening to you. That’s another area where DELMIA is going to deliver a lot of value to customers.
And finally simulation. Is there a doubt of the fact that simulation as (inaudible) that 3D Experience is going to become more and more important and that customers will have a virtual test environment instead of doing and cashing physical prototype. I don’t think so. So let’s just illustrate with a recent win. The capabilities in simulation. Here what you can see is this ability to do product, to harmonize product nature and light actually, because it is the feel of the keystroke that is being simulated with SIMULIA at Lenovo. Is it a good feel? How to improve the keystroke such that the user is going to feel more comfortable and to have of course also a stronger keyboard. So it’s about, this dream of harmonizing product and life.
And finally, let’s go east and here you know, is really the presentation you just had with EXALEAD and Netvibes and so we spent of course with the data as a service. We extract the intelligence of the information from the big data and our ability to have high Symantec engine and to combine big data from the enterprise and big data from the web environment. And use it in order to do analytics and to develop applications that are delivering value like you know spare part management for example without having to put all the spare parts in one database and go a four-year migration of database, you know you immediately can manage your spare parts logistically with our search based application.
Here an illustration of the usage of EXALEAD at Abercrombie & Fitch in order to fight piracy. With EXALEAD they can find on the web who has models that are looking very much like the Abercrombie & Fitch model and so they know that they have been copied and they can fight the counterfeiting activity.
So lastly, the second axis is the diversification in new industries, you know and I think here I am not going to repeat our strategy that has been presented in four industries this morning. But very clearly, the new industries that we're going after, you know eight new industries, if you look at the saving that Pascal does, they represent a market which is twice the one of our core industries, so here again there is a very significant expansion potential.
And one example of new industries is Pierre Fabre who selected ENOVIA Version 6, they deployed it in their cosmetic branch at first and what they do is real-time vision of the flow of raw material and substances in order to do the regulatory activities and to monitor of course all these material chose in the best manner, they do actually even more than that there far by now ENOVIA is becoming a tool enterprise backbone.
Finally, as Bernard said we are not anymore in the strategy of selling ENOVIA as the infrastructure you know as the first step. We sell industry solutions and so the value is created by our customers. I say go and as they want they can always reuse the IP created by one solution when they go to the next industrial process.
So the sales are driven by the applications, by the solution to given industrial process problem you know and they are all consistent, because there is an infrastructure. So our customers can know build IP as they go and you know and they will always be able to leverage everything which has been done with our systems.
And finally version six is still at the beginning of the product cycle. We are starting the migration and so there is a large potential of new users of new customers with version six. There is also a better ability to capture the value of things to the named user licensing model that we are deploying and finally what is very clear is that the average transactions size for version six is almost double of version five transaction size today.
So I will finish with a quick update on our 2014 growth objectives. You remember the growth objectives. Our target was to almost double the revenue, going to €2.3 billion to €2.5 billion and to more than double EPS going to 3.70 to 4.0. Where are we? What you can see here, you can see where we were in 2009. You can see there is no scope for 2012.
So this is the 2012 objective that we released when we published first quarter. It does not include Gemcom yet. And we don't deliver engineering you will find exactly what we published at the end of first quarter. The orange rectangle is showing where we should be to be just on the curve of our five year goal.
So you can see that even with this first quarter objectives we are above the curve you know to be hitching our goal and what has to be done in order to achieve the 2014 goal is an average growth of between 9% and 14% so its not ridiculous as remaining goal in terms of revenue growth, you know I am not ashamed by such a goal. At the same time, we are convinced it is achievable and on EPS same thing, you know you can see the blue and that's where the curve is you know if we were exactly on the curve, linear curve or line, to be reaching our EPS goal and so we are also above of course and we need in order to complete an average goals in EPS between 8% and 13% same thing it’s not a ridiculous goal. I am not ashamed by the goal of growing 13% EPS going forward, but at the same time I believe it’s achievable.
And with that I think I will take your questions if you have any.
Thibault, can you talk about operating margins that’s one thing you didn’t talk about in terms of the outlook. You had indicated us over 30% range which you have sort of reached already. How should we think about operating leverage as you transition this organization towards this 3D experience and is there anymore scope for leverage in the short to medium term even?
Thibault de Tersant
Okay. I had left carefully margins for the Q&A session. So in 2012, we are on a trend where we continue to improve our margins. The only reason why in our guidance there is no improvement is because we want to keep the flexibility to continue to do acquisitions to support our strategy to go to 3D experience. Of course with the time going, the acquisition will have to be really dilutive for us not to exceed slightly the goal that we have set in the guidance.
But really I think that we need to continue to support our strategy with acquisitions and so we don’t want to set the expectation that we are going to skyrocket margins and be at 35% in two years.
Having said that, we continue to work on our efficiency and we have a few drivers of operating leverage and we’re working hard on them. One is sales productivity. We have said, we improved productivity in sales in 2011 substantially. With the industry modification expansion we’re doing, it’s not going to be the same pace in 2012 but going forward, we still have a significant improvement in sales productivity that we can realize.
Our services margin is not satisfactory and we’re also working on our services business. So this is another area of margin expansion and we have a third area of margin expansion which is G&A. We have been working actively on developing services centers. This is done today. We have not platform for growth with our administration infrastructure. So if I combine these pay levers, I believe that we have across the over the years, coming years, probably five points of margin that could become available if we do a proper job. But we are not announcing that we are going to grow the operating margin now. Our goal is to grow and that's the goal we have released for our 2014 plan, our top line and our EPS.
And so we will stick to it. And we will invest what the efficiencies are going to enable us to do in acquisitions and organic developments. The R&D you have seen that we have been working hard on R&D in the former years in order to co-locate the teams, reduce the IT spend by virtualizing our servers, by enhancing the configuration management tools available to the developers and you have seen the significant leverage in R&D happening. So today our focus is to serve the strategy and continue to develop our R&D operations you know. So that's why mentioned I didn't mention it when I did my list of efficiencies, it is because we are going to continue to invest in R&D. Is that the answer more that you were-- to your question?
Hi, Thibault. Thanks for taking my question, just on the earlier presentation that was a lot of kind of discussion about kind of moving outside engineering and design. I was wondering if you could share with us what is the percentage of the revenues at the moment outside engineering and design and where do you expect this to be in 2014? Thanks.
Thibault de Tersant
Okay, so that is a difficult question because we measure our business in many axis, but not yet in the revenue we make outside of engineering and design. And I'm not sure; it's an axis we want to add to our business intelligence. So what is clear is that what we want to measure is our ability to serve new users and today if there are industries first of all that we now serve where you don’t find many engineers. You know like (inaudible) like financial services and there are some other examples. What we do typically with 3DSwym is generally serving populations that are outside of engineering and design but it may also include a few of them. So all we have very clear signs that we are expanding outside of engineering department but it is a little bit early for me to give you a clear measurement on that. But in terms of population, we can see that we feel today we believe that we are serving all together about 10 million users and of this very clearly in 10 million users you'll find many who are outside already of the engineering department.
I have couple of question following up and back on last one, related to the components of your growth and business model and I thought its fascinating that you mentioned new users and in effect high volumes because historically DS has not been a particularly high volume company although SolidWorks has the largest base in its peer group, could you talk however about the other components of revenue growth and for instance how are you envisioning the direction of ASPs over time, the growth of services over time particularly in relation to industry solutions and in fact is the channel structure both direct and indirect even really equipped to handle million and millions of potential users, you know the five to 10 multiple for example of your 0.5 million CAD users and then I have a follow-up?
Thibault de Tersant
Okay. So first of all on ASP, ASP is a topic where it’s a topic of satisfaction. You know I don't know how to say it in a different manner. And I don't want to look at ours but as you know there is a pricing war in our industry. Some of our competitors are discounting heavily their products and my observation is that if I look backward the last two years we have been able to increase our ASP across the board and essentially in each of the product that we do including SolidWorks where we don't hold and so that is of course the most exposed to pricing aversion.
We were able to slightly increase ASP in 2011 for SolidWorks and of course we were able to increase ASP better for the other products that we have. I guess your second question is the whole of our channel in order to expand the use of it and here the strategy is very simple. It is to attract new partners in order to better serve the new industries that we want to cover. Some partners we have today are serving in fact mostly our traditional industries.
The diversification has been first the work done by our direct sales organizations and so since the beginning of this year [Bruno], has I believe he shared at TCF, have started to hire new valves in new industries and with these new valves in new industry is very clearly there is a need to go after new kinds of users. And there is also, you also find the skills to do it because when you are positioned in business services, financial services, or life science you can do it.
Okay, lastly my follow-up is as part of your model change or strategic division, could you foresee the role of some kind of sharing of the business value or revenues that your customers generate in other words is there any potential for your having an on the meter components of the business, many other companies I followed like you, franchise company and design they had new sweeps that offer tools in addition to which as the customer’s customers employ the content created by those tools, this particular company gets a piece of the revenue. So again on the meter, is that since you mentioned IP were used something that you might potentially have?
Thibault de Tersant
So we paid a lot of attention you know for this expansion of users to bring revenue. And not to do it in a manner where this expansion can be done without increasing our revenues. In terms of capturing a portion of the benefit, this is always a very difficult topic because the truth is that we are bringing two good benefits and so when we offer our customers to share, to even have a reduced price for the software but in exchange for that share a portion of their benefit, very quickly we go back to… this is a very good to actually to close the price negotiation under license.
When initially they don’t want to pay for the license and they want discounts, we say okay we can give discount if we get 10% of your benefits for example then very quickly afterward they say no, we don’t want to give you 10% of our benefit and by the way may be we are okay on the license price.
So I don’t know how to change that, I am trying I am not giving up this I can guarantee. I am still trying with new customers to have a mechanism where we can share some of the benefits and they very often essentially 99% of the cases they push back. If you have a recipe, if you know a company with a good recipe I am very interested. The one who at some point in time was successful at setting it to customers was [i2] and but they said they had afterwards but not encouraged to follow exactly the same pattern.
Thank you, Thibault for taking my question. What is the price point of CATIA system and what would change with the introduction of industry solution? Would it change the price point of CATIA system?
Thibault de Tersant
CATIA systems is a portfolio of product. So, I think a good average is around $20,000 for the specialist, for the requirements gathering of course it is ENOVIA which is doing it. So our system offering is not just made of CATIA. It’s also made of specific ENOVIA product in order to do that and those are much cheaper and the population is also much broader of course, you know, for those user profiles. So the system, CATIA system product will be embedded in to industry solutions. You know that we’re developing progressively.
The industry solution goal is of course not to lose value. So, I am not expecting that industry solutions are going to drive steeper discounts. In fact, trying to make sure that it is the opposite and the fact that we have industry solutions, it will help protect our price points better, because the value is more visible. And so the dialogue with the customer is less, a picture on function dialogues and is more value that we can deliver kind of dialogue.
Okay, thank you for taking my question. Just a quick one on R&D, how do you plan to split or allocate your R&D spending in the coming couple of years? If I understand correctly, there's a few strings going on right now. You're working with these new industry solutions. You are working as well or will work on the Gemcom integration.
You are still -- I believe you said, like one-third of your way in embedding mechatronics functionality into V6. And obviously, you shouldn't forget your traditional business because it's very competitive with Siemens and Parametric. So can you give us a sense, should we expect an increase in R&D as a percentage of sales in the next couple of years?
Thibault de Tersant
Not an increase, but I was trying to gently prepare you for less leverage in R&D for the next year because of the busy agenda. And on top of what you said, I would add that we are very interested in construction as well. It's a portion of the market that we believe is underserved today and where we can bring a lot of value.
And certainly also simulation, for molecules with research project that was launched two years ago, is another area where we will continue to ramp up because it's very promising. We are today doing simulations of new drug molecules in the context of oncology. And so, this research project is going to deliver commercial products. We can now be relatively sure of it.
Thibault, when you talked about growth opportunities in the West, there was a lot of talk about new users. But certainly, there's a lot of potential from selling additional modules like composites, CATIA analytics, et cetera. Looking forward, let's say, the next two, three years, could you give us an idea of what percentage of growth comes really from new seats? And from what -- you can also maybe, looking back on the 10% that you mentioned as historical growth, an idea where you see roughly the split?
Thibault de Tersant
So for CATIA, the dynamic right now is that if you just look at the growth in new license, one-third is made of two new users and two-third is made of the expansion of product components.
And this is a good plan except that at some point we will probably, at least my assumption is, we will see some more migration also from SolidWorks to CATIA, because when you get users more proficient in 3D, thanks to SolidWorks, down the road they want to be able to cover better end-to-end design processes, go to real virtual products, go to designing the context of digital mock-up, et cetera.
So this dynamic may evolve. For the time being, we are still in this one-third, two-thirds. But I believe that with the uptake from SolidWorks, this can probably come slightly more in favor of new users.
Can you explain a little bit on your point on the margin in services, because we have a lot of companies, a group of companies here in Europe where it's a subject which i0073 a bit challenging. So how would you achieve this because you are recruiting integration partners, for example? And so, if that is the case, what kind of targets in terms of resources do you have, and so on?
Thibault de Tersant
Thank you for asking. Today we are still the typical software company doing services as something that is necessary in order to do the first implementations of Version 6 in new customers or in new industries. And so, what happens when you do that kind of first implementations is that you are not always right in evaluating the cost of it, because there are a few unknowns and these unknowns are difficult to cover.
When you need to negotiate a fixed price, which is today unfortunately what is always requested from customers. So our situation in services is really very much related to that. Our ability to improve margin is, first of all, ability to do better quotes, with better tools in order to quote the cost of a service project. But more importantly, our ability to go to replication mode because now we have already a few Version 6 successful projects, so integrate those and now step up and take more part of implementations with customers.
And so our whole is progressively going to be support to the integrators, and the validation of the architecture of a project rather than doing ourselves the integration work. So there is a natural evolution that is going to be good for the services margin. And what we will do is also make sure that our processes and services continue to improve, and that we are just services population to this new whole, which is a higher end whole.
More consultants, more architect and less people in implementation, so this is the restructuring that I believe we are going to be able to perform. And I believe we should be in a much better situation 12 months from now in services, but we'll start to improve progressively in the meantime.
Very quick one then. I was a bit curious to hear about the fact that SolidWorks this morning. I know you are -- actually that is the first software category to be attacked by the cloud paradigm. But since you've been one of the first software player in the industry, did that thing deliver the cloud? And seems lately, one of your competitor has been quite vocal about it. He's really stealing your mojo on that. Why is the reason it was totally absent?
Thibault de Tersant
The cloud was totally absent even if there was a few thing about so on a so forth. We are here to hear on the strategy on long -- at least medium term horizon, and it gives you the impression that the things is pretty serious in that.
Thibault de Tersant
You know what, Sebastian, you are making my friend Sophie Plante quite unhappy because she thought she was clear that 3DSwYm was a cloud offering.
True, but I guess you can be much more ambitious --
Thibault de Tersant
So you don't take it seriously? We are very ambitious with cloud. We are very ambitious with cloud for EXALEAD, 3DSwYm and Netvibes. We also believe and we have already bet our products for SolidWorks, the ENOVIA version to do data management underneath. SolidWorks, we have a better product also for CATIA in order to do data management.
But these are better and it will take some time before customers really accept to put their product, intellectual property in public clouds. That's our observation today. We think that usages like 3DSWYM. Netvibes, EXALEAD are more likely to be on the cloud and to be accepted both on the cloud. The fact that the product IP goes to public cloud will come -- it's very importance for us to be the first ones with credible products in this field.
But the traction today that we see is not very substantial yet. It will come. It's an education process. It's the fact that customers one day will admit that maybe the IP is equally protected in a public cloud environment or even better so for suppliers, for example. But I don't think the market is exactly there yet.
It's also to us of course to explain that what we offer as a public cloud is a very secure environment and that we have the means to ensure that the data remain in the countries where they should remain, which is another very significant aspect because a lot of our customers cannot freely explore data. So you need to be very careful about the mirroring of cloud in different geographies.
So there are all kinds of questions to be well resolved before this can expand on the product side. But on the social side, there is no doubt that our customers are much more ready to accept it, even if Sophie would tell you that probably half of the prospects we have today are asking her to have an on-premise solution for 3DSwYm.
Yes, I have a couple of quick questions. The first one in one of your slides you show that there's a big slice for the financial service. And I am not really sure which software is addressing this side. Is it EXALEAD or is it Netvibes? And is there any relationship I can draw from this big slice to your move as a director to Temenos? That's the first. And the second, historically I remember that we have roughly speaking 15% of sales in yen and 5% of cost in Yen. But with the change of parameter, what is it today? And sorry for (inaudible), thank you.
Thibault de Tersant
So what do we offer in financial services? It's a combination of different products. It is actually 3DSwYm in order to give them a platform to exchange ideas, to do innovation and new financial products. It is EXALEAD in order to of course do business intelligence, search in big data. It's very important for them. Find information in SwYm as well.
The with ENOVIA is also something that is very critical for them because financial institutions have product portfolios to manage, and ENOVIA can bring them this vigor in the product portfolio management and can also help them accelerate the phase at which they can release new financial products.
Today, a bank would take about nine months to release a new financial product because of all the internal approvals and the compliance work, with all the governmental new rules. With ENOVIA, you can offer an environment where the work flow can be monitored such that the release of a new financial product would only take three months instead of nine.
Netvibes for dashboarding is also, of course, a solution that is very relevant. How do you present information? How do you access only the information that you believe is relevant for the job you have to do? A lot of bankers need to get connected to their customers in a smart manner. Netvibes is very useful to do that. So it's already a small portfolio of products that we can offer to financial institutions.
Now having said that, we are still at the beginning of it, of course. But there is potential and there is no real relation to the fact that a director of Temenos. Thank you for having noted it. It's equivocal I believe that. In fact, I'm ready to sponsor our activities to financial services inside Dassault Systemes. So to be honest, I am curious to learn more on this business and Temenos is an opportunity to do that. And we don't compete against them, so that's fine. And on the other side, I think I can bring some experience to them.
So the yen, I'm sorry. 16% of our revenues are yen denominated and our cost base in yen is 5%. So it has not changed substantially. With your good advice, I have been hedging significantly our revenues in yen for the next 18 months, and I believe that the yen is particularly strong right now. So we have done two things. We have been hedging. And also, when we did the IBM acquisition, we have been borrowing in yen.
So we now have a quite natural hedge, also thanks to the borrowing in yen from Bank of Tokyo in order to pay for the IBM acquisitions. U.S. dollar, so U.S. dollar, we are at exactly the same percentage in revenues and expenses, which is 36%. And so we are absolutely not exposed at the margin level but we are exposed or we can benefit at the translation level into revenues and EPS. Last question before lunch?
Just to come back on CATIA system, do you think we will see a declaration between the adoption of CATIA system and the immigration of CATIA V5 customers on CATIA V6 like the one we have seen at BMW, or do you think it's definitely highly correlated?
Thibault de Tersant
Well, it's okay for a customer to go to CATIA Version 6 -- first of all, CATIA system is only Version 6. There's no Version 5. And it's okay for a customer to go for systems to CATIA Version 6 and continue to operate CATIA Version 5 for some time, if they see fit like BMW does actually for the mechanical part. There is no problem doing that and they know they can manage both Version 5 and Version 6. So it doesn't hurt the fact that there is a coherent environment. Next question, last question.
I was not looking for the -- I know that it could CATIA V5 plus CATIA V6. I was just wondering if in the customer mind it was something a decision which implies immigration in the near future from this CATIA V5 to V6 or it was totally independent in their mind.
Thibault de Tersant
Oh, it is independent. It is independent. It's a very good first step. I think it cannot hurt, it can only help. But for migration work, it's always a heavy duty work compared to a decision where you are simply serving your users and you don't need to care about any migration. So the pace is different as you can see.
With this, I want to thank you for participating to this Capital Markets Day. I hope that you are now going to have a good lunch and will leave from our campus with a better sense of what means 3DEXPERIENCE and the fact that we are already well advanced in delivering against this strategy. Thank you.
Just to remind you that some CATIA V6 simulation are available, as well our virtual reality room. And that for the one who came this morning by bus, the bus is leaving in exactly one hour at 2:30 and that we can certainly order a taxi for those who would like. Thank you very much again.
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