After acknowledging a "challenging" third quarter and cutting its full-year sales guidance, Dassault executives went on to voice optimism for 2010 and call the separation from IBM “a boon to customers.”
Oddly, executives at Siemens and PTC joined the cheerleading chorus by pronouncing the IBM deal a “leveling of the playing field” that would benefit the industry. Somehow, losing IBM as a channel partner is good news for both Dassault and its competitors.
Apparently, skeptics of the “great news” have all been transported to a parallel universe where independent critical analysis still exists, leaving only those analysts and writers behind that readily accept executive pronouncements at face value. I searched in vain for anyone who put these two announcements together. Surely, there must be some linkage between the rushed, last minute IBM announcement and the 37% decline in new license sales.
Dassault is paying IBM $600M to acquire between $450-$600M of annual revenue and approximately 700 IBM employees. Significantly, this marks the first time that Dassault Systems will take direct responsibility for selling any of their own software products. With this comes the responsibility to manage a large direct sales force. The opportunities for failure are huge, but completely unspoken by Dassault and unasked by analysts and the media. Rather than a win-win arrangement we have:
- The Winner. IBM dumps a loss making business that has been crushed by the economy, while also shedding highly paid personnel and overhead costs. A one-time gain of $600M ices their cake nicely.
- The Loser. Dassault Systemes, desperately makes omelets from broken eggs while struggling to rebuild and integrate a collapsing sales channel no longer able to dependably produce a third of its revenue.
Dassault and 700 individual IBM employees are going to have to decide whether they like each other or not. Given the unit’s recent sales performance and Dassault’s emphasis on cost reduction, many of these positions could be on the block. Severance costs could be considerable. Plus, how many dyed in the wool blue suits will eagerly leave their careers at IBM to join a French software developer?
Massive chaos in the ranks seems inevitable, and a culture clash of epic proportions certain, as IBM’s “take no prisoners” sales team moves into the headquarters of technology driven Dassault. Don’t forget, these IBM guys are the same ones that routinely go straight to the top to get anyone standing in their way fired. Direct sales teams can easily establish cultural dominance in large publicly held companies, as excellent sales execution is required to meet investor expectations.
One of Dassault’s strengths has been its ability to acquire and successfully manage the growth of companies such as Solidworks and Enovia. The key to their success has been the independent management of sales channels, allowing Dassault to remain neutral and avoid product / channel conflict. Companies such as PTC, Autodesk, and Siemens quickly absorb the sales operations of their acquisitions, resulting in sub-optimization of combinations.
How long before clashes
between product-aligned organizations, the new direct selling PLM headquarters
versus the Solidworks VAR channel, develop over which products should be sold
and who should get credit for them?
Will Solidworks become like Solid Edge at Siemens, an increasingly marginalized
stepchild of a foreign parent with better loved and better looking offspring?
Comments