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One of the talking points of the annual Nasscom show in
Mumbai this year was the emergence of engineering services as India's next
goldmine after IT services. The logical point that followed this debate was how
to exploit the synergies between the two. While behemoths such as Infosys and
TCS as well as engineering services specialists like Neilsoft and Tata
Technologies have been juggling the two for years, one often tends to overlook
the efforts of medium-sized companies who has perfectly married the two off,
while charting its path to success. Take the case of Mumbai based Geometric
Software.
The revenue of Rs 168 crore in 2004-05 recording a 58%
growth over its turnover of Rs 106 crore in 2003-04 is an ample testimony to
Geometric's claim. The company's MD Manu Parpia attributes this success to
the company's strategy to clearly demarcate its offerings-it consolidated
its product offerings into desktop and enterprise lines besides providing PLM
and engineering services. While products currently contribute 15% of the
revenues, Parpia expects the number to grow significantly; his optimism is
backed by the fact that the desktop product unit brought in record revenues, led
by the CamWorks/ProCAM series, whose revenues topped $1 mn in the quarter for
the first time. Besides, eDrawings and GeomCaliper also saw good sales enabling
the recently acquired Teksoft unit to launch its new role successfully.
| We can build a series of
applications enabling Geometric to position itself as a major player in
the interoperability space, which in turn will lead to revenue
opportunities in related services |
The Teksoft acquisition has indeed provided a boost to
Geometric's product business. While the two companies had a ten-year old
relation in developing and marketing CamWorks. Teksoft has now been given the
additional responsibility for Geometric's Desktop software products. It now
acts as the distributor for Geometric's Desktop software products and the
strategic marketing arm for Geometric technologies. It also enabled the
introduction of FabWorks, a new product to automate the programming of sheet
metal cutting machines. Says Parpia, “With this initiative, Geometric will
enable both companies to capitalize on synergies of a common business model.”
Adds Mike Coleman, CEO and president of Teksoft, “Our worldwide channel has
been expanded; service and support infrastructures have been strengthened.”
The Enterprise Trail
On the enterprise product front, Geometric has made significant progress on
the CAD-PDM interoperability enterprise product. Parpia sounds upbeat on this.
“We believe that the architecture we have deployed is extensible enabling us
to seek applications beyond the CAD-PDM integration. Indeed, if the architecture
is successful, then we can build a series of applications enabling Geometric to
position itself as a major player in the interoperability space, which in turn
will lead to revenue opportunities in related services.” As a first step
towards fulfilling Parpia's dream, Geometric has signed agreements with IBM
and UGS to distribute the product. It has also received commitments from two
large users to take this solution through a pilot phase.
Geometric has been deriving a chunk of its revenues from
two principal sources: Software OEMs and industrial customers. While software
OEMs accounted for 51% of the revenues, the company is consciously focusing on
building long-term relationships with its industrial customers over the past
couple of years. By 2007, industrial customers, which accounted for 39% of
revenues in FY 2005, is expected to be scaled-up to 50-55% (including
engineering services) by 2007. On the OEM front, Geometric extended eDrawings
support for all major CAD platforms. Key industrial customers were Volvo IT and
Modern Engineering besides IBM and Honeywell India.
| Geometric's IP is the reason
why the company is counted among the very best in the global PLM space |
The engineering design services (provided to both software
OEMs and partners), which is a relatively new initiative of the company has been
growing fast and contributed less than 5% to the revenues of the quarter. The
company has a target of $1.5 mn of revenues from this service in the current
fiscal. This business not only boosts the overall revenue growth, but also
contributes relatively higher to the margins as it runs on a two-shift basis.
However, Parpia readily agrees that in engineering services, Geometric needs to
augment its activities through an acquisition to achieve critical mass. The
accelerated growth of engineering services is vital to Geometric achieving its
$100 mn goal. In 2003, Geometric set up an engineering services center at
Bangalore to broaden its range of services and offering an end-to-end PLM
solution.
In fact, PLM takes the cake amongst the bouquet of
Geometric offerings, and financial analyst K Thiagarajan believes that it adds
the innovative edge for the company. The strategy of providing services
revolving around its intellectual property in the PLM space allowed Geometric to
differentiate itself from other players. So, while the company chose the path of
software services for growth, it never diluted its focus of creating IP in the
PLM space. Incidentally, Geometric was one of the first Indian companies to go
on the path of IP licensing when it licensed its geometry-based algorithms to
other companies for improving their CAD/CAM processes.
Geometric's IP is the reason why the company is counted
among the very best in the global PLM space. In 2001, for instance, Spatial
bought out Geometric's translation technology for over a million dollars. It
is a sound marketing strategy for Geometric, since the company knows it does not
have the resources to market the technology independently. Its PLM domain
expertise was also the reason why French PLM major Dassault decided to enter
into a JV with Geometric. Geometric has also invested considerable resources in
developing its feature recognition technology. This technology reduces design
and manufacturing cycles by enabling mechanical and manufacturing products to
automatically recognize features from any legacy 3D model. What's significant
here is that a company such as Dassault is marketing the latest version of its
product Catia saying that it has Geometric's feature recognition technology.
Rajneesh De
rajneeshd@cybermedia.co.in
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