IBM Sells PLM Operations - Analyst Blog

International Business Machines Corp. (IBM) announced the completion of the sale of its sales and client support operations to Dassault Systèmes (DS), a leading provider of 3D software and Product Lifecycle Management (PLM) solutions. The acquisition will fetch IBM approximately $600 million, including customer contracts and related assets.

Under the agreement, Dassault acquired IBM’s PLM software application portfolio as well as customer contracts and related assets. IBM’s PLM sales and client support operations will be integrated with Dassault’s PLM software application portfolio. The agreement was earlier entered in October 2009 and was expected to be completed by the first half of 2010.

With this strategic partnership, IBM will significantly expand its 25-year relationship with Dassult. Moreover, the integration of IBM’s PLM sales operations into Dassault’s business will encourage growth, improve customer service and expand channel efficiency.

IBM and Dassault plan to initiate a Global Alliance partnership, under which both IBM and DS will continue to jointly invest in developing, deploying and supporting client PLM environments and delivering solutions to their clients worldwide.

Through this integration, IBM plans to focus on its PLM infrastructure leveraging IBM's middleware offerings with Websphere (SOA), Information Management (DB2), Tivoli, Rational, Lotus Domino and Sametime.

IBM also plans to establish DS as an IBM Global Alliance Partner and expand their services partnership. To expand its PLM products, IBM has earlier entered into various partnerships with MSC Software, ProStep, Par Technology Corp. (PTC) and Siemens (SI).

Al Bunshaft, formerly global Vice President of IBM’s PLM division, has been appointed as the managing director of Dassault Systèmes’ America organization.

IBM is one of the leaders in PLM solutions in terms of both revenue and services offered. However, the company has been focusing on its core competency for quite a long time, which has helped drive margins and serve customers better.

Thus, the company planned to exit the PLM sales and client support operations. Although this will lead to some revenue loss, we feel positive about the impact on margins. We believe IBM’s strong growth reflects the shift in its corporate philosophy to offering higher value, productivity initiatives that provide longer-term benefits, as well as its transformation to a globally integrated enterprise.

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