UGS and Siemens — Take 2

I had a few minutes to catch up with UGS on Friday to find out more about the Siemens acquisition (and its impact on their Spend Management related products). And here's what I discovered. To start, all UGS products and services will continue to be offered (including Team Center Supplier Relationship Management). And the current plan is to keep the UGS brand and all of the associated product brands. This sounds smart to be as most design engineers are as loyal to their CAD / PLM provider as most Golden Retrievers are to their master. Sure, they'll bark on occasion, but they'll never leave their providers.

Regarding the SRM module, I did not find out anything new, other than that it will continue to be supported and developed. Given UGS' strong position in the design world, I suspect we'll begin to see additional engineering linkages with the sourcing and supplier management capabilities of the suite. But I did not hear anything specific during these discussions on this topic.

In my view, building out these linkages is a golden opportunity for UGS. It might even allow them to begin to take the high ground for direct materials sourcing, a technology area which so far has been dominated by the more traditional sourcing and procurement providers. With Siemens, the opportunities to extend these linkages all the way from design to the factory floor are fascinating (but more on that in a later post).

Overall, UGS believes that the acquisition will accelerate R&D funding across their portfolio of products. The uber vision here is to become the first integrated software / hardware provider in the manufacturing market (don't think laptops and PCs -- think machining equipment and factory floor controls and systems). Bridging the physical and virtual worlds with an open architecture approach is a major element of this plan.

The UGS management team members all have long-term commitments to Siemens as part of the transaction. And interestingly, before the deal was announced, UGS assured me that they were not "being shopped" by their investors. Rather, they saw a natural and highly strategic fit with Siemens. The deal still needs to pass anti-trust muster in the US and Europe -- and neither firm has publicly indicated an anticipated close date -- but I reckon we'll see UGS under the Siemens umbrella by the fall (if not earlier).

Jason Busch

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