Commentary: MCAD/MCAE Industry View - A September 2011 Update
by Dr. Russ Henke
Approaching 50? Years of age? Hardly! Your writer wishes! Been there, done that. A Golden Wedding Anniversary? Now that’s still possible, but not for awhile. Years since his first college degree? Getting warmer!
But this article in not about your writer, although there are several inter-connections. Rather, it’s about 2013 and the year the MCAE Company now named MSC.Sofware turns 50 years of age.
Yes, the very same structural analysis software vendor that the writer has included in his quarterly MCAD/MCAE Commentaries since those electronic postings began in 2003 on IBSystems’ MCADCafe.com. Yes, that MSC, known in the 60’s as the MacNeal Schwendler Corporation, the company that developed NASTRAN, the analysis software that underpinned the first US landing on the Moon in 1969, as well as countless automotive and aerospace vehicles ever since.
Not only that, MSC has recently been identified as one of the first ten software companies ever! See this article from Maximum PC, 4000 Shoreline Ct. Suite 400, South San Francisco, CA 94080:
Where It All Began: The 10 Original Software Companies
Posted 06/28/2011 at 12:47 PM | by Gord Goble
Earlier, the writer mentioned MSC connections. Well, MSC/NASTRAN was one of the very first structural analysis software codes licensed by SDRC when the writer first formed the SDRC Computer Operations consulting and software development business of the then-tiny SDRC enterprise in 1970 (ANSYS was the other licensed code). While SDRC subsequently developed many of its own commercially-successful software suites in the 70’s and 80’s, both MSC/NASTRAN and ANSYS remained at the center of SDRC’s renowned CAE consulting business with top automobile, aerospace, construction equipment, farm equipment , machine tools, etc., suppliers for decades.
Dr. Henke speaking at an SDRC
Executive Seminar in the 70’s
SDRC is now part of Siemens PLM Software, within the Siemens Industry Automation Division.
Later, your writer served on the MSC Board of Directors in 1995-96,
while founder Richard H. MacNeal was still the CEO. MacNeal's career spanned state-of-the art advances in numerous technologies, including digital and analog computing techniques; the dynamics of airplanes, helicopters, spacecraft, and missiles; and structural analysis. MacNeal developed most of the mathematical techniques and procedures for structural analysis that are basic to the capabilities of the NASTRAN computer program—one of the leading programs on the market in the area of computational solid mechanics. For his work on NASTRAN, MacNeal received a Certification of Recognition from the National Aeronautics and Space Administration in 1974.
Dr. Henke addressing the
MSC BOD in the 90’s
In June of 1996, your writer became a business consultant to Richard MacNeal’s successor Tom Curry for about a year, before leaving to pursue other consulting clients. Dr. MacNeal retired from MSC in early 1997.
More Recent Developments
By the time 2008 and 2009 rolled around, the then-current MSC.Software management found company revenues dwindling, with profits disappearing along with many of its customers.
The MSC Board put the company up for sale.
To cut to the heart of the matter, on July 07, 2009 the BOD of MSC.Software announced that it had entered into a definitive agreement with affiliates of Symphony Technology Group (STG) under which a company controlled by STG would acquire all of MSC's outstanding shares in a one-step cash merger transaction. This acquisition of MSC.Software by STG was finally consummated on October 14, 2009.
Soon a new CEO was named, industry veteran Dominic Gallello, who had been in discussions with the MSC BOD before STG entered the picture.
Dominic Gallello is an established leader who brought to MSC a deep background in design software. Early in his career, he spent 11 years at Intergraph, leading that company's businesses in both China and Japan. Following his time with Intergraph, Gallello spent 10 years at Autodesk, serving as EVP Asia/Pacific, establishing and running the high growth Mechanical Division and later served as EVP for all design and engineering related products. Throughout his career, Gallello has established a track record of building great products, driving an intense customer focus and building global brands. Dominic holds both BA and MBA degrees from Monmouth University.
As a telling anecdote of the kind of respect Dominic has for his predecessors, a few months after he became CEO himself, Dominic sought out Dick MacNeal in early 2010, and made a brief video on February 18, 2010 with Dick for the benefit of current MSC personnel, most of whom had never met their company’s founder. This 13-minute video interview may be seen and heard at:
MCAD/MCAE Commentary Coverage after MSC privatization
While the MCAD/MCAE Commentary was no longer privy to the financials of this now-private company after October 2009, we continued to watch the progress of MSC from afar and published news stories and covered personnel additions each quarter about MSC, not only out of interest in the personal career of Mr. Gallello, but also because we have confidence that one day MSC will again emerge as a public company.
A few weeks ago, the writer was invited to MSC in Costa Mesa, CA to attend its upcoming MSC Software Users Conference on October 4-6, 2011. The writer responded favorably to the invitation, as Conference attendance would have afforded him a chance to get updated on MSC’s turnaround progress and also to meet face-to-face with his old acquaintance Dominic Gallello again. Alas, scheduling conflicts will preclude the writer’s attendance at the User’s Conference, so he arranged instead for a telephone interview with Dominic, to which Dominic readily agreed despite Dominic’s hectic schedule. The gist of that very recent telephone interview follows.
Telephonic Interview August 26, 2011
EDA WEEKLY: Thanks very much for taking the time for this interview. To get underway, what were the circumstances that led you to join MSC.Software back in 2009?
MR. GALLELLO: I was already being recruited in the spring of 2009 for the MSC.Software leadership position by the then-current Board of MSC, after the previous management team had departed. The folks from the Symphony Technology Group (STG) had not yet become involved. Once STG entered the loop, mutual interest again quickly materialized. As you well know, Russ, design software is an avocation for me, so MSC was and is a great fit.
EDA WEEKLY: I am certain that you soon developed a formal Business Plan. What was and is the time horizon for most of the Business Plan’s goals?
MR. GALLELLO: Yes indeed. Three years, one year very detailed. Especially important: we’re putting together three-year MSC software product roadmaps. We now share them with our users and they in turn share their methods development roadmaps with us. The synergy is great!
TO THE READER: The writer is sure you understand the pattern here; EDA WEEKLY’s questions are in black font; Mr. GALLELLO’s responses are in red font. The words are as close to actual as memory serves.
How are you doing vs. the main goals of the MSC Business Plan? Are you on track? Yes! Growing Revenue? Yes! Signing up new customers? Many! “New Logos” is a mantra for us. Profitable? Yes! We are constantly driving down G&A; reduced it by 50% so far. We are re-directing spending onto things that really matter to customers.
Are you able to get back customers who dropped MSC in the past, especially aerospace and automotive companies? Yes! We established a comprehensive program called, “Rediscover MSC,” for customers with whom we had lost touch. This plan calls for highly technical engagements and fortunately we have enjoyed a high success rate of bringing companies back to MSC.
Are there other examples of major goals you have reached or exceeded? Dominic responded, “Well, you may recall that regardless of the particular company I served at the moment, I have always believed in executing a rigorous Customer Survey, one that truly discovers the actual state of affairs resulting from the use of that company’s products ... a survey that we would drive hard and insist on in-depth, well-thought-out responses from customers, both current and former customers. We at MSC recently completed such an arduous survey that involved the entire MSC team.” The carefully-crafted questions were posed in eight (8) different languages. In place of a possible temptation to prepare a set of bland, non-committal answers to issues and concerns raised by customers in their survey responses, Dominic insisted on delivering personal, tailored responses himself to over 300 key accounts. Many of these customers were amazed to hear directly from the CEO, let alone being provided with real, detailed MSC commitments. “This is the new MSC -- intense customer focus,” says Dominic. Any major disappointments so far? “I just always want to go faster to deliver what customers expect from MSC,” says Dominic.
About 12 months after you started at MSC, I ran a short piece in an MCAD/MCAE Commentary on the number of new faces there were in MSC management; I counted 12, including yourself. Of these, how many were existing MSC folks, how many new (i.e. from outside)?? Of the new folks, how many were completely new to the industry?
It is a mix of the existing team and a greatly expanded team of new technical managers and engineers that can deliver what customers expect, and most importantly, “What they don’t expect but will appreciate.” The number of PhD’s and post docs that we have added in the past year is an order of magnitude more than we had done in the prior 4 years. They are bringing research for tomorrow’s simulation behaviors.
As CEO, how to you assess MSC progress vs. goals? Externally? Internally?
Both; I oversee it all; it uses many hours of hard work, and a very connected management team with modern communications to stay in touch, especially when I am out of town. I try to be constantly in front of customers worldwide. For example, I visited over twenty automotive & aerospace OEMs in my first year at MSC to better understand where we needed to take MSC.
So far, what are some areas of change you’re most pleased about?
1. We focused on existing products, not new ones. The one exception is the XFlow CFD product that we brought to market through a partnership; MSC’s first entry in CFD. 2. Three Year Product Road Maps. 3. Product Releases back to a 9 month cycle; before, it had been almost 2 years since a major s/w update. 4. Restoration of aero and auto customers. 5. Restored rigorous Beta testing. 6. New Innovation – stay tuned! Most disappointed? None mentioned.
What message(s) do you want to transmit to your industry, users and prospects as a result of this article?
MSC – RELOADED! Intense customer focus to deliver a very broad range of real world behaviors in simulation. Markets - Aero and auto, and the related supply chain; plus, targeted non-transporation markets.
MSC is one of the first 10 OEM’s and software companies ever, per MaximumPC.com Magazine. MSC is not just a special company in simulation software, it is a very special company in the computer industry.
About the Writer:
Since 1996, Dr. Russ Henke has been active as president of HENKE ASSOCIATES, a San Francisco Bay Area high-tech business & management consulting firm. The number of client companies served by Henke Associates during those years now numbers close to fifty. Engagement lengths have varied from a few weeks up to ten years and beyond.
During his previous corporate career, Henke operated sequentially on "both sides" of MCAE/MCAD and EDA, as a user and as a vendor. He's a veteran corporate executive from Cincinnati Milacron (Research Scientist), SDRC (President & COO), Schlumberger Applicon (Executive VP), Gould Electronics (President & General Manager), ATP (Chairman and CEO), and Mentor Graphics (VP & General Manager).
Henke is a Fellow of the Society of Manufacturing Engineers (SME) and served on the SME International Board of Directors. Henke was also a board member of SDRC, PDA, ATP, and the MacNeal Schwendler Corporation, and he currently serves on the board of Stottler Henke Associates, Inc.
Henke is also a member of the IEEE and a Life Fellow of ASME International. In April 2006, Dr. Henke received the 2006 Lifetime Achievement Award from the CAD Society, presented by CAD Society president Jeff Rowe at COFES2006 in Scottsdale, AZ. In February 2007, Henke became affiliated with Cyon Research's select group of experts on business and technology issues as a Senior Analyst. This Cyon Research connection aids and supplements Henke's ongoing, independent consulting practice (HENKE ASSOCIATES). Dr. Henke is also a contributing editor of the EDACafé EDA WEEKLY, and he has published EDA WEEKLY articles every four weeks since November 2009; URL's available.
Since May 2003 HENKE ASSOCIATES has also published a total of ninety-eight (98) independent COMMENTARY articles on MCAD, PLM, EDA and Electronics IP on IBSystems' MCADCafé and EDACafé.
Further information on HENKE ASSOCIATES, and URL's for past Commentaries, are available at http://www.henkeassociates.net.
March 31, 2011 marked the 15th Anniversary of the founding of HENKE ASSOCIATES.