March 23, 2009
V-Shaped Recession Predicted for Technical Software
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Jeff Rowe - Managing Editor

by Jeff Rowe - Contributing Editor
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Research from engineering and enterprise IT applications market research and analysis firm, Cambashi, predicts future growth in global expenditure on software for technical applications. Spending on technical applications software includes AEC (architecture, engineering & construction), geospatial (GIS) and manufacturing (CAD/CAM/CAE and PDM/PLM) applications.

Using the latest economic data, Cambashi has processed its Country Observatory models to show the demand for technical applications software is set for a marked increase following the predicted slump in 2009.

To focus on underlying demand, Cambashi selected local currency information from its Country Observatory to avoid the distortions introduced by currency exchange rate fluctuations. This provides a fair indicator of relative growth as many contracts are honoured in local currencies.

Christine Easterfield, principal consultant at Cambashi, stated, “Despite the general decline in demand for technical applications software, there are still areas with potential. For example, when ranked in order of growth, four of the top ten countries are from the emerging nations of South America with China and India maintaining a strong position. But overall, the figures show the battle for market share will be more difficult over the next 12 to 18 months.”

With government support in Europe and the USA for major infrastructure programs, for example, renewable energy programs, the prospect for growth in this market space is also considered to be good.

These results come from Cambashi’s latest version of the Cambashi Country Observatory which contains estimates of market size and growth for over 50 countries worldwide.

This is the first in a series of market observations from the team at Cambashi that combine to give a worldwide view of the status of the technical applications software market by region at this challenging time.

For further information:

Commentary By Jeffrey Rowe, Editor

By now, virtually everyone I know has been adversely affected by the current state of our economy, so the Cambashi report and its observations really should come as no surprise to anybody. Although more information may be disclosed, the first installment doesn’t really discuss the bottom or breadth of the V-shaped trough that represents current and future technical software purchases. In other words, like other segments of the economy, no one can really accurately predict how low sales will go and how long they will remain low before rebounding.

I see the current and foreseeable future of technical software as an opportunity for a few technical software markets:
  • Lower-cost (mid-range) or even free software
  • Open source software (relatively small potatoes now, but has interesting implications and a promising future)
  • New versions of software with significant upgrades that appeal to larger groups of prospective customers
  • Upgraded software that is more stable and reliable
  • Most of these points involve actually spending money for software, but I’m hearing from more companies and vendors that a lot of users will just make do with what they have for at least this year. This slowdown is very visible in the recent earnings of several CAx vendors, and the fact that very few of them are hiring anyone in any capacity at any level. Some vendors have already made modest cuts, but much bigger ones are in the near future if revenues continue to fall.

    On the customer/user side, it’s all about making the correct technical software choices for maintaining competitiveness. In the United States, from various statistics I’ve tracked from various sources, I estimate that manufacturing accounts for approximately 20 percent of our economy, over 60 percent of our exports, and probably over half of our total R&D expenditures. While these are impressive numbers, are they enough to maintain our position as an innovator in manufacturing practices on the world stage? That’s a debatable and critical question we must ask ourselves in today’s increasingly competitive manufacturing environment.

    All manufacturing companies are mindful that they must equip their workforces with tools for solving problems with innovative solutions. These same companies must constantly respond to regional and global trends in product demand and adjust their product development processes accordingly. On top of all this, manufacturers must be aware of what’s going on in the many links that comprise the supply chain, as well as overall business practices and the business climate, the state of education for attracting future workers, and domestic and foreign government policies. This lengthy list just seems to get bigger as time goes on, further complicating an already complicated tangle of

    Today there are obvious indicators that show overall spending is increasingly falling for computer software and hardware because many manufacturers do not believe spending right now will promote immediate technology-induced gains in productivity and profitability. I believe that this thought process goes counter to getting out of the current economic hole, but more about that later.

    The price/performance ratio of technical software technologies has increased dramatically in the past few years when compared with the bigger corporate IT world. However, IT specific to design, engineering, and manufacturing, CAx tools, have made greater strides in terms of capabilities. At the same time it has also tried to overcome the misconception that it is too expensive, difficult to learn and use, and may not integrate well with existing systems and processes. Like corporate hardware and software, for CAx tools it is almost as important to what not to base a purchasing decision on as it is what to actually base the decision on.

    So what do you base CAM purchasing and implementation decisions on? Certainly not hype or emotion – especially now.

    As the design and manufacturing environment becomes increasingly competitive, it becomes more important and more complex than ever to make the right choices for the technical software tools that literally run an innovative product development process.

    The thing I want to leave you with is the fact that virtually all of us (software vendor or end user/customer) should continually re-educate and reinvent ourselves in good times. During times like we are experiencing now, it is essential if we are to survive and innovate another day. Of course, reinvention requires sacrifice and investment, yes, investment, as hard as that may be to swallow right now. No company that I am aware of ever cost-cut its way to greatness, and the current state of the American car companies are perfect examples of this. Innovation comes from investment, ideas, and commitment to both. Granted, technical (including MCAD) software may be a relatively small
    part of the bigger economic picture, but is a vital aspect of future innovation.

    We believe that the current state of affairs and its future implications toward the development and use of CAx tools are so important that we will frequently revisit this topic over the coming months with an eye toward a positive outlook and outcome.

    EDITOR’S NOTE: In the next edition of MCADCafe Weekly (to be published April 6, 2009), we will feature as our focal point a detailed review of Adobe Photoshop CS4 Extended. The review will show that that the software is very capable and comprehensive for some interesting engineering applications that include 3D image editing and advanced image analysis.

    The Week’s Top 5

    At MCADCafé we track many things, including the stories that have attracted the most interest from our subscribers. Below are the five news items that were the most viewed during last week.

    Autodesk named ADEPT Airmotive, a South Africa-based manufacturer of general aviation engines for the light aircraft market, the Autodesk Inventor of the Year for 2008. ADEPT used Autodesk Inventor software to develop the 320T, a 320-horsepower general aviation engine with a compact design that offers low vibration levels and high structural integrity. The 350-pound engine is more than 130 pounds lighter than a traditional piston engine of comparable horsepower, allowing the 320T to reap fuel savings of about 30 percent and decrease environmental impact. Inventor software's capabilities helped ADEPT produce accurate 3D models of the 320T before anything was actually built, reducing the
    number of physical prototypes that needed to be constructed. ADEPT Airmotive's core activities are the design, development and manufacture of a range of general aviation engines for the light aircraft market.

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    -- Jeff Rowe, Contributing Editor.

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