The Dassault Systemes Success Story – Part 6Featured, Interviews Saturday, November 27th, 2010
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In early 1981, Dassault Aviation took the decision to diversify into the CAD/CAM technologies and solutions. This was quite exceptional in an enterprise which had kept a SME culture despite its size and its strategic role in the French defense.
We had the technical knowledge and we had the initial version 0 of CATIA, including 5 integrated products: 3D Shape Design (curves, surfaces, solids), 3D Kinematics, Analysis (surface, volume), Multi-axis NC machining and a CADAM-CATIA data transfer interface that allowed generation of a drawing in CADAM from section curves generated in CATIA. But we had absolutely no knowledge, no experience and no organization to sell and to support our solution.
We knew that the competition would come mainly from USA. There was a huge domestic market in a very dynamic industry, at least ten times more important that our French market. A few CAD/CAM vendors has already established themselves. To name the most successful: CADAM (a spin-off of Lockheed Aircraft, with its impressive Drafting product that we used at Dassault Aviation as a 2D add-on to CATIA), Computer Vision, CALMA (a spin-off of McDonnell Douglas Aircraft) and APPLICON. These vendors had hundreds of employees and hundreds of customers mostly in USA but also in Europe and Asia. And we were just 25 in my team, with only one captive customer – Dassault Aviation. Not many knew Dassault outside France, except maybe in the aerospace community.
Here again, I was lucky to be at the right place, at the right time. Dassault Aviation was one of the biggest French clients of IBM. Perhaps the biggest in the scientific and technical domain. In the early 80’s, IBM was by far the worldwide leader in the computer industry, with more than 80% of the market share. It was the great period of the mainframe computers. There was no PC. No Microsoft. Also, in 1977, IBM had signed a worldwide distribution agreement with CADAM Inc. to sell CADAM together with its mainframe computers and graphic terminals. As a matter of fact, for IBM, CADAM was an excellent catalyst to generate significant hardware revenue, because the software ran only on the IBM platform.
It so happens that I had a good relationship with our IBM salesman, a very dynamic personality. And I proposed to him a similar deal between IBM and Dassault, where IBM would sell our software worldwide, together with its hardware. The IBM software portfolio would include CADAM for 2D applications and CATIA for 3D applications, with a relatively good level of integration, as long as CATIA included a CADAM-CATIA data transfer interface.
For Dassault, such a deal was mandatory. We could not go to the market without a sales force. We needed worldwide coverage to compete against the American competition. And we didn’t know how to sell and support a software product. Getting the skills and experience by ourselves and building the appropriate worldwide organization would take too much time to survive. This was a mistake which was made by our French competitor at that time called Matra Datavision. Also, the IBM brand name added significant credibility to our offering. It was like Coca Cola in the IT industry.
My French IBM friend took on the challenge. At that time, all of IBM decisions were negotiated at the level of its headquarters in the USA. So, he flew to New York and got in touch with all the concerned IBM executives. He did a really good job as a salesman, this time not to sell a piece of hardware to a customer, but to sell a French software opportunity to the IBM American Company. He succeeded in generating some interest and IBM executives flew to Paris to negotiate the deal with Dassault. Charles Edelstenne, CFO of Dassault Aviation, leds the negotiation which would end successfully with a worldwide IBM-Dassault agreement that was signed in July 1981. It was a non-exclusive, 50/50 revenue share agreement where CATIA would be sold by IBM as an IBM product. This deal has been extremely successful for both companies. It has been one of the fundamental drivers of the Dassault Systemes success story. And it lasted for nearly 30 years, ending smoothly without any crisis when Dassault Systemes acquired the IBM Sales force dedicated to its solution at the end of 2009.
In 1981, the value of such agreement was not so well perceived. I remember the French authorities asking me why I was making an alliance with an American company and some American executives questioning if it was appropriate for IBM to make a deal with a semi-communist country. As a matter of fact, there were a few communist ministers in the French government of that time.
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