EDS Product Life-Cycle Management Unit Sold

Computerworld - Users of UGS PLM Solutions software can expect to see the company partner with more global systems integrators and service providers, a UGS official said last week in the wake of its sale by parent Electronic Data Systems Corp.

The sale is also unlikely to cause any disruptions for customers of UGS's product life-cycle management software, the executive added.

EDS last week announced the sale of its UGS PLM subsidiary to three private equity firms in a transaction valued at $2.05 billion. Under the deal, Bain Capital LLC in Boston, Silver Lake Partners LLC in Menlo Park, Calif., and Warburg Pincus LLC in New York will each hold an equal investment in UGS.

Being cut loose from EDS will allow UGS PLM to attract more services partners that might otherwise have stayed away, said Robert M. Nierman, executive vice president of business strategy at UGS.

"Being part of EDS made it difficult for us to entertain serious discussion about global partnerships," he said. "This opens the door for stronger partnerships, though EDS will remain a key partner for us."

Being independent will give UGS the "ability to act more like a software company" instead of the more services-led business it had become as an EDS subsidiary, said Ed Miller, an analyst at CIMdata Inc. in Ann Arbor, Mich.

"In the near term, they need to reinforce to their customers that their direction is consistent with what they have been saying" prior to the sale, Miller said. The UGS business, with nearly $900 million in revenue, was a profitable one for EDS. But it will need to work on raising its market visibility after having a relatively low profile as an EDS unit, Miller added.

"Everyone we have talked to from the EDS side has assured us that this is going to be completely transparent," said John Loo, senior manager of technical computing at a California-based sporting goods company that is a longtime user of UGS PLM products. Loo requested that his company not be named.

EDS's sale of its UGS PLM subsidiary comes at a time when the PLM industry looks poised to grow, said Andrew Balson, managing director at Bain Capital. After years of slow growth, the market for product life-cycle management software has reached an "inflection point," Balson said.

"We think the technology today is mature enough and the customers are mature enough that we are going to see very significant growth," he said.

PLM Portfolio

UGS PLM sells the following products: Teamcenter: Core PLM suite Unigraphics NX: 3-D product engineering software I-deas: Integrated CAD/CAM/CAE product E-factory: Preproduction information management

Read more about software in Computerworld's Software Knowledge Center.