Dassault Systèmes: How to Achieve Sustainable Growth in a VUCA World?
On June 9th and 10th, 2021, the annual Industry Analyst Meeting of Dassault Systèmes was held as scheduled. It was the second year for the event to take place virtually. Dr. Pei Huang, CEO of e-works, and Yang Wang, e-works analyst, participated in the meeting and heard Dassault Systèmes’ top management team to share their latest development on strategic visions, operation performance and portfolios.
From left to right: Florence Verzelen, Executive Vice President, Industry, Marketing, and Sustainability; Bernard Charlès, Vice-Chairman & Chief Executive Officer; Pascal Daloz, Chief Operating Officer & Chief Financial Officer
Sustainability of Development Strategy
In FY 2020, Dassault Systèmes' IFRS total revenue increased by 12% to 4.5 billion euros, and software revenue grew 14%. Bernard Charlès, Dassault Systèmes’ Vice Chairman and CEO commented, “During this unprecedented period, we have revealed the critical importance of collaborative innovation across the three sectors we serve as a strategic partner in value creation. Through close engagement, we have helped our clients to manage and reinvent their operations during the pandemic – especially for businesses in the manufacturing industries. At the same moment, our collaborative innovation platform has also enabled our clients to prepare for the future and advance their next generation portfolios for sustainable innovation."
Bernard Charlès, Vice Chairman and CEO, Dassault Systèmes'
It is noteworthy that many clinical trials of COVID-19 drugs and vaccines are run on a Medidata platform, which had a triple-digit growth in the past year. We still remembered two years ago in 2019, Dassault Systèmes acquired Medidata for US$ 5.8 billion, making it the largest acquisition in its history. Within a year after the acquisition, Medidata began to come into play during the COVID-19 pandemic and became a crucial component in response to the pandemic.
The capacity to cope with VUCA (volatility, uncertainty, complexity, ambiguity) is the key to Dassault Systèmes' sustainable development. COVID-19 pandemic, from another point of view, has provided Dassault Systèmes with the good chance to validate their products and solutions. For example, BIOVIA helped expedite the identification of new drug candidates; SIMULIA was used to simulate the virus transmission in the ventilation system to prevent further spread; Medidata facilitated the trials of COVID-19 drugs and vaccines. In addition, the 3DEXPERIENCE Edu platform allowed engineers to learn in virtual classes, while the 3DEXPERIENCE Lab helped the cultivation and authorization of disruptive innovation projects.
Dassault Systèmes’ identity continues to evolve
In 2012, Dassault Systèmes launched the 3DEXPERIENCE platform, transforming into a technology company dedicated to 3D experience. In 2020, Dassault Systèmes made life sciences and healthcare the focus of its transformation. The shifts marked two milestones in the development of Dassault Systèmes, and also a significant manifestation of its sustainable development strategy.
Commitment to Sustainability of Environment
In 2020, Dassault Systèmes actively pursued sustainable development and joined the Global Enabling Sustainability Initiative (GeSI), a global organization focused on enabling digital sustainability. Florence Verzelen, Executive Vice President in charge of Marketing and Global Affairs, believes that becoming a member of GeSI means that Dassault Systèmes is seeking to achieve social and environmental sustainability through technology.
Dassault Systèmes launched “The Only Progress is Human” that same year, which is a global initiative to increase awareness of today's societal and environmental challenges, and to inspire people to use the virtual world to imagine sustainable innovations for a better future. During a two-year period, Dassault Systèmes engages with the public through 10 “Acts” that focus on some of the most pressing issues humanity faces in health, cities, energy, water and other areas. These acts illustrate how virtual twin experiences empower people to address challenges and drive progress by re-imagining the future and changing the way products are designed and made.
Cases of Dassault Systèmes supporting customers to achieve sustainable development
In respect of carbon emission, Dassault Systèmes is actively engaged in the emissions reduction targets. With its simulation and digital twin technologies, Dassault Systèmes changes the current working mode, making companies smarter in R&D, manufacturing and operations, and assisting industries such as new energy vehicles, solar spacecraft, wind power generation, plastic packaging, infrastructure and construction to reduce carbon emissions.
In respect of water resource, through “Water for Life”, Dassault Systèmes drives the 3DEXPERIENCE platform as an accelerator for measuring and optimizing the water footprint of businesses by providing customers with integrated industry solutions that deliver data on the water consumption associated with the experience they are creating and the impacts of various design options. It also nurtures educational programs to increase awareness of major water-related issues and inspire future generations to conserve this key resource.
In respect of construction, Dassault Systèmes and Bouygues Construction Group reinforce their partnership. With the 3DEXPERIENCE platform on the cloud, Bouygues Construction can take a systemic approach to project management that integrates virtual twin experiences across the value chain. This partnership helps Dassault Systèmes to generalize the use of virtual twins in the building segment through its “Integrated Built Environment” and “Creative Building Design” industry solution experiences.
Sustainability of Products and Technologies
Dassault Systèmes attaches great importance to R&D investment. According to the financial report，Dassault Systèmes’ R&D personnel increased by 7.7% in 2020, accounting for 41% of its total employees. In 2020, its R&D investment reached 935 million euros, accounting for more than 20% of the total revenue, with a year-on-year growth of 26.8%, which also exceeded the growth rate of the total revenue.
Dassault Systèmes makes several mergers and acquisitions every year to maintain the sustainable evolution of products and technologies. In the past year, Dassault Systèmes has successively acquired companies such as NuoDB, AVSimulation, and Proxem.
Latest acquisitions of Dassault Systèmes
Founded in 2010 and headquartered in Cambridge, Massachusetts, NuoDB provides a cloud-native distributed SQL database. One of the objectives with the 3DEXPERIENCE platform on the cloud is to deliver the most scalable and resilient infrastructure for the industries and clients, and NuoDB’s SQL database that’s well adapted for native cloud environment can provide further technical support for 3DEXPERIENCE.
Proxem is a France-based specialist in artificial intelligence-powered semantic processing software and services, and provider of customer experience analysis solutions. The acquisition of Proxem is a key step in Dassault's AI strategic layout, which can enhance collaborative data science capabilities on the 3DEXPERIENCE platform. Dassault Systèmes has integrated Proxem’s main software, Proxem Studio, into the 3DEXPERIENCE platform to complement NETVIBES EXALEAD information intelligence applications.
Founded in 2017, AVSimulation is a joint venture between Oktal Sydac, Renault and Dassault Systèmes leveraging 25 years of experience in simulation and deep automotive domain knowledge. Dassault Systèmes acquired a 15% stake in AVSimulation. AVSimulation provides end-to-end simulation solutions from software such as SCANeR to ground breaking simulators – for advanced and autonomous vehicles prototyping, development, validation and AI training.
These three companies are not traditional PLM providers, but they will reinforce Dassault Systèmes’ capabilities in cloud computing, artificial intelligence, and autonomous driving, and enable Dassault Systèmes to maintain sustainability of products and technologies in the future market competition.
Sustainability of Market Growth
Dassault Systèmes mainly focuses on three sectors: Life sciences and healthcare, infrastructure and cities, and manufacturing industries. At this year's meeting, Dassault Systèmes proposed a development plan for 2020-2025, giving prospects of these three sectors.
Revenue Growth Perspectives of the Dassault Systèmes’ three major sectors in the next five years
First, Dassault Systèmes put forward a double-digit growth goal, much higher than the market compound annual growth rate of 6% in the next 5 years.
Second, manufacturing still holds the largest part for as much as 70%revenue of Dassault Systèmes. However, the growth rate of manufacturing industries is expected to be 6-8%, which is slightly lower than life sciences and healthcare, infrastructure and cities.
In the future, life sciences and healthcare will be the key field of Dassault Systèmes, including drug discovery, vaccine research, clinical trials, pharmaceutical manufacturing and patient healthcare. Especially during the COVID-19 epidemic, Dassault Systèmes technologies were applied to various scenarios such as hospital construction, virus transmission and mechanism research, and virtual drug screening. Bernard Charlès said it will open a new era for Dassault Systèmes.
When Dassault Systèmes proposed the 3DEXPERIENCE strategy, its revenue was approximately 3.2 billion euros, and now it has grown to 4.5 billion euros. Pascal Daloz pointed out that in the era of "Virtual Twin Experience of Humans", Dassault Systèmes is expected to reach 10 billion euros. And manufacturing industries will account for 50%, life sciences and healthcare 20%, infrastructure and cities 30%.
In the fast-changing market, Dassault Systèmes has maintained its strategic focus and a rapid growth. By providing digital transformation tools and platforms for manufacturing, construction, retail, life sciences and other industries, Dassault Systèmes has committed to advancing its mission of harmonizing product, nature and life. Based on its clear understanding of the capacity and trends of the target market, we have reason to believe that Dassault Systèmes will achieve a sustainable growth together with its customers in this VUCA world!