PTC Makes Key Advance in Model-Based Systems Engineering With Atego Buy

G00266739

Analyst(s):

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Summary

The Atego acquisition adds systems engineering support to PTC’s comprehensive product life cycle management software portfolio. PTC customers adopting Atego should prioritize education and process and organizational change.

News Analysis

Event

On 16 June 2014, the product life cycle management (PLM) and application life cycle management vendor PTC announced that it has signed a definitive agreement to acquire the U.K.-based software company Atego for approximately $50 million in cash. Atego focuses on model-based systems and software engineering applications. The deal is scheduled to close during PTC's fiscal 4Q14.

Analysis

PTC and Atego customers will benefit from this deal. Atego's systems engineering capabilities will fill a key PTC software gap for PTC customers, who will now be able to map market requirements for successful products to product architecture in a disciplined, traceable way. For example, in diverse discrete manufacturing industries, engineers and designers use a combination of mechanical parts, electronics and enabling software to fulfill requirements of modern products. Atego helps these PTC customers decide which combinations of mechanical, electronics and software components best fulfill product needs, yet deliver variations of such products for different market segments. Atego customers benefit from PTC’s substantial resources and broader community of customers to enhance their new product development and PLM environment.

The PTC-Atego deal also reaffirms advice that Gartner has offered since 2008 that systems engineering must play a central role in next-generation product development (see "Expand Markets Yet Reduce Costs With Winning Product Portfolios" ). Systems engineering currently is the only viable means of defining the relationships between physical parts (mechanical and electronic components) and embedded software, and linking those with product requirements. Systems engineering is also necessary for enterprises building or enabling "things" that will be part of the emerging Internet-of-things world, since those things combine physical parts and software. Atego therefore has synergies with PTC's ThingWorx purchase during December 2013.

Over time, Atego will play a central role in orchestrating activities across PTC’s CAD and product data management tools for designing physical systems and its Integrity software for software development, which it acquired through MKS during 2011. Gartner estimates that PTC will not deliver such an integrated environment before 2016. Also, Atego does not fulfill all systems engineering needs. It provides system-level simulation of the behavior defined in its models, but links out to other simulation tools when users need more detailed simulation. Finally, customers adopting Atego will need to invest in education and change management to enable more systems-engineering-centric processes and practices.

Recommendations

PTC customers in discrete manufacturing industries:

  • Engineering managers should plan on investing in Atego as part of their new product development environment.

  • Leverage Atego's systems engineering expert consultants to help in education and change management.

  • Consider third parties such as Mathworks, Scilab or Maple to complement Atego with systems simulation.

Atego customers:

  • If you are responsible for IT strategy, investigate PTC's capabilities and resources for additional new product development and PLM opportunities.

  • If you already use non-PTC PLM offerings, continue with Atego as usual. But for IT planning, assume that Atego interfaces with your PLM software will not advance

  • If you are responsible for software procurement, anticipate changes in licensing terms and conditions at the next contract renewals by reviewing contracts and negotiating for the status quo.

Other discrete manufacturers:

  • If you plan to invest in systems-centric new product development and PLM capabilities, consider the PTC-Atego combination.

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