Manufacturers face constant pressure to develop new and innovative products and bring them to market faster than ever. Recent research has shown that 25-30% of revenues by manufacturing companies come from products that have been on the market for less than five years. Best-in-class companies are those that are able to introduce innovative products while meeting time-to-market, production cost, revenue, and quality targets around 80-100% of the time. One of the primary differentiators of these companies is that they most often use collaborative Product Lifecycle Management (PLM) tools across multiple domains of the product lifecycle.

The worldwide market for PLM software and services is expected to grow at a compounded annual growth rate (CAGR) of 14.5% over the next five years. The market was $7.5 billion in 2006 and is forecasted to be over $14.6 billion in 2011, according to ARC Advisory Group's "Product Lifecycle Management Solutions Worldwide Outlook Market Analysis and Forecast through 2011".

Strong growth will occur across most sectors of the PLM market, with particularly strong growth in the market sectors of new product development (NPD), portfolio management, and collaborative product data management (PDM), as manufacturers seek innovation and global operations to drive top level growth. According to Dick Slansky, the principal author of ARC's study, "Top executives in the manufacturing sector are refocusing the strategic direction of their companies toward innovation and new product development to gain market share and grow top line revenues. However, this does not mean that they are ignoring cost containment. While innovation, new product concepts, and design are necessary to keep a company competing in the market, reducing the time and cost of producing the product will help to make a company profitable. PLM solutions, such as digital manufacturing, will enable virtual commissioning and greatly reduce production ramp-up."

Asia represents a significant opportunity for PLM-enabling applications over the next five years as it continues to grow its industrial manufacturing base. Representing over 24% of the PLM market in 2006, the Asian market will rapidly grow to represent over 27% of the market by 2011. While Japan continues to be the largest market in Asia for PLM solutions, this market is maturing rapidly. Both China and India will see very strong growth in excess of that forecasted for the entire Asian market through 2011.

PLM suppliers see a rapidly emerging market in the Small/Medium Business (SMB) sector and are targeting these companies with PLM solution sets specifically tailored to meet their size and cost requirements. The intent is to afford these companies with smaller engineering design seat requirements a comprehensive PLM solution set that compares in functionality and scope to those used by larger tier one companies.

The discrete industry remains, by far, the largest single sector for PLM solutions in 2006 representing nearly 90% of the total market. Within the discrete industry, the automotive and aerospace sectors are the largest markets for PLM solutions. The balance of the PLM market is represented by the process and hybrid industries, which while small, will see substantial growth over the forecast period. Both the Consumer Packaged Goods (CPG) and Food & Beverage industries will be particularly fertile markets for PLM solutions over the forecast period.
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