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IDC MarketScape: Worldwide RetailProduct Life-Cycle Management (PLM)Applications 2012 Vendor AssessmentIDC Retail Insights: Retail Supply Chain, Sourcing and ProductLife-Cycle Management StrategiesGlobal Headquarters: 5 Speen Street Framingham, MA 01701 USAP.508.935.4400F.508.988.7881www.idc-ri.comV E N D O R A S S E S S ME N T#GRI236445ELeslie HandIN THIS EXCERPTThe content for this excerpt was taken directly from the IDCMarketScape: Worldwide Retail Product Life-Cycle Management(PLM) Applications 2012 Vendor Assessmentt" by Leslie Hand (Doc# GRI236445). All or parts of the following sections are included inthis excerpt: IDC Health Insights Opinion, In This Study, SituationOverview, Future Outlook, and Essential Guidance. Also included isFigure 1.IDC RETAIL INSIGHTS OPINIONThe retail product life-cycle management (PLM) applications marketfor apparel, footwear, and hardlines products continues to evolve, withthe focus shifting from merely enabling improved technicalspecification, sampling, and sourcing management processes to actingas a central lynchpin, from a supply chain perspective, empoweringretailers to conduct customer-centric, efficient, and effective brandmanagement. Key findings include: Retail PLM allows retailers to harmonize decisions at each step ofthe product life cycle, resulting in more profitable productlaunches, fewer product failures, and more business success. Retailers improve the performance of their companies and,specifically, private label brands with a broad spectrum of productlife-cycle management capabilities from product conception toorder receipt. Vendors that serve this space range from those that have longhistories in PLM and CAD, vendors that initially were sourcingspecialists and those that have emerged specifically to serve retailproduct or merchandise life-cycle management (retail PLM orMLM) needs. Regardless of heritage, many of these companieshave increased retail-specific R&D in the past several years. To address the business and technical requirements of retail PLMprocesses, beyond core product development and sourcing,vendors are developing, partnering, or acquiring analytics, 3DAugust 2012, IDC Retail Insights #GRI236445eIDC Retail Insights: Retail Supply Chain, Sourcing and Product Life-Cycle Management Strategies: Vendor Assessment
visualization, social networking, and collaborative platformtechnologies. Many vendors that appeared in IDC Retail Insights' last retail PLMvendor landscape document (see Vendor Assessment: RetailPLM/MLM — Bringing Quality Product to Market Faster, IDCRetail Insights #GRI220578, November 2009) are not included inthis IDC MarketScape, and notably, one was added. Importantly,the vendors included meet the criteria established by IDC forinclusion in this MarketScape — their capabilities, market share,and growth potential all met our criteria.IN THIS STUDYThis IDC Retail Insights study represents a comprehensive vendorassessment of the retail product life-cycle management applicationsmarket for apparel, footwear, and hardlines products using the IDCMarketScape model. Vendors were selected on the basis of estimatedmarket share and potential for growth among vendors with theappropriate range of capabilities. This study ultimately providesprospective buyers critical insights into vendors' competitive marketposition, strengths, and weaknesses.The evaluation is based on a comprehensive and rigorous frameworkthat assesses vendors relative to the criteria and one another andhighlights the factors that influence success in the market both shortand long term. End-user feedback from current retail PLM customerswas also considered when determining the position of each vendor inthe IDC MarketScape framework.#GRI236445e 2012 IDC Retail Insights
MethodologyWe invited 11 vendors to participate in this study, extending aninvitation only to those vendors that have PLM solutions specificallydesigned for apparel, footwear, and hardlines. One vendor, Lawson,had to decline because it was in the process of being acquired by Infor.The resulting retail PLM IDC MarketScape assesses 10 vendors thatrepresent 45% of total worldwide named vendor software spending onretail PLM solutions (in all retail business segments).There were a number of steps in this evaluation process, including: Product review and strategy briefings with each of the participatingvendors Each vendor completing an extensive RFI and providing customerreferences Customer reference calls conducted, covering complexity of theproject, vendor responsiveness, and strengths of vendor andoffering Quantitative and qualitative assessment of each vendor against theevaluation criteria Review of scores and assessment with each vendor prior topublication to ensure factual accuracyIDC MarketScape criteria selection, weightings, and vendor scoresrepresent well-researched IDC judgment about the market and specificvendors. IDC analysts tailor the range of standard characteristics bywhich vendors are measured through structured discussions, surveys,and interviews with market leaders, participants, and end users. Marketweightings are based on user interviews, buyer surveys, and the inputof a review board of IDC experts in each market. IDC analysts baseindividual vendor scores, and ultimately vendor positions on the IDCMarketScape, on detailed surveys and interviews with the vendors,publicly available information, and end-user experiences in an effort toprovide an accurate and consistent assessment of each vendor'scharacteristics, behavior, and capability. 2012 IDC Retail Insights#GRI236445ePage 1
SITUATION OVERVIEWBusiness NeedsRetail PLM Improves Return on Capital, Improves BrandEquity, and Reduces RiskRetail PLM enables faster innovation and product cycle times, withimproved regulatory compliance and reduced costs. The evolving bestpractices include establishing a common data repository, facilitatingcollaborative innovation, calendar management and workflow control,automated collaborative sourcing processes, and close attention toregulations and product, vendor, and factory compliance andperformance.PLM enables employees to return to core competencies — designerscan design products, supply chain managers can optimize a wellorchestrated and instrumented supply network, and merchants canoptimize assortments, efficiently buying and selling products. RetailPLM enables collaboration up and down the supply chain that reducesthe cost of doing business and improves performance for all supplychain partners.Retail PLM supports a retailer's desire to improve return on capital,improve brand equity, and reduce risk, and this is validated by WallStreet analysts. In a report, Outlook and Top Picks for 2012 (source:Citi Investment Research & Analysis, January 13, 2012), DeborahWeinswig, managing director, Retailing/Broadlines, Food and Drug,and Home Improvement, Citi Investment Research & Analysis,reiterates that merchandise life-cycle management (MLM) (referred toas retail PLM in this report) is one of the most critical technologiesthat will drive improved bottom-line results. Note that we use theterms merchandise life-cycle management and retail product life-cyclemanagement interchangeably, recognizing the need to differentiateapplication capabilities that retailers need from those of manufacturersof discrete or highly complex products, but in this report, we havedropped the more complex MLM/PLM phrasing we have previouslyused. The industry generally agrees that for retailers, the term PLMalone does not capture the breadth or depth of retail applicationssufficiently but has not settled collectively on anything other thanretail PLM.Retail PLM supportsa retailer's desire toimprove return oncapital, improve brandequity, and reducerisk, and this isvalidated by WallStreet analysts.In summary, retail PLM enables improved performance by enablingthe following: Improves brand equity. Retail PLM improves a retailer's abilityto deliver product — on time, on trend, of right quality, and at theright value. It also offers an opportunity to bring customers closerto the process by leveraging social commerce to engage consumersin cocreation. Brand equity is also enhanced with suppliers asPage 2#GRI236445e 2012 IDC Retail Insights
collaboration improves profitability bilaterally and fosters strongerpartnerships. Improves return on capital. As the central version of the truth forall information and processes related to the product from the pointof ideation to fulfillment, retail PLM takes cost out of design andpreproduction processes, consolidates sourcing needs acrossdivisions and channels, and reduces waste in materials,manufacturing, and logistics. Built-in business intelligence (BI),reporting, and dashboards enable high visibility, proactivemanagement of critical path issues, and key performance measures. Reduces risk. Collaborative supplier relationships reduce risk asmaterials and labor costs, manufacturing capacity, and regulatoryissues challenge retail product flow and performance. Movinginefficient processes "online" reduces the investment and time lostrelated to offline, back-and-forth negotiations, and sampling.Standardized electronic QA and compliance processes ensurequality products are delivered to market on time withoutunexpected costs. Additionally, the reuse of artifacts from a singledata repository ensures product integrity in compliance withcomplex global regulations and with regard to social,environmental, and financial sustainability.Retail Business Needs That Propel PLM InvestmentsPLM has the potential to solve many of the issues related tointroducing new products to market, driving dramatic businessperformance improvement as a result.To understand much more closely why this is true, let's do a quickreview of the pre-PLM state of retail product life-cycle practices formost retailers. Current "legacy" retail product life-cycle managementpractices are linear, inefficient, and error prone. Independent designersand preproduction technicians often have unique processes andpersonal fit, grade, materials, and specification repositories.Errors occur too frequently because of miscommunications, lack ofstandards, and individual mistakes. Spreadsheets, PDFs, and otherdocuments are typically faxed or emailed to colleagues and suppliers.Communication lags and gaffes result as there is no assurance thatreviews, approvals, or changes will be handled efficiently. Criticalpath management and document control in this environment arevirtually nonexistent. We recommend that retailers compare the chaosand inefficiency of legacy product management processes with bestpractice retail PLM applications processes.As it relates to product, the common objective is always successfullybringing customer-pleasing products to market at the expected marginand velocity. The challenges to doing this successfully for manyretailers are: 2012 IDC Retail Insights#GRI236445ePage 3
Retailers need to innovate faster. This requires better businessand customer intelligence and analysis so that the right assortmentsof products are planned. But it also requires that the businessprocess is efficient, eliminating existing workflow gaps, so that thecycle time from product ideation to shelf is faster. Retailers need to actively manage product life-cycle events.This requires active calendar management, real-time statusupdates, and alerting, enabling excellent responsiveness tounexpected events including materials issues, logistics challenges,manufacturer capacity constraints, and product demand changes.With the right tools, vendors can self-manage better, enablinghigher ratios of on-time, on-budget product success. Retailers need to apply human resources to the "art" ofproduct design, planning, and selling. This means that scienceshould enable everything that does not have to do with the "art" ofproduct introduction and life-cycle management, therebyimproving efficiencies, reducing costs, and reducing waste.Managing where the most current version of the design, colorlibrary, or fit rules is should not even be a concern to a designer.Nor should sourcing managers have to worry about how they willcoordinate schedules or communicate with and manage vendorsthat are halfway around the world. Retailers need to collaborate with supply chain partners. Thisrequires a platform that enables electronic collaboration, with ashared workspace and shared product information including parts,specifications, bills of materials (BOMs), schedule, status, alertmanagement, compliance requirements, quality control and auditdata, and shipping information. Suppliers need to be bettercodevelopment and production partners. Retailers need to ensure regulatory compliance and productquality. Every aspect of a product is regulated, often differently indifferent parts of the world. Some of the current drivers areregulations including REACH, CTPAT, 10 2, and CPSIA.Retailers need to manage everything that goes into producing aproduct, including labels, packaging, materials, country of origin,and environmental compliance — this has to be right for all of themarkets in which they distribute the product. This is no easy task,but the right software and audit processes can ensure complianceand that the product meets quality guidelines. Audit data needs tobe accessible in real time to satisfy trading partner and regulatorybody needs. Some retailers are going so far as to implement fulltraceability to facilitate reverse logistics processes, with just acouple also planning on providing consumers access to productheritage information.Page 4#GRI236445e 2012 IDC Retail Insights
FUTURE OUTLOOKIDC MarketScape: Retail PLM Applicationsfor Apparel, Footwear, and HardlinesThe IDC vendor assessment for retail PLM applications for apparel,footwear, and hardlines products represents IDC's opinion on whichvendors are well positioned today through current capabilities andwhich are best positioned to gain market share over the next few years.Positioning in the upper right of the grid indicates that vendors arewell positioned to gain market share. For the purposes of discussion,IDC divided potential key strategy measures for success into twoprimary categories: capabilities and strategies: Positioning on the y-axis or capabilities axis reflects the vendor'scurrent capabilities and menu of services and how well aligned thevendor is to customer needs. The capabilities category focuses onthe capabilities of the company and product today, here and now.Under this category, IDC analysts look at how well a vendor isbuilding/delivering capabilities that enable it to execute its chosenstrategy in the market. Positioning on the x-axis or strategies axis indicates how well thevendor's future strategy aligns with what customers will require inthree to five years. The strategies category focuses on high-levelstrategic decisions and underlying assumptions about offerings,customer segments, business, and go-to-market plans for thefuture, in this case defined as the next three to five years. Underthis category, analysts look at whether or not a supplier's strategiesin various areas are aligned with customer requirements (andspending) over a defined future time period.Figure 1 shows each vendor's position in the vendor assessment chart.Its market share is indicated by the size of the bubble, and a ( ), (-), or() icon indicates whether or not the vendor is growing faster than,slower than, or even with, respectively, overall market growth, whichis currently growing at a CAGR of 11.4% (see Pivot Table: WorldwideRetail IT Spending Guide, Version 2, 2011, IDC Retail Insights#GRI235660, July 2012). Please note that some of the vendors coveredin this report do not publically report retail PLM revenue, andtherefore IDC Retail Insights estimated values for these companies.However, vendors were given an opportunity to review these valuesfor accuracy before this report was published. 2012 IDC Retail Insights#GRI236445ePage 5
FIGURE 1IDC MarketScape W orldwide Retail PLM ApplicationsVendor AssessmentSource: IDC Retail Insights, 2012Vendor Summary AnalysisThis IDC MarketScape focuses on PLM solutions specifically gearedtoward apparel, footwear, and hardlines, including functionality tosupport the entire product life cycle for private-label goods such asdesign, sourcing, order management, and compliance.IDC's MarketScape model balances the strategy of vendors with theircurrent capabilities. Because marketing and sales, operational issues,and products are all critical in this evaluation, the IDC MarketScapemodel weighs these factors on the strategy side as well as on currentcapabilities.Page 6#GRI236445e 2012 IDC Retail Insights
Key findings include: Dassault had the highest strategies score, followed by TradeStoneand PTC. TradeStone had the highest capabilities score, closely followed byPTC and Dassault. Innovation is an important component of this market as it hasevolved over the past several years to meet the emerging privatelabel needs of many customers. The innovation score isparticularly important as a result. Vendors that have madesignificant ongoing investments in product functionalityenhancements scored high on the innovation scale. The threevendors that scored highest in innovation were Dassault, Centric,and TradeStone. Because of the intricate business processes these PLM solutionsneed to facilitate, and the need for them to work with internal andexternal systems, overall functionality of the product offering wasan important criteria for scoring. The top overall score reflects thevendor's current capabilities as well as the vendor's product roadmap for providing functionality for product life-cycle management,sourcing, compliance, and order management capabilities. The top5 vendors that scored highest in breadth of functionality andoffering road map were Centric, Dassault, Gerber, PTC, andTradeStone. 2012 IDC Retail Insights#GRI236445ePage 7
The sections that follow provide more information and detail the keyobservations made regarding each vendor's offerings, capabilities, andstrategies that led to their positioning in the IDC MarketScape (referback to Figure 1).Dassault SystèmesFounded in 1981 and well known for its 3D modeling software,Dassault Systèmes launched its PLM offering initially in 2000. Today,the PLM offering from DS is organized around the CATIA,SIMULIA, DELMIA, ENOVIA, EXALEAD, NETVIBES,SOLIDWORKS, 3DVIA, 3DSWYM, and GEMCOM brands. Withheadquarters in France, DS has 9,500 employees worldwide. Revenuefor DS grew 3.2% from 2010 to 2011 to 2.2 billion.Of the company's approximately 130,000 clients in more than 80countries, there are 120 companies in the apparel, footwear, andhardlines categories that use Dassault's PLM applications. Themajority of these companies are in Europe and the Americas, and thenumbers are roughly split among these two regions. Customerexamples include Guess, Gucci, adidas, REI, and Under Armour.Recent customer wins include Mammut Sports Group, BenettonGroup, and s.Oliver.DS serves the industry through three sales channels: professional sales,direct sales, plus an extended network of partners with local andindustry expertise. It has an extensive partnership network thatincludes 150 authorized education partners, 165 software partners, and700 channel partners.Dassault Systèmes SA (Euronext Paris: #13065, DSY.PA) ENOVIAsubsidiary is a Leader in our IDC MarketScape for retail PLMapplications. Dassault Systèmes products offer a range of capabilitiesthat should certainly land DS on the short lists of retailers looking forretail PLM to support product development for the apparel, footwearand hardlines categories. The company's PLM offering is being usedfor product design, sourcing, collaboration, and all processes up toexecution of the PO. It supports preproduction PO management andintegrates with ERP systems for PO execution. All Dassault PLMcomponents are built on top of the Version 6 Web-based platform. DSrecently added cloud business services through a strategic investmentin Outscale, a SaaS provider. Beyond product development andsourcing, DS PLM extends into the store and channels withvisualization and 3D capabilities that enable better collaborativeplanning all the way to the store shelf or rack.Dassault Systèmes received one of the top 3 scores for its productcapabilities. Among the strengths of the DS PLM offering are that allDS accelerators (such as the apparel accelerator) are Web based, andtherefore available to any Web-enabled device, and that the 3DSWYMPage 8#GRI236445e 2012 IDC Retail Insights
social collaboration environment supports collaboration throughoutPLM processes, with internal and external partners. Business usersleverage this application to share trend and concept developmentinformation, and visualization and 3D capabilities from ideation anddesign through placement on a shelf are unique and support thecomplete product life cycle. This capability is best in class among thisset of vendors, enabling manufacturing virtual validation, samplingand testing, and new virtual product collaboration and sellingopportunities.Additionally, EXALEAD, a search-based application, is also a best-inclass capability among the PLM vendors reviewed in this report. Thiscapability successfully searches and transforms large volumes ofstructured and unstructured data into meaningful, real-timeinformation intelligence. Retailers are successfully leveraging thiscapability to search for counterfeit images, thwarting potential harm totheir brand image and performance. Hardlines retailers also benefitfrom the extended 3D CAD and simulation capabilities of 3DSOLIDWORKS. 2012 IDC Retail Insights#GRI236445ePage 9
Dassault Systèmes has plans to see overall revenue growth of 6–8%for 2012. The company's overall strategy for PLM is to expandpenetration by extending the use of its collaborative business platformdeeper into the planning, design, and supply chain organization. In thepast two years, the company has added eight new retail customers forits PLM offering.Dassault Systèmes received the highest score among this group ofretail PLM vendors for strategy. DS has a holistic vision to helpcompanies visualize and experience product through the product lifecycle the way individuals experience products in their everyday lives.This is not an easy feat, but DS is investing heavily in innovation andacquiring complementary game-changing applications where it makessense. While at times it seems like some of the areas DS is innovatingin are a bit out of reach for many retailers, the company has not lostsight of enhancing the core product development and sourcingcapabilities. Recent usability, compliance, and sourcing enhancementsare a testament to the level of commitment to fundamental retail PLM.Dassault has embraced mobility and social networking. In April 2012,the company announced an update to 3DSWYM, Dassault's socialenterprise platform that was created internally in 2010. 3DSWYM ispositioned as a "real-time, social dynamic referential environment"and can integrate with legacy information systems and businessprocesses as well as Dassault's ENOVIA collaborative platform.Companies can develop their own complete secure, on-the-cloudcommunity using 3DSWYM or participate in Dassault's manycommunities. The success of 3DSWYM has led Dassault to sell itsequity position in blueKiwi SA, a European-based vendor of enterprisesocial software.G uid an ceDassault Systèmes applications are a good choice for the apparel,footwear, and hardlines retailers focused on leading-edge innovation inproduct and process. Many customers of Dassault frequently approacha PLM evaluation to support growth initiatives. Customers weinterviewed utilized an iterative approach to the configuration andimplementation of the solution. Reasons for choosing DS PLMincluded the company's ability to integrate with and facilitateinteractions between ERP systems, the flexibility of the solution, andthe deep expertise of the company's integration partners. In somecases, retailers leveraged a third-party tool to improve workflowefficiency, but these customers were completely satisfied with DS.Page 10#GRI236445e 2012 IDC Retail Insights
Dassault is also reinforcing its position in the fashion industry with astrategic move toward collaboration in high-end apparel. In late 2011,the company launched FashionLab, a technology incubator dedicatedto fashion designers and stylists, to explore and test new conceptsusing 3D. The ultimate goal is to create a solution that integrates thedesign, simulation, and collaboration tools required to create an entirecollection.These product and portfolio enhancements should bolster Dassault'sability to meet the goal for doubling revenue share in key markets overthe next five years as an increasing number of retailers will seize theinnovative advantage of working with Dassault.ESSENTIAL GUIDANCEIndications are strong for the future of retail PLM. Retailers with retailPLM generally outperform those without. Wall Street recognizes this,and stock performance often is reflective of this fact. Companiesincluding Walmart, Burberry's, Under Armour, Nike, Urban Outfitters,and Kohl's have implemented retail PLM and are outperforming theirpeers by reducing cycle time, improving assortment performance, andensuring customers that they take responsibility for product safety andquality.IDC Retail Insights believes that retailers that leverage retail PLMtechnology to deliver quality product to market faster will strengthentheir current market positions and will be more viable for the longterm. It is very fundamental but cannot be minimized — the effectiveuse of assets, coupled with good margin and revenue growth, positionsretailers for success in good and bad times.IDC Retail Insights' worldwide retail IT spending forecast data forsome of the relevant application areas indicates that retail PLMspending has a compound annual growth rate (CAGR) of 11.4% forthe five-year period ending in 2015 (see Pivot Table: Worldwide RetailIT Spending Guide, Version 2, 2011, IDC Retail Insights #GRI235660,July 2012).Actions to ConsiderFor RetailersWith a clear vision of the opportunities, each retailer should define itspriorities and establish its strategy to achieve optimal productdevelopment, PLM, and sourcing efficiency and effectiveness. Thisexercise results in a road map that is easily aligned to vendorcapabilities, strengths, and weaknesses. Retailers should: 2012 IDC Retail Insights#GRI236445ePage 11
Define current barriers to visibility and efficient concept-tofulfillment processes. Construct the initial list of opportunities toreview. This will require an in-depth analysis of all productdevelopment, PLM, and supply chain processes, followed bycomparison with best-in-class processes. Establish a strategy. Define both short- and long-term strategies.What are your business' biggest competitive advantages? Cancapitalizing on any of these opportunities create a differentiatingmarket advantage? For example, does bringing product to marketfaster enable you to provide on-trend merchandise to your marketbetter? Does it improve the customer experience? Or does havinggreater control over the design of its private brands enable fasterresponse to market needs? Can the retailer improve its ability todeliver highly desirable products to market in response to changingmarket dynamics? Define requirements and develop a road map. Identify projectswith the most significance — measured by ROI or marketdifferentiation — and prioritize. Don't lose sight of the long-termneeds of your organization when identifying your quick wins.Where is the biggest pain point? Is it managing product librariesand reuse concerns, sourcing effectively, sampling processes,calendar and workflow management, or something else? Select a vendor. Align your needs with the capabilities of thevendors outlined in this report. It's quite possible that one vendorwill not meet all of your needs, given your business objectives,current IT portfolio, and short- and long-term road map.For Vendors Develop depth of experience in retail. Understand retail pain pointsand deliver retail-focused capabilities, marketing, and services.Ensure product road maps are detailed and customer-value driven.Share as much as possible, including detailed release plans, withcustomers. Focus on delivering a combination of out-of-the-box functionalityand efficient customization tools to accelerate time to value. Develop capabilities to extend the value of core functionality byleveraging mobile devices, social networking, and analytics. Integrate to existing retail ERP, assortment management,merchandising and business intelligence, and analytics capabilities. Support both on-premise and (private and public) clouddeployment models to meet future customer demands. This meansPage 12#GRI236445e 2012 IDC Retail Insights
offering commensurate licensing policies that reflect the deliverymodel and allow customers to scale up and down as needed. Publicize credible use cases and customer ROI. Develop ROItemplates to help customers understand and quantify benefits.LEARN MORERelated Research How PLM Vendors are Supporting Better Customer Service withCollaborative Capabilities (IDC Retail Insights #GRI235878, July2012) Perspective: Customer Needs and Strategies — Grocers EmbraceOmnichannel Retail (IDC Retail Insights #GRI235877, July 2012) A Closer Look at Mobility in Retail (IDC Retail Insights#GRI235133, May 2012) Worldwide Retail IT Spending Guide, Version 1, 2011 (IDC RetailInsights #GRI233454, February 2012) Perspective: NRF 2012 — What a Difference a Year Makes! (IDCRetail Insights #GRI233126, February 2012) Perspective: IDC Retail Insights' 2012 Supply Chain Predictions(IDC Retail Insights #GRI233025, February 2012) Worldwide Retail Industry 2012 Top 10 Predictions (IDC Ret
This IDC Retail Insights study represents a comprehensive vendor assessment of the retail product life-cycle management applications market for apparel, footwear, and hardlines products using the IDC MarketScape model. Vendors were selected on the basis of estimated market share and potential for growth among vendors with the .
