Filling the Gap in Engineering Simulation Software Market

Originally posted on LinkedIn




Increasing competition pushes engineering companies to advance the efficiency of design and engineering by means of digital transformation. Over the last decades, we have been observing the winning march of computer-aided design (CAD) programs, which are nowadays the market standard even for small workshops. Now, it’s the time for software that covers the next step of engineering design workflow - computer-aided engineering (CAE) software (also known as simulation/modeling software).


Traditionally, enterprise-grade simulation software like ANSYS, SIMULIA, Altair Hyperworks is used by a relatively small group of highly experienced engineers in R&D centers of corporations. A couple of decades ago, that covered almost the whole addressable market. However, the demand in the SMB sector has been gradually growing and that was not recognized by the big players. Besides overall advancement in the design process efficiency, simulation is frequently considered as an enabler for the adoption of additive manufacturing of parts and digital twin technologies, which ensured the recent jump of the demand for simulation. 40% of production engineers at plants and SMB suppliers say they want to use simulation but cannot [1]. 

I remember the story by Jack Harris (Chairman of IMS International) which was a colorful illustration of this software gap. In the keynote at Heat Treat show in Detroit in October 2019, he gave an example:

Boeing tried to push down SIMULIA software adoption in its supply chain. In return, it harmed the suppliers and entire supply chain since the software was an expensive investment for many SMBs and they were not even able to use the software properly due to lack of trained staff.

Let’s take a look at how the demand for simulation democratization looks like, and what the CAE-software market offers!


Demand for simulation democratization


In 2011, Simscape did the survey [2], which highlighted the software price as a major factor that holds back from simulation adoption at SMBs (49%), software complexity follows with 17%. In 2019, the survey by CENOS [3] shows the dominance of the same two answers, but the priority swapped: 28% of respondents highlighted the price point and 40% mentioned the software complexity (together with the similar answers like long learning period and lack of simulation engineers). This probably indicates the progress in democratization and shift of the focus from pricepoint to the usability of the engineering tool to be utilized without special education, outside R&D centers - in production plants and by engineers at SMB suppliers. It is also nice to see the portals like revolutioninsimulation.org that highlights the demand for simulation democratization.


Let’s check now, what was the offering from the software companies to address the issue.


Cost-saving


As price point was indicated as the most painful aspect for simulation adoption in smaller companies, the software costs of ANSYS, Dassault Systems, Altair, and some other major market players were under the primary attack of newcomers. So did Comsol, with its multiphysics platform - the program, which ensures interconnectivity between mechanical, fluid,

electromagnetic, and other models. The name of the product - Comsol Multiphysics, highlights the main focus of the software, that was uptaken by academic customers first. Industrial customers appeared mostly at price-sensitive mid-size companies, which used the opportunity to buy separate modules at a lower price than from traditional enterprise-grade competition. Therefore, it seems that Comsol’s mainly emphasized benefit of multiphysics has never been accepted by the target market and didn’t lead to a real democratization of simulation. That is because multiphysics is not something SMBs need, quite the opposite - they need an easy to use tool which is specialized for their specific application.


Pay-as-go model


Although Comsol’s attempt was good enough to get some market share, at the end of the day it just demonstrated the potential of the academic community to alter traditionally expensive enterprise sales processes of the market leaders.

The real attempt of liberalization of the traditional pricing policy came from the software world. The simulation software companies were pushed to leave the traditional software purchase model, which requires a significant upfront investment, and offer a SaaS business model (they call it “software lease”) as an alternative. Furthermore, with the development of cloud computing services, they were pushed even further - to the pay-as-go model.

Initially, that sounded great, and the new model was uptaken by enterprise customers as costs- and cash flow optimization option but has not ended up with revolutionary democratization of simulation, just because the software itself remained to be a very heavy simulation tool designed for use of a privileged group of simulation engineers in R&D centers of enterprises.


Cloud computing services


The first real cloud computing service came from VC-backed SimScale - a Munich-based startup, which armed itself with the pay-as-go model and d