Online CAD and the fear for the sales channel

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In a world where everything is available online where does this leave traditional CAD dealers? The software developers are busy developing the technology but still pondering the impact on the sales channel, writes Martyn Day
I recently attended the Congress on the Future of Engineering Software (COFES), held in Phoenix, Arizona. The event is where the elite of the CAD software developers congregate once a year to talk shop, make deals and hear from analysts as to what are the emerging trends.

One of the surprise hot topics was ‘channel’, i.e. how the relationship between software developers and the independent businesses that resell these tools to engineers is changing, or going to change.

Channel rarely gets mentioned at COFES as it has been a near constant for decades, with greater concern given to PLM adoption and what will be the next disruptive design technology.

Traditionally the CAD resellers (often called Value Added Resellers – VARs) have provided support, installation, training and consultancy to the customers of mainstream CAD developers like SolidWorks and Autodesk. Some CAD vendors mix their sales with direct sales and indirect sales models, such as PTC and Dassault Systèmes. There are others such as Alibre that only sell direct over the web.

Now that the software industry is actively re-architecting its products to be web delivered and even run over the web, this relationship between CAD reseller and software developer is under discussion, and it’s proving to be quite a heated topic.

At COFES the issue was discussed a number of times and it was clear that nobody had really worked out how the dealers would fit into a web delivered world, where the software developer would connect directly to the customer. The standard answer was that dealers would still be required but only to deliver the local consultancy services around the engineering tools.

As to how viable this would be as a business nobody had any idea.


What was clear was that the days of selling boxes of CAD are very numbered. While this is how most CAD dealers built their businesses, many have expanded to provide training, support and some consultancy, but more out of necessity to find extra revenue due to the dwindling margins on the boxed product.

Imagine an online store that offered Amazon style suggestions ‘customers who bought this 3D CAD system also bought: SAP, Enovia PLM and a £50,000 analysis tool!’

The software firms have also over-distributed their products to the point where competition between dealers selling the same software solution also drives down the street price. All too often I hear software developers bitch about the dealers throwing away margin, or not adding value when their sales incentives only reward dealers for quantity of sales rather than quality of service and are in fact mainly responsible for the sales ecosystems and attitudes that they appear to so dislike and disrespect.

With tough economic times new seat sales are hard to find but dealers have done well at selling subscriptions and do get a recurring revenue stream from that. In a web-based world the software firms will have direct access to customers for selling this too and so this will also become increasingly less rewarding for CAD dealers, leaving training, implementation and consultancy as the mainstay of their businesses.

However, software vendors are also increasingly offering online training and support packages of their own and while some of this may get subcontracted out to approved dealers for a fee, it again eats into this envisioned future role for the CAD dealer.

The serious flaw in all this postulating is the concept that CAD systems are easy to use, that customers could really download and start modelling with any design tool.

In the commoditisation of CAD, the marketing has also led to the perception being created that expensive consulting and deployment isn’t required for 3D design tools.

The fact is that to get the most out of a new system training is essential but it’s still often a tough sell to customers and an upgrade refresher training course is even harder.

By thinking in this way, the software developers are marginalising a key asset, are even undermining the ‘value’ of what these dealers will have left to sell, as well as anticipating that selling direct online will not require as much local representation.

At £4,000 to £10,000 a seat I’m not too sure how many purchasing decisions will be made in an online store. Imagine an online store that offered Amazon style suggestions ‘customers who bought this 3D CAD system also bought: SAP, Enovia PLM and a £50,000 analysis tool!’

With the rush to get CAD on to the ‘cloud’, and provide design tools on demand, an unsettling dark cloud of insecurity has descended on the various CAD reseller channels. Both SolidWorks and Autodesk appear to be doing their best at unintentionally creating this doubt by showing forthcoming cloud technology without giving an explanation as to how this might impact the route to market. In the case of Autodesk, this has been exacerbated with news that it is heavily investing in a direct sales force of its own.

There is of course the added issue that customers aren’t exactly saying they want their design tools delivered on the cloud yet. Following the tweets during and after SolidWorks World, the elation at seeing SW on the web soon turned to doubt and raised more questions than it answered.

Yes, the cloud technology is cool and interesting but will the end experience be an improvement over what we experience today?

The software vendors are convinced this is the future but nobody is exactly sure of the best way to get there.

{encode=” ” title=”Martyn Day”} is consulting editor of DEVELOP3D. He spends most of his working life looking for power outlets to recharge his mobile gadgets. His next gadget will definitely be a portable power source.

Is the move online damaging the traditional CAD dealers?

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