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IBM (NYSE: IBM) has achieved a major win in the automotive industry, inking a services contract with Ford Motor Company (NYSE: F), along with a French software firm.
While specific terms of the deal 
were not disclosed, IBM and Dassault Systems said they will supply Ford with IBM Product Lifecycle Management software, including CATIA V5 and ENOVIA VPM (virtual product manager) software, for use in the automaker's design and manufacturing processes worldwide.
Keith Pillow, spokesperson for Dassault Systems, told the E-Commerce Times that CATIA is one of the most widely used 3D computer-aided design (CAD) software programs in the automotive industry. In addition, he said, "The ENOVIA Virtual Product Manager software facilitates collaboration between different geographic locations and offices and, more specifically, facilitates the sharing of design files back and forth." The management tool also allows the sharing of other types of design software besides CATIA.
Pillow said IBM and Dassault already provide similar software to nearly 23 auto manufacturers worldwide, including Toyota, DaimlerChrysler, Renault, Volkswagen and BMW.
EDS Unseated?
IBM's announcement could mark the unseating of competitor Electronic Data Systems, which, until now, had a hold over U.S. automakers. Ford previously used software designed by SDRC (Structural Dynamics Research Corporation), which was acquired by EDS.
However, Ford Motor Company spokesperson Paul Wood told the E-Commerce Times that the automaker will continue to use EDS CAD software, and that both solutions are part of Ford's design strategy. "It's not a win or lose for IBM/Dassault or EDS," he said. "It's a reallocation of their resources."
Although Wood could not comment on the duration of the contract, Dassault's Pillow said it is a long-term deal that is to last for five years.
Wood did say the value of the contract is "a lot closer to $50 million than it is to $500 million." And he noted that earlier analysts' estimates, which pegged the deal's worth at between $400 million and $500 million, were "wildly, wildly wrong. It's almost as if they added an extra zero."
However, Wood noted, "this is a huge contract. Ford Motor Company is the second largest company in the U.S., and we get economies of scale."
Streamlining Processes
Ford's agreement with IBM/Dassault is intended to help streamline the auto design process. Wood said Ford is still in pilot stages with the new software, though it eventually will have a common development process, methods, tools and data libraries across its eight brands worldwide.
Two Ford brands, Land Rover and Volvo Cars, already use IBM Product Lifecycle Management. Ford said it will integrate these solutions into its next-generation C3P (PLM) systems environment, which "will cost a whole lot less than the number that has been carelessly estimated and reported in the press," according to Wood.
The move is intended to support Ford's revitalization efforts, which are aiming to produce a five-year turnaround that will cut costs and increase profits by $9 billion.
"Whatever we do spend will be more than offset by productivity gains in the product development process," Wood noted.
IBM was unavailable for comment at press time.
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