Last May I wrote an editorial entitled “PLM and cPDm Update”. That editorial appeared soon after Dassault Systemes announced in March 2006 that it would acquire MatrixOne for around $408 million. For its most recent fiscal year ended July 2, 2005, MatrixOne reported total revenues of $124.1 million. MatrixOne was folded under the ENOVIA brand name along with ENOVIA and SmarTeam. MatrixOne itself had acquired Synchronicity Software, Inc. for consideration valued at approximately $18 million in stock and cash in June of 2004. At the time Synchronicity, founded in 1996, had more than 120 electronics industry customers, including 13 of the top 15 semiconductor companies. The company was private and had raised $31.5 million. In addition to venture capital investors Intel Capital, Cadence Design Systems and Synopsys were strategic investors. In its last fiscal year Synchronicity generated $12 million in revenue and had a user base of around 25,000 seats. At the time Mark O'Connell, then President and Chief Executive Officer of MatrixOne, said “Synchronicity will add compelling new solutions for semiconductor and electronics design management to our solutions portfolio, expand our customer base by approximately 20% and deepen our domain expertise in the electronics industry.” On February 20th Dassault announced the release of three new products for the semiconductor industry: Enovia MatrixOne's Synchronicity DesignSync 5.0, MatrixOne Semiconductor Accelerator for IP Management and the MatrixOne Semiconductor Accelerator for Team Collaboration.
I had an opportunity to discuss the situation recently with John Stanglewicz of ENOVIA MatrixOne Synchronicity.
Would you provide us a brief biography?
I am the Director of Semiconductor Products for Enovia MatrixOne. I come out of the Synchronicity acquisition a couple of years ago. Responsibility-wise this means I am responsible for engineering product management, both the MatrixOne products and the products we kind of affectionately refer to as the former Synchronicity products as we well as how these products are being merged, how they are being combined and how they fit into the whole PLM structure and value proposition. Prior to that, I used to work at a company called I-Logix which included some embedded software work. We also had a foray into HDL generation from state machines for a while. Prior to that I was formerly a customer at a couple of different companies, Hamilton Standard and what was then McDonnell Douglas and Sanders. I originally had a military background.
Would you provide us a little history of Synchronicity up until its acquisition by MatrixOne in August 2004?
Synchronicity started about 10 years ago. The vision of the founders was that the need for design data management was very pressing in hardware design. Our original ancestry was in analog design. As you probably know data that is produced by a lot of EDA tools is fairly complex with respect to the number of files and how they need to be managed together. The vision was to be able to provide a more natural way to manage these files so that each individual user does not have to understand which files needed to be kept together. Take for instance Cadence data. You have four, five or six files that need to be kept together in order to represent the information in the cell view. To be able to version manage, to combine and to collaborate on different designs meant that anyone who was trying to create a version or keep track of the history or bring cell views together had to understand exactly the directory structure and all the details and files necessary. If you left one file behind, you could easily destroy that cell view and a lot of work. As the design rolls up to the final tape out obviously missing a single file could be quite disastrous. DesignSync is a design data management solution built to solve that problem and to provide a collaboration environment for users. As time went on they added a product called ProjectSync which extended the collaboration engine to include the ability to dialog and track details about things like issues. People often used the capability to collaborate on things like features, requirements, and even task check lists. It was a very extensible and flexible tool. It allows people to have a centralized way to say I’m going to create an issue that directly attaches to DesignSync data. Then multiple people could enter a dialog about that issue, keep track of status, walk through things like approvals and close out issues while making sure all that information was available in a central way such that people could always have that status and history. Later in the company’s history they introduced the concept of an IP reuse catalog based upon the underlying DesignSync vault. As designs reached the complete state, you would have a place to catalog and reuse design. It would be natural then to vault these designs in a DesignSync structure and provide the user a way to say “Here’s a version that is complete. Yes I still need to be able to keep track of it. I still need to be able to collaborate on it because people may download and use it. I would like to know who is using this design in case there are issues that are found downstream that need to get back to the designers. I may need to have similar collaboration discussions around this. I would like to notify other consumers of this piece of IP whether this was internally developed or externally purchased. I want people to be able to subscribe to informational broadcasts or emails about new things that are created or when updates become available.” Once we had this whole tiering of architecture, people in the company began to talk in a manner very similar to that of product lifecycle management. We were effectively providing a way to manage the lifecycle of this EDA design all the way from the beginning to work in progress through full development and publication and even into its reuse lifecycle. I think that in part this is what attracted MatrixOne to eventually purchase us. From my point of view we seem like a deep dive into the electronics and semiconductor industries. We really expose the kind of things that they were always trying to do in PDM first and then in PLM. But we at Synchronicity dive down deeper and start maybe a little bit earlier and have a very robust lifecycle around work in progress.
How big a company was Synchronicity when MatrixOne acquired it?
I don’t know the exact count. But it was probably near 100 people as a pre-IPO company. I don’t know what the revenue numbers were.
When MatrixOne took over in August 2004, what changes were made in how you did business or in product direction? Was Synchronicity left to operate with a large degree of independence?
I would say a little bit of both. There is certainly an audience that is doing things at a different level than some of the other PLM customers in some other industries. I know one of your questions is “Why is PDM in EDA is so different from MCAD?” We have a lot of use models that get into detailed design processes. A lot, especially the DesignSync product, have their own progression. When it comes to ProjectSynch and IP Gear, the issue management and collaboration part, and the IP reuse part the MatrixOne acquisition was very natural and fortuitous for us. At the time we had been looking at how we could create a more enterprise wide version of these solutions. In part we were looking to build out these products in a Java engine, a J2EE environment. This is one of the things that the acquisition brought to us, an already made enterprise server. This is part of what we just released as the next generation of these products. In this new environment they are clearly more scalable than the original products years ago. The Java environment also means that instead of being little old Synchronicity and building our own, we are able to use something that is highly scalable and has already been deployed at many, many customers. We are able to inherit functionality that has already been produced rather than having a long list of things that we would want to eventually get on this new platform. It is very natural evolution for us in those regards.
It has also brought too us a couple of things which I did not foresee at first. There are a lot of areas of synergy. One of the areas that our customers tried to pull ProjectSynch into was broader project management. They were looking for things like work breakdown structures and task management. That was one of the first projects we created after the acquisition even prior to migrating the ProjectSynch and IP Gear material over to MatrixOne. We created a product called Semiconductor Accelerator for Enterprise Product Management. What this did was allow the DesignSync vault and work that the end user did at the design level to drive work breakdown structures in the MatrixOne platforms in a product called Program Central. The combination of the value of these two things is bigger than the sum of the parts because neither of these could really address this space without the other. DesignSync has detailed control and handoff of the data that the engineers were checking directly into Cadence and Synopsys environments. We were able to provide a natural way to drive these schedules. Otherwise people were forever going to use sneaker net for updating managers and managers of managers of the status. This sort of synergy was kind of a surprise for me. I think we will have some other areas of possible synergy. In a lot of ways we have kept to our strength but we are finding a lot of ways the larger organization the larger set of functionality are giving us ways to add things that were not in our plan years ago.