Engineering Software Market Update – March 2023

The ecosystem of engineering, as well as manufacturing software, is at an inflection point.  Almost all vendors are looking to expand outside their traditional markets, mostly by acquisition.  Additionally, new technologies such as electric vehicles are posing new demands, along with new product development challenges for the ecosystem as a whole.  We see these dynamics leading to opportunities for new companies, and towards consolidation across the industry

Madison Park Group actively tracks the broader Industrial Technology market and has dedicated significant attention to the Engineering Software landscape. We are particularly interested in several trends which are affecting product development and M&A in the space:

• Industrial equipment manufacturers are folding EHSQ guidelines into their designs and are looking for products to help them address these needs. This introduces opportunities, as well as challenges, for engineering software providers. The same is true as manufacturers look for ways to aggregate and analyze carbon roll-up and sustainability as part of their designs

• Private equity firms across the spectrum are expanding their thesis and interest in the engineering software space. Many are looking for a base platform on which they can provide a broad product offering using acquisitions.

• There continues to be significant interest and discussion around the concept of digital twins and the real-life applications of this technology. However, many components are still required to make digital twins truly effective for predictive maintenance and repair.
• Providers of traditional design, PLM, and CAE tools are pursuing strategies to expand out of their traditional (e.g., structural, CFD, etc.) markets. Broad themes of expansion include electronics, supply chain management, and general data analytics