Product-life-cycle management is quickly maturing as a major category of enterprise software, and the leading PLM vendors' revenues are reflecting that growth.

Just last week, UGS Corp. reached the $1 billion mark in total revenue for 2004. That was also the case for Dassault Systèmes. The company reported annual revenue of 796.6 million euros, which translates to slightly more than $1 billion at current exchange rates. Other PLM vendors like Agile Software, MatrixOne, and Parametric Technology are also performing well, industry analysts say.

Billion-dollar vendors like Dassault Systèmes and UGS are showing long-term commitment to the PLM space that big companies can count on, says Kevin O'Marah, VP of AMR Research. This week, for example, UGS signed an agreement with Volvo Group to globally deploy UGS's virtual manufacturing tools. Volvo Group will use the Teamcenter Manufacturing knowledge-management and collaboration software, the E-factory digital manufacturing software, and the Tecnomatix applications to manufacture trucks, buses, construction equipment, diesel engines, and aero engines.

Following in similar footsteps, Delmia Corp., a Dassault Systèmes company, revealed a multimillion-euro sale of its Delmia Digital Factory to DaimlerChrysler Corp., which will use the software for planning and optimization processes for digital product and process validation, assembly, body manufacturing, and chassis and assembly production, as well as logistics for DaimlerChrysler vehicle projects.

PLM vendors are also expanding through acquisitions. Agile's acquisition of Cimmetry Systems last week will add about $12 million to the company's total revenue, but more importantly it will add well-established visualization technology to Agile's portfolio and could open doors to new business, O'Marah says.

But the despite the growth that the PLM market is experiencing, existing and potential customers need to watch out for several pitfalls, O'Marah says. Some of these include poor integration; architectural considerations for network capacity, data access, and analytics; making a business case strictly around time to market; and choosing the right vendor in a market where there's both consolidation and the emergence of new vendors such as Arena Solutions Inc. and Autodesk Inc.