CoCreate banks on attractions of brainstrorming across the Internet

The Hewlett-Packard spinoff is confident it can steal a march on competitors with its OneSpace collaborative design system and convince high-tech companies that it will save them time and money and improve their design processes.

When CoCreate was spun out of Hewlett-Packard in September in a management buyout, it took its place as a new small player claiming a stake in a large, aggressive market.

The CAD company that grew out of Hewlett-Packard’s in-house design facility finds itself in a market where spending on big ticket 3D CAD systems by the automotive industry is hitting a plateau.

So why have venture capitalists 3i and Triton put up the cash to allow CoCreate to go it alone?

The answer is design collaboration over the internet. Despite growing numbers of other players in this field, CoCreate and its backers believe the company still has a technological advantage over similar-sounding offerings from much bigger players: Enovia from IBM, Windchill from PTC, iMAN from Unigraphics, and the rest.

CoCreate’s collaborative system is based on its OneSpace product, which was launched a year ago. It allows CAD drawings from half a dozen different systems to be viewed and amended simultaneously by designers in different locations, while retaining a high degree of accuracy. Tilman Schad, CoCreate’s president and chief executive officer, likens its effect to the kind of informal brainstorming discussions that used to take place in a drawing office in pre-CAD days, when design, manufacturing, engineering and sales people would cluster around a single drawing, sketching out amendments and arriving at a solution together.

‘In a way, it’s back to the future,’ Schad says. ‘Engineers today have become a bit too de-socialised. They don’t discuss enough. They create a design and then go into defensive mode. With CAD today, you can end up with the most impressive images of something that doesn’t work.’While such collaboration seems eminently sensible, the market for this technology is still small, and remains strictly the domain of so-called ‘early adopters’ , the small part of the market which is enthusiastic about new technology — and prepared to put up with the bugs.

But the gamble which CoCreate’s managers and backers are taking is based on the market catching on to their idea. Over the next two to three years, CoCreate aims to more than double its turnover, with the bulk of the growth (five to ten-fold) coming from OneSpace. ‘It’s not a ridiculous goal, but it’s ambitious,’ Schad admits.

OneSpace currently accounts for less than 10% of CoCreate’s $80m turnover. And with continuing development costs, these sales have yet to make money, being largely financed by revenues from CoCreate’s CAD products. So the race is now on. Schad reckons the company has a 12- to to 18-month technological lead over the systems offered by its bigger rivals. But it is not an easy market to crack open. For one thing, CoCreate could be slightly ahead of its time in terms of mass market acceptance. In addition, while the high-end CAD companies’ own collaborative design offerings may be less effective, they are being marketed with much bigger budgets and sales forces than those available to CoCreate — muddying the waters over what ‘collaboration’ means.

In fact, software companies everywhere are about to muscle in on the act. ‘There is a huge focus now on reinventing the design process,’ says Mike Evans, a director at industry analyst Cambashi. He cites an MIT survey back in the mid-1980s which showed that more time was spent on design review than on the process of design creation itself. ‘That situation is unlikely to have changed,’ he adds. ‘People are looking at systems that will add value and create partnerships.’ While this raises the stakes in terms of competition, it will eventually make the market more receptive. CoCreate is pouring resources into sales, aiming to find the early adopters and convince them that OneSpace will save time and money. The target is the electronics sector, with the focus on the US and the Far East.

The sales story there should be fairly straightforward. After all, OneSpace was originally developed for use by Hewlett-Packard, a company that subsequently became seen as ‘best-in-class’ globally in its product development process.

Apart from electronics firms, other targets could be engineering companies contracted to, say, car makers — such as Lotus or Ricardo in the UK. Indeed, the product could appeal to any high- tech contractor.

Similarly, packaging companies or industrial designers could have an interest in being brought into the product development process in a much more interactive and detailed way from the outset.

For the 560 people working at CoCreate, the cultural change of the shift out of Hewlett-Packard has been dramatic, though around 95% have stayed with firm, encouraged by profit sharing schemes and stock options. Three years down the line, CoCreate will probably go for a stock market flotation, or else be sold to a rival group. Assuming it has read the market correctly and has the relevant technology, the company’s future is now in the hands of its management, engineers and sales force.