After ERP, CAD-CAM shines in SME segment

CAD-CAM vendors are looking for fresh markets beyond their traditional hunting grounds in the automotive industry and aerospace. Indian SMEs are their new target, says Abhinav Singh

To grow, Indian SMEs have to be cost-competitive, improve product quality and be innovative in product design, says Vivek Marwaha

There was a time in India when the usage of CAD-CAM tools was restricted to the automotive and aerospace industries. Today, CAD-CAM is used for designing watches, jewellery, kitchen appliances and television sets, in addition to traditional automotive and defence equipment. Tools that were earlier restricted to large manufacturers such as Tata and Bajaj are now available to small and medium enterprises. SMEs have latched on to these tools to reduce design cycle time, cut the number of errors at the initial stage of production and reduce the time-to-market. With fully-functional 3D CAD tools becoming affordable and hardware prices falling (low-cost desktop workstations are good enough for 3D CAD today), Indian SMEs are making the transition from their existing 2D CAD tools to 3D.

SME spend is rising

Vendors say that spending among SMEs on CAD-CAM products has increased tremendously. There has been a substantial increase in the number of CAD-CAM customers and these smaller customers account for a bigger chunk of their revenues than large enterprises. Bhupesh Lal, director of marketing at PTC India says, "30 percent of our revenues in India comes from the SME segment. We expect this number to increase." Indian SME customers spend Rs 80 crore on CAD-CAM solutions annually, a number that is on the rise. That said, demand for CAD-CAM products from large enterprises has not gone down, it is just that large numbers of Indian SMEs have started adopting CAD-CAM solutions.

Growth triggers

Shorter development cycles
Gone are the days when product development cycles were long and SMEs could develop products at their own pace. To remain competitive and survive it has become imperative for SMEs to develop products in a shorter timeframe and market them as quickly as possible. Most large enterprises are outsourcing work to SMEs. Since large enterprises have to maintain an efficient supply chain, it’s the SMEs and ancillaries who have to improve their operational efficiency.

Up to 70 percent of component manufacturing is outsourced by automobile companies, says Bhupesh Lal

Need for quality standards
CAD-CAM tools have become a basic requirement for Indian SMEs who find themselves part of a global supply chain where they have to comply with international quality standards. Peter Leihn, product marketing manager of manufacturing at Autodesk, South Asia-Pacific says, "Indian SME companies can no longer rely on cheap labour. They need to have a technological edge to stay competitive and deliver quality products. We see more Indian SMEs adopting CAD-CAM solutions." SMEs working with large OEMs are increasingly being forced to exchange design data in digital formats. This in turn is leading them to adopt CAD-CAM products in a big way.

Export market for design services
SMEs are looking beyond the domestic market. Many Indian ancillaries have started supplying materials to foreign OEMs and are using CAD-CAM tools to tap export markets to the fullest extent possible. Vivek Marwaha, head of marketing at EDS PLM Solutions India says, "In order to address the fiercely competitive global market, it has become necessary for Indian SMEs to be cost-competitive, improve product quality and be innovative in product design. To accomplish this it is imperative for them to automate their design processes using CAD-CAM tools."

Shift to 3D tools
Indian SMEs are migrating to 3D CAD tools that are affordable and are priced within a range of Rs 2 lakh to Rs 12 lakh per licence. Besides, Indian SMEs work on reasonably priced Pentium 4 workstations. With CAD-CAM players flooding the market there has been a tendency on their part to reduce prices to gain market share. K Varghese Daniel, director of CADD Solutions says, "While designing a product, the drafting stage takes a considerable amount of time. This stage has become fully automated with 3D CAD-CAM tools that run on basic Pentium 4 workstations." Many product vendors are banking upon this migration to gain market share among Indian SMEs. Marwaha says, "We are addressing the requirements of the SME market with Solid Edge, a 3D CAD application." Likewise, Inventor 7 from Autodesk is a 3D mechanical design system for mechanical designers and engineers.

According to Peter Leihn, Indian SME companies can no longer rely on cheap labour but need a technological edge to stay competitive and deliver quality products

Outsourcing drives adoption

Automotive suppliers are among the biggest users of these software tools. However, today most large automobile manufacturing companies are outsourcing their work to SMEs in order to cut overheads. Lal says, "40- 70 percent of component manufacturing is outsourced by automobile companies, this includes steering, speedometer and seats." A lot of consumer product manufacturers have also come forward to adopt CAD-CAM tools in India. For instance, Titan designed the world’s thinnest water-resistant watch using PTC’s tool, Pro/Engineer, in India. SMEs in healthcare, telecom and IT have also been adopting CAD-CAM solutions in a big way.

Focus on RoI

The SME segment in India is driving the overall growth of CAD-CAM vendors. Indian SMEs have realised the importance of CAD-CAM tools that help in paring costs. Leihn of Autodesk says, "In recent times, there has been an increased focus on return on investment (RoI) by companies and it has become an integral part of pre-sales activity in technology. Some customers insist on RoI calculations before making an investment. This is important since in the case of a design company, 10 percent of costs are spent on creating the design in a product lifecycle." Any way you look at it, CAD-CAM vendors will continue to see sunny times in the SME space.

CAD-CAM products targeted at Indian SME segment