The Conversation: Bernard Charlès, VC & CEO, Dassault Systèmes

SOFTWARE IN FACTORY

Until a decade ago, the world was running on traditional manufa- cturing. In many sectors, China was creating huge capacities, with Europe, U.S. and other emerging economies consuming most of its production. That’s changing. With emergence of 3D printing, sensors, Artificial Intelligence and Internet of Things, software is taking centre stage in manufacturing. How is this changing the world?

The top priority 10-15 years ago was improving product quality and reducing errors. We were the first company to do full virtual twin of a manufacturing system. We made major advances with Toyota on quality of production systems and capacity to master those systems in a consistent way across the world. For example, in every Toyota plant, there is a room at the ground level called the V-Com (virtual communication) room. When there is a problem in the line, people enter that room, pre-set with names of roles, not people but their jobs, and immediately connect with Toyota City (Toyota headquarters), where there’s a sister room/the twin room. People there see the problem on their gigantic screen and provide help in solving it. That was started 25 years ago. It was a secret programme. There’s no doubt that on parameters such as quality, traceability and quality of cooperation, this virtualisation, called digital design then, has transformed products and processes to a point where we can now redefine how supply chain works.

The new conditions are becoming game-changing. What we did before for quality, speed and lowering cost is now becoming a question of reducing dependency. The focus is on better management of processes and raw materials needed for security as well as thinking about what happens to what you create when it is not in use anymore.

Carmakers are no longer making car parts, while drug makers are personalising medicines. What are the challenges such changes are bringing for innovators?

We are catalysts for such change. Take Tesla. It is an energy company. It is providing infrastructure to move from point A to point B. Yes, they do cars, but with a lot of additional services. I can list the challenges of moving from cars to mobility as a service. One, you need to have a view of the entire system and understand the entire value chain right from producing the car to the way it is used. Two, you need to provide connectivity vis-a-vis services so that users, workers and citizens are able to take advantage of those services. We did a paper on the experience economy in 2012. We did a world tour for one year to explain details of Dassault Systemes’ move from product to experience economy and how it will use the platform for virtual presentation of products and systems.

A concrete example is our work with Moderna (1) and BioNTech. Most pharmaceutical companies do research, development, clinical trials and say bye (to us) when they get approval and certification. Going forward, they will also have to carry out surveillance of how precision medicine is working. That is what we are doing. We acquired the health software company, Medidata, for almost $6 billion to create a platform for clinical trials that can be a one step to tracking therapeutics in real life. That is why we are doing ‘sensor cloud’ (use of sensors to collect data and transmit it to Cloud). The structure of the healthcare system is not oriented towards that yet but regulators are opening their eyes and new players are going to turn the rules anyway like Tesla did.

India is debating data protection laws. You have about three lakh customers as partners. Each of these companies generates a lot of data and IP. How will you secure such data and IP?

We always had this challenge while protecting their data. I will give you an example. When we did the first digital twin of an airplane, the Boeing 777 (2) , nobody believed we could do the entire airplane digitally. We also completed the process of assembling it virtually. Humans do not have capacity to observe a highly complex system like this airplane and replicate it. But if a player had access to our digital reference, it would be able to replicate it. Till now, most of our systems were used internally. Exposure with supplier was the weakest point. So, we developed techniques, called data segregation, for traceability. Now, we are applying those technologies on Cloud.

INDIA CLIENTS

When you talk to an SME, say, a medium-scale company with ₹500 crore revenue, the first thing it will ask is, how I will benefit? Do you face such questions from companies in India?

Yes. But I look at their track record. For example, we have design tools for mainstream market that are relatively easy to justify. For example, a technician designing a part in his MSME can do a stress test without being an engineer, without being a scientist who knows finite element analysis. This is what we enable. One of our brands is a de-facto world standard for 3D design (3). It is easy to justify value quickly, though it doesn’t mean the customer will decide, as the question is — can it train people to take best advantage of our tools?

When you say manufacturing, which are the segments, apart from pharma, that are about to take off?

Biochemistry and biotech. And firms that have understood that things are becoming systems and there is need for integration between software, mechanical and electronics for doing smart work. Drones are a good example. A drone is not possible as electronic, software or mechanical equipment alone and requires a high level of integration. That is what I call a system or cyber system approach. Security is a small slice of a big governance framework. We are creating new needs for the way one produces, the way one designs or the way one certifies. That’s where we are in India.

Globally, a lot of disruptions are happening, especially in the way we are going to live. Energy forms that have been there for 100 years, the way we travel, etc., are all going to change. India is creating a lot of infrastructure, apart from new energy forms. How do you see prospects in India?

The prospects are gigantic. We use virtual worlds to imagine and create better solutions. Now, the focus is on making the product circular. That’s what modelling simulation (4) can bring to the real world. We can see that with clients like L&T or projects that Reliance or life science companies or start-ups are doing. This understanding of the new possible is creating a massive opportunity for India.

In case of energy forms, for example, I hope India takes a systemic as opposed to a one-topic approach. It’s a system you need to connect to infrastructure, with technical solutions available at some downtime. As you move on, look at EVs or E-mobility. Even drones could do a lot, like what 4G did. We have more opportunities in India to showcase a new circularity approach for what I call the experience economy. Experience economy for me is to stop thinking about product function and look at how useful it is in real life. And if you look at what is used in real life, you can simplify the offer.

You have been a regular visitor to India for over 25 years. What changes do you see here? How is the business environment evolving with changing times?

I remember that I used to come here very often for 15 years. But 7-10 years ago, I saw a new evolution, may be because we knew more and were more connected with people. For example, while meeting Mr. Ratan Tata at that point in time, we started discussing innovation, about trying different things in different ways, more frugal, more suitable to the state of the society, the state of the economy.

Now, in recent years, I have seen a new approach to the economy with more focus on what we can do differently and sustainably. This year, especially, it has been a core topic for us. We started with subcontracting activities here with our R&D lab in Bangalore. We were careful about what to share, what to do and what not to do here at the beginning. Then we discovered that the resources here were much more capable of creating new things. What we share with them are real customer needs, more on the product definition side than the validation side. Our R&D lab here is becoming on a par with our big labs around the world. So, there is a pathway which I feel good about. It is an interesting evolution.