A long term vision
Continuing its focus on the long term, the new 2017-2019 roadmap is the first step in Lectra’s development plans for the coming decade.
Millennials shaking up rules, the digitalization of businesses, the emergence of Industry 4.0, and China’s evolving economy are four major emerging trends, already perceptible and expected to be felt with growing strength, generating many challenges for the fashion and apparel, automotive and furniture industries.
In order to effectively respond to changing demands and to bolster their competitive position, businesses need to speed their implementation of the vital technologies required to achieve their objectives: while controlling costs, they need to improve flexibility and ensure rapid responses, to boost efficiency across processes, to guarantee product quality and ensure shorter time-to-market for products.
Lectra, an indispensable player in Industry 4.0
Such necessities require businesses and practices to be more collaborative, agile and efficient. These requirements are converging towards the major principles of Industry 4.0, which, in particular, enable businesses to shift from mass production to profitable, large scale personalized production. Factories are at the heart of the value chain, propelling a new digitalized lifecycle for products.
This shift will force all businesses to integrate smart, connected solutions and services, an essential condition of continuing competitiveness in the digital age.
For Lectra, the capability to support customers as they face these key challenges is encapsulated in one concept: Industry 4.0.Selling software as if it were a service—SaaS—, reinforced by cloud technology, is opening up new horizons for innovation. Industry 4.0 is an unprecedented opportunity for Lectra.
Developing the business model for profitable, long-term growth
The 2017-2019 strategic roadmap was framed to enable Lectra to consolidate its global leadership within this new context and achieve sustained growth, while maintaining short-term profitability and continuing to focus activities on its main market sectors: fashion and apparel, automotive, and furniture.
Five strategic objectives
To accelerate revenue growth, both organic and through targeted acquisitions
To accentuate Lectra’s technological leadership and leverage new technologies to further enhance the value of its products and services offer
To strengthen Lectra’s competitive position and long-term relationships with customers
To progressively transform most of its revenues from new software licenses into recurring subscriptions by establishing a SaaS business model
To maintain the Group’s profitability and generate a high level of free cash flow in order to self-finance internal and external development (1)
(1) Other than potential acquisitions whose scale might require additional financing
Five Growth accelerators
In addition to Industry 4.0 and SaaS offers, Lectra is counting on the following accelerators to boost its growth
6 to 12% annual organic revenue growth
15% annual operating margin before non-recurring items, potentially lower in the first two years reflecting the acceleration of Lectra’s shift to the new SaaS business model
80+% Percentage of annual fixed overhead costs covered by gross profit on recurring revenues.
Based on like-for-like comparisons. These objectives will be adjusted if the company executes one or more targeted acquisitions over the period.
Increased investment in design and development of Lectra’s offers
Lectra believes it has the necessary resources to achieve its growth potential. The company will continue to invest actively in innovation to constantly reinforce its competitive leadership and its value proposition by increasing the share of revenues dedicated to R&D to 10% for the period from 2017 to 2019—a rise of about 50% of the amount of R&D investments in 2019 compared to 2016.