Aspen Tech case study

Topics: United States dollar, Currency, Risk management Pages: 18 (1239 words) Published: April 26, 2014
Aspen Technology,Inc.:
Currency Hedging Review

History and Overview
•  Specialized in the development of simulation software for customer in process manufacturing industries
•  Advanced System for Process Engineering (ASPEN) project conducted at the Massachusetts Intitutes of Technology (MIT) in Cambridge Massachusetts, from 1976 to 1981
•  Founded in 1981 by Dr. Larry Evans, a professor of chemical engineering at MIT
•  Larry Evans"leadership in the development and application of integrated systems for modeling, simulation and optimization of industrial chemical process

History and Overview
•  In 1982 its first year of operations, AspenTech lost USD565,000 on sales of USD182,000
•  Over next 13 years AspenTech’s sales grew rapidly as it became a major payer in the process simulation segment of the software industry.
•  1995 company earned net income $5.4 million on sales $57.5 million. AspenTech estimated that it commanded 50% of the
simulation market for chemical sector.
•  1995, it employed 417 people of which 265 ware based in the US and the remainder in office in 5 countries.

History and Overview
•  AspenTech went public in USDD31 million IPO which included a USD 18 Million primary offering and USD 13 Million secondary offering :
–  to finance further R&D
–  to acquire externally developed technologies
–  to allow early investors to monetize their holdings in the company,

•  Feb1995, Aspentech conducted a $23 million public offering, which included a USD 1 million primary offering and USD 22 million secondary offering.
•  1995, AspenTech was the only one of the firms that specialized in simulation programs for chemical petroleum, and petrochemicals industries that was publicly traded.

Products (versi makalah)

Aspen Plus
Aspen Plus is the most popular product
a steady state modeling system built around the core technology This product accounted 48% of sales in 1995


Speed UP
It was AspenTech’s dynamic process modeling product
commercialized in 1986 by Prosys Tecknology that AspenTech purchased in 1991


It is a less powerful version of Aspen Plus


A software to optimize the tradeoff between capital expenditures for energy saving heat exchangers and the energy saving realized

Product Portfolio (versi makalah)
•  Properties PLUS
It is a database of chemicals properties underlying its other products, popular with customers ~ developed in-house modeling software

•  Other modules
–  offers to the customers ~ license separately
–  use with its other products to model subsystems used in highly specialized chemicals processing application.

Product Portfolio (versi web)

Process Engineering

Process simulation Chemicals (10 products : AspenPlus)
Process simulation Oil&Gas (8 products : AspenHYSYS)
Process simulation Refining (11 products : Aspenadsim+)
Process simulation Batch/Pharma (8 products :Aspenproperties) Model Deployment (3 products : AspenModelrunner)
Equipment modeling (8 products :AspenAcol+)
Basic Engineering (2 products :AspenKbase)
Economic Evaluation (3 products : Aspn Icarus Project Manager)


Advance Process Control (14 products : Aspen Apollo, Aspen IQ)


Planning & Scheduling (10 products : Aspen Advisor, Aspen MBO)


Supply & Distribution (3 products : Aspen Retail)


Production Management & Execution (16 products : Aspen 0server)

Sales & Marketing

1995, licensed to more than 450 companies ~ chemical industry and 350 univerities


The selling cycle for process modelling software was long (6-12 months)


AspenTech charged a premium over competitors products, raise licensing fees three times (1998-1995)~10%


Customer loyalty
–  Over 90% renewed their software
–  1994 : 34% revenue from software renewal; 34% from expansion from existing customer

Sales & Marketing

United States :
–  Directs sales...
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