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

• 

Max
It is a less powerful version of Aspen Plus

• 

Advent
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
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– 
– 
– 
– 
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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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