When the Jaguar Racing Formula One team finally made it onto the podium at last month's Monaco Grand Prix - with Eddie Irvine in third place - the champagne corks were popping a long way beyond the motor racing fraternity.

One man who had reason to be cheerful was Tony Affuso, president of US-based UGS, whose Unigraphics design software is used by the Jaguar team. Mr Affuso is unlikely, however, to have much spare time in the next few months to watch any further achievements by Jaguar on the track.

Last month, less than a year after Mr Affuso took over from John Mazzola at the helm of UGS, its parent company EDS announced it was snapping up the 14 per cent of the company that it did not own, and at the same time purchasing Structural Dynamics Research Corporation (SDRC), hitherto one of UGS' big rivals in the computer-aided design and manufacturing sector. The two companies will be combined under the UGS name, and Mr Affuso gets the top job.

Much of the press coverage immediately following the EDS announcement focussed on how the $1.1bn outlay by the US IT services and consultancy group would give it a new fifth business leg. But lying at the heart of the soon-to-be-expanded UGS is Mr Affuso's vision of what the Cadcam industry is turning into, and what industrial customers are increasingly seeking from their design and manufacturing software.

It was Mr Affuso who recommended the SDRC takeover to EDS several months ago, and he and his team who will have to make it work. "There is no question that it's going to be a big effort to undertake," he says. "It's one heck of a challenge."

Mr Affuso approaches his job with the methodical, no-nonsense thoroughness you would expect of an engineer with more than 30 years of experience in the manufacturing automation industry. A striking contrast to the more languid, deep-thinking Mr Mazzola, he is "really an engineer who's moved into computers and never went back," says Mike Evans, senior partner at Cambashi, the UK-based IT consultancy.

The world that UGS and its rivals are now operating in has truly emerged from the design office where it began in the 1970s. Computer-aided design is now just one element in a range of software and services that are being brought together by the internet into a phenomenon variously known as collaborative commerce (or "c-commerce"), collaborative product development, or product lifecycle management.

However this is defined, the salient features are use of the internet to accelerate and optimise the product development process across an extended supply chain. It encompasses not only the design and collaboration tools that engineers use, but also visualisation tools enabling people across an enterprise, such as managers, to participate in the development process, and software for "virtual manufacturing".

This all-encompassing vision may sound simple and sensible but, beneath the surface, as so often in the IT industry, is a profusion of three-letter acronyms and a morass of practical issues involving standards, interoperability and co-operation with vendors in overlapping areas of responsibility.

It is an environment where size and financial muscle - and a willingness to co-operate with suppliers of software and services from related fields - will be increasingly important, most analysts believe, as customers will not want to implement collaborative commerce on a piecemeal basis. As Mr Evans puts it starkly: "The Cad business is over. The concentration of what used to be the Cad business into an engineering applications business is in full flood."

Hence the need for consolidation in what used to be called the Cad sector - the UGS deal leaves four companies or groupings with roughly $1bn of annual revenues each. "As we look out to the future we believe in this digital process," says Mr Affuso. "We wanted to be out in the forefront of helping to make this happen, and scale and resources was very important to us."

Fuller access to EDS' IT consulting and integration skills could also pay dividends when dealing with customers seeking broad-scale applications, he says. The two companies have hitherto maintained an arms-length relationship, and are already starting to work more closely together.

Mr Affuso deals confidently with the questions raised by this strategy, the most important of which is the readiness of customers to buy into the vision. "We've had a tremendous reception as we talk to customers," he says. "They're very warm and interested - it's logical and it's rational. We think we can achieve this vision, and they can see the proof in the products already out there."

Despite the current nervousness among the IT industry's big customers, he does not believe market conditions will delay the implementation of the collaborative commerce vision in the long-term. "We saw a little bit of a slowdown in the first quarter," he says. "We were hoping to have a blow away quarter, but I think the economy got pulled back a bit."

In the automotive sector, now even more important to UGS after the SDRC takeover, some customers were hesitating to make orders, he says. "But I don't think they're going to hold back for a whole year, they were just waiting to see what was going to happen. In other cases, they are looking at this technology and saying 'We need to get there'.

It's a matter of survival, this networked collaboration with the supply base."

There is too, the tricky challenge of integrating the two companies - not always an easy task in the IT industry, whatever the sector - while at the same time managing the transition from being simply a supplier of Cadcam and PDM (product data management) software to participating in and shaping the c-commerce revolution.

Mr Affuso points out that UGS has made four sizable acquisitions in the past four years - culminating in the $205m takeover last September of US-based Engineering Animation, which develops visualisation, collaboration and analysis tools. "We did all four successfully, and hardly missed a beat," he says.

The SDRC takeover is much bigger, but the two companies' cultures are very similar, he says, and they already have teams working together. There will be some fall-out, inevitably - workforce reductions, building and facilities consolidation and reduced payments to third-party companies will cut post merger-costs by about $70m or 7 per cent.

Bill Weyand, the affable chief executive of SDRC, is due to stay on as adviser for six to nine months after the merger is sealed, probably in September.

As befits an engineer with his feet on the ground, Mr Affuso is not getting carried away by the c-commerce vision. Along with its peers, UGS has what Mr Affuso calls a "nice business model" which starts with Cad and works through PDM to the newer visualisation, collaboration and digital factory businesses. So if the market for the traditional products is maturing in the US and western Europe, there is plenty of scope for growth elsewhere, and a wide range of possibilities for the company to exploit.

"If you look at Asia, they are behind that curve, still going into 3D Cad, but beginning to think about PDM," he says. "Also, however, many Asian companies are really hot on the internet, so our collaboration capabilities are attractive to them."

Abandoning the traditional Cad business - the lifeblood of mechanical engineering companies worldwide - would be "a mistake that we don't intend to make," stresses Jim Duncan, UGS's European chief. "We're still spending a ton of money in this area," he says.

If it sounds like UGS's managers have a lot on their plate, there is at least one thing they will not have to worry about with the full takeover by EDS. On the stock market, the relative underperformance of the solidly profitable UGS in the dotcom hype of the late 1990s was a source of irritation for Mr Mazzola, and there is a certain sense of schadenfreude at UGS since the dotcom boom turned to bust a year ago. But Wall Street institutions were never too keen on a stock with such a small float.

Mr Affuso says the loss of a public quote will take some of the pressure off, in terms of satisfying the demands of the quarterly results treadmill, although he stresses that, as part of a much larger group, "we've still got to make our numbers."