Following on to last week’s quick post of PTC’s Internet of Things acquisition of Kepware, I’ve gone a little deeper into the build up to and the strategy of the acquisition.
First off, the Internet of Things is a strategy. It isn’t a “thing.” PTC management seems to “get it.” As you’ll read further down, PTC is not pursuing a simple bolt-on strategy such as what several companies have come to me to help justify. This appears to be a serious attempt to assemble a complete ecosystem / platform going beyond a simple IoT play to offer a business solution to customers.
Warning note. PTC is acquiring software companies and attempting to blend their technologies into a coherent whole. We’ve witnessed many of these seemingly simple processes go south quickly. But PTC has done this before in its core market, then again in the services market. I have confidence the company will show the way in a complete solution.
PTC is paying a large premium for Kepware–Up to $120 million for a company with about $20 million in annual sales. It obviously thinks there is a tremendous upside to its IoT business.
From the press release: PTC announced it has signed a definitive agreement to acquire Kepware, a software development company that provides communications connectivity to industrial automation environments, for approximately $100 million, plus up to an additional $18 million based on achievement of certain strategic initiatives and financial results. The acquisition will enhance PTC’s portfolio of Internet of Things (IoT) technology, and accelerate the company’s entry into the factory setting and Industrial IoT (IIoT).
Founded in 1995 and located in Portland, Maine, Kepware serves customers in more than 120 countries in such industries as manufacturing, oil and gas, building automation, and power and utilities. The company’s flagship product, KEPServerEX, connects disparate devices and control systems, providing users with a single source of industrial data.
Kepware’s KEPServerEX will become a strategic component of the PTC ThingWorx IoT technology platform. Once the companies’ products are integrated, machine data will be able to be aggregated into the PTC ThingWorx platform, integrated with a wide array of internal and external information, and then automatically analyzed using ThingWorx machine learning capabilities. The integration will allow organizations to gain enterprise-wide insight and to proactively optimize mission-critical processes – enabling them to improve operational performance, quality, and time to market.
In its June 2015 research report, entitled The Internet of Things: Mapping the Value Beyond the Hype, the McKinsey Global Institute identified the factory as one of the largest sources of potential value to be realized from the adoption of the Internet of Things. PTC has established a dedicated business segment and has formed a strategic alliance with GE to pursue this brilliant factory opportunity. The acquisition of Kepware is intended to complement the alliance with GE.
Kepware and PTC share many common customers that will be able to realize value from the acquisition. Industrial environments already leveraging Kepware technology will be able to benefit from the added breadth of capabilities available in the PTC ThingWorx IoT technology platform. The acquisition of Kepware will also provide a fast-to-value connectivity option for PTC customers to gain visibility into data from a vast range of industrial controls and production equipment, enabling them to kick-start their smart, connected factory initiatives.
“PTC is committed to helping manufacturers, infrastructure operators, and others realize the enormous value inherent in the Internet of Things,” said Jim Heppelmann, president and CEO, PTC. “With this acquisition, we will gain entry into heterogeneous factory and operating environments with robust technology, an impressive list of customers, and a high-quality, profitable company with incredibly talented employees.”
“Kepware and PTC share a common vision of helping organizations realize the potential of the Industrial Internet of Things,” said, Tony Paine, CEO, Kepware. “We believe this acquisition will benefit our customers, partners, and employees – and ultimately drive software innovation for industrial automation markets. We are excited for the opportunity to become part of PTC.”
Over the past 12 months, privately-held Kepware generated approximately $20 million in revenue. PTC expects to draw on its credit facility to finance this transaction and expects Kepware to be neutral to its FY’16 non-GAAP EPS. The transaction is expected to close in early 2016, subject to customary closing conditions, including regulatory approval. PTC intends to maintain the Kepware partner ecosystem and to continue developing and enhancing the Kepware technology, once acquired.
PTC Internet of Things Acquisitions
The acquisition of ThingWorx positions PTC as a major player in the emerging Internet of Things era.
The acquisition of Axeda allows PTC to leverage its core IoT technology to enable companies to establish secure connectivity and remotely monitor and manage a wide range of machines, sensors, and devices.
The acquisition of ColdLight’s Neuron automated predictive analytics platform will enrich PTC’s technology portfolio and extend PTC’s position as a leader in the Internet of Things (IoT) market.
GE and PTC announced that the two companies are partnering to deliver an innovative manufacturing solution that will be available within GE’s Brilliant Manufacturing Suite. This new GE-branded manufacturing solution leverages the capabilities of PTC’s ThingWorx Industrial Internet of Things application enablement environment. The result is an industry-hardened solution that features flexible dashboards and powerful data analytics integrated with GE’s software capabilities on the manufacturing plant floor.
ThingWorx IoT Platform
- ThingWorx Composer
ThingWorx Composer is an end-to-end application modeling environment designed to help you easily build the unique applications of today’s connected world. ThingWorx Composer makes it easy to model the things, business logic, visualization, data storage, collaboration, and security required for a connected application.
- Codeless Mashup Builder
ThingWorx “drag and drop” Mashup Builder empowers developers and business users to rapidly create rich, interactive applications, real-time dashboards, collaborative workspaces, and mobile interfaces without the need for coding. This next-generation application builder reduces development time and produces high quality, scalable, smart connected applications which allows companies to accelerate the pace at which they can deliver value-add solutions, resulting in greater market share against new and existing competitors.
- Actionable, Correlated Data from People, Systems and Things
ThingWorx is the only platform that can store and correlate data from three dimensions: people, systems, and connected things. This capability allows companies to make business sense of the massive amounts of data from those three dimensions – making the data useful and actionable. The platform supports scale requirements for millions of devices, and provides connectivity, storage, analysis, execution, and collaboration capabilities required for applications in today’s connected world. It also features a data collection engine that provides unified, semantic storage for time-series, structured, and social data at rates 10X faster than traditional relational databases.
- Search-Based Intelligence
ThingWorx SQUEAL (Search, Query, and Analysis) brings search to the world of smart connected devices and distributed data. With ThingWorx SQUEAL’s interactive search capabilities, users can now correlate data that delivers answers to key business questions. Pertinent and related collaboration data, line-of-business system records, and equipment data get returned in a single search, speeding problem resolution and enabling innovation.
ThingWorx dynamically and virtually brings together people, systems, and connected equipment, and utilizes live collaboration sessions that help individuals or teams solve problems faster. The ThingWorx data store becomes the basis of context aware collaboration and interaction among the systems users, further enhancing its value. Additionally, the tribal knowledge exposed during the process is automatically captured and indexed for use in future troubleshooting activities.
- Flexible Connectivity Options
ThingWorx “inclusive” connectivity strategy maximizes market opportunity and minimizes integration efforts. ThingWorx supports connectivity to devices via several methods, including 3rd party device clouds, direct network connections, Open APIs, and AlwaysOn connectivity.
KEPServerEX is a communications platform that provides a single source of industrial automation data to all of applications. The platform design allows users to connect, manage, monitor, and control diverse automation devices and software applications through one intuitive user interface.
KEPServerEX leverages OPC (the automation industry’s standard for interoperability) and IT-centric communication protocols (such as SNMP, ODBC, and web services) to provide users with a single source for industrial data. Designed around the four product pillars of Proven Interoperability, Centralized Communications, On-Demand Scalability, and Industrial Strength, KEPServerEX is developed and tested to meet our customers’ performance, reliability, and ease-of-use requirements.
KEPServerEX provides critical technical features that are centralized around accessibility, aggregation, optimization, connectivity, security, and diagnostics.
OPC is the leading standard for industrial automation connectivity. KEPServerEX supports the OPC Unified Architecture (OPC UA) specification and many of the OPC Classic specifications, including OPC Data Access (OPC DA), OPC Alarms and Events (OPC AE), and OPC Historical Data Access (OPC HDA).
KEPServerEX has preferred access to leading automation software, including iFIX by GE Intelligent Platforms (NIO) and InTouch by Wonderware (SuiteLink/FastDDE). KEPServerEX also supports preferred access to Oracle MES and MOC solutions through their proprietary API.
KEPServerEX supports multiple interfaces for integration with IT applications, including ODBC for logging information to a database and SNMP for providing information to a Network Management System (NMS). With the advent of IoT and Big Data applications, KEPServerEX now includes the ability to communicate with Splunk software and cloud services via the Industrial Data Forwarder for Splunk.
With the IoT Gateway, KEPServerEX can seamlessly stream real-time industrial control data directly into Big Data and analytic software for Business Intelligence and Operational Excellence. Its customizable data format supports most MQTT and REST applications—enabling users to choose the vendors and communication methodologies right for their system.
Some applications require information to be made available from a file or database. This information is typically exported at a predefined rate and includes both current and historical data. KEPServerEX has the ability to export historical Electronic Flow Measurement (EFM) data (via the EFM Exporter plug-in) or historical trend data (via supported drivers) to files and/or databases.
KEPServerEX is a communications platform that can support connections to thousands of data sources and provide information to hundreds of applications. The platform design simplifies the configuration of the connected applications by providing a single point of entry to all information. KEPServerEX also enables troubleshooting and issue diagnosis, provides control to the access of information based on user roles, and the ability to restrict the frequency of communications over bandwidth-limited telemetry-based environments.
KEPServerEX provides a unified configuration for managing connectivity to any data source. Anything can be added, configured, or deleted while the server is on-line and operational. Users can configure projects manually using a step-by-step wizard or programmatically through the export and import of XML and CSV files.
KEPServerEX is capable of archiving the real-time data it collects to local storage. By leveraging the Local Historian plug-in, applications can access this historical data (via OPC HDA) for future analysis. KEPServerEX can also store information in any ODBC-compliant database using the DataLogger plug-in, which has a store-and-forward capability for when a database is unreachable or unable to process the information fast enough.
In addition to providing raw values to connected applications, KEPServerEX can perform linear or square root scaling, perform basic arithmetic expressions, or apply deadband calculations on raw data and provide its aggregate. This provides minimal bandwidth and resource utilization by providing only the most critical updates.
KEPServerEX is used in critical applications where highly-reliable systems are required for maximum uptime. It includes the ability to define redundant network paths, primary and secondary data sources, and applicable failover criteria.
In large networks that have many devices and applications requiring information, flexible control is necessary to allow for customized load-balancing of data collection and information flow. KEPServerEX provides tools to schedule the frequency of communications and throttle the demand across the network.
KEPServerEX optimizes communications with devices by aggregating identical requests from different applications whenever possible. Multiple demands on data can be batched together into the fewest requests possible. These optimizations are unique to each protocol, and are designed to reduce network overhead and device processing.
In a typical industrial automation network, devices and controllers must communicate with one another even if they are not from the same manufacturer or do not support the same protocol. KEPServerEX provides the ability to establish links between data values in different data sources, allowing Machine-to- Machine (M2M) communications as close to the device as possible.
KEPServerEX offers the broadest range of drivers available, supporting devices across various verticals within the Industrial Automation Industry. While most drivers act as masters that initiate requests, there are many drivers that can emulate a device where communications are driven by a controller. KEPServerEX drivers also support a variety of wired and wireless network mediums for Ethernet, serial, and proprietary networks. Although most drivers connect directly with hardware devices, some are designed to connect with other applications—such as databases, custom software applications, or other OPC servers.
Industrial automation equipment can be deployed in a dry and heated factory, but it can also be installed inside a vehicle, on a remote pipeline, or in a well or pump station. In these remote environments, there are often a variety of telemetry solutions in use like cellular, radio, or satellite modems. KEPServerEX supports these telemetry configurations and provides additional ways to optimize communications through virtual networks, timing parameters, device demotion, and by scheduling communications across devices.
As automation networks have grown from ten controllers to thousands of controllers, tools that aid and accelerate deployment are critical to a solution’s success. KEPServerEX provides many tools that speed the deployment of new devices, including Automatic Tag Generation (ATG) and Device Discovery (when supported by the device and communication protocols). Users can also export, manipulate, and import an XML project file to programmatically define the configuration.
As systems are configured, components must be implemented and tested before the entire system becomes available. KEPServerEX allows any data source to be placed into simulation mode prior to deployment. In addition, the Memory Based driver can be configured to create a range of static and dynamic data points. The Advanced Simulator driver can leverage a database and its contents to drive application-specific simulation data into connected applications.
Access to the KEPServerEX configuration can be restricted through the User Manager. This tool allows the administrator to define user groups and users with restricted access to certain project configuration tasks, and also provides the ability to disconnect client applications.
There are various tools available within KEPServerEX to control user access to the server, data source, or data values. The Security Policies plug-in limits access based on OPC UA user credentials while supporting default handling for anonymous users (both OPC UA and other client interfaces). The ability to dynamically address information can be disabled, limiting user access to tags defined within the project. KEPServerEX supports a number of secure client standards including SNMP (v3 security), OPC UA, and OPC DA (DCOM security) to further restrict access to the server, as well as a number of secure device protocols to meet the requirements of DNP3, SNMP, and OPC UA data sources. Secure data tunnels can be configured by leveraging multiple KEPServerEX instances at remote endpoints to pass data through firewalls and meet authentication and encryption requirements across the Internet.
OPC Diagnostics provide a real-time and historical view of OPC events between any OPC client and the server, including method calls made by the client or callbacks made by the server. The ability to view actual communications and responses is invaluable when troubleshooting client accessibility. The diagnostics tools within KEPServerEX greatly speed deployment and reduce downtime.
Communication Diagnostics provide real-time capturing of the protocol frames transferred between the server and any device, as well as indications on the driver’s performance. All read and write operations can be viewed or tracked directly in an OPC client application using built-in diagnostics tags. This is useful when modifying key communication parameter settings (such as baud rate, parity, or Device IDs), because corrections are immediately visible.
Diagnostics information can be viewed within KEPServerEX and by third-party applications. Diagnostics information is provided through system-defined tags and accessible to the same clients connecting to the data sources. KEPServerEX logs event information, which is accessible within the configuration tool or to any application that supports the OPC Alarms and Events specification.