New Generation Leadership At Inductive Automation

Bringing in a new generation of leadership to an organization when you’ve groomed people with potential to realize that potential brings rejuvenation and excitement. The leadership at Inductive Automation is transitioning to the next generation.

I met Steve Hechtman in probably 2003 or 2004 at a trade show. A quiet software guy he told me he had started a new company with many new ways of approaching the HMI/SCADA market. The software was built from the ground up to be IT friendly. Pricing would be totally different from what was common at the time.

With much skepticism, I dived into learning about the new approach. Gotta say he moved the market forward. I met the co-developers of Inductive Automation’s Ignition Colby Clegg and Carl Gould a year or so later to interview for my new podcast called Automation Minutes. I just blew a half-hour trying to find that in the archives without success. 

The reason for this reminiscing comes from notice of a leadership transition at Inductive Automation. The full story is on its blog.

After dealing with inferior software and inadequate support for 25 years in the integration business, Steve started this company in 2003 to provide a new and better user experience for industrial professionals. Ever since, we’ve worked to provide our customers with the industry’s best SCADA software and equally excellent customer service.

Together, the two of us [Steve and Wendi-Lynn Hechtman] serve as the Executive Chairmen of our Board of Directors, and we’ve both also held C-level positions since the company started.

And today, we are very excited to announce that the time has come. While we will both continue to lead the company as the Executive Chairmen of the Board of Directors, Colby Clegg will take over as the Chief Executive Officer, and Kat Robinett will assume the role of Chief Operating Officer. Kat and Colby have been preparing for this moment for years, and we have every confidence in their ability to lead the company in our mission to empower our customers with the best software and services in the industry.

And some brief bios of the new leadership team. I wish them well. 

As Inductive Automation’s new CEO, Colby Clegg will oversee the company’s strategic vision and execution, ensuring that the goals set forth by the Board of Directors are achieved and maintained. Colby has been with Inductive since its very beginning, serving most recently as Vice President of Technology.

During his time here, Colby has created great strategic plans and executed practical solutions not just for technology problems but for sales, support, marketing, and organizational challenges as well. Colby has also had extensive first-hand experience working with integrators in the field and seeing the challenges our customers face. We think he is the perfect person to take on this role.

As the new COO, Kat Robinett will oversee the tactical execution of strategic goals and projects. Kat will be responsible for the company’s daily operations and facilities, as she continues to work to create a great company culture that encourages collaboration, fosters community, and provides growth opportunities.

Kat has been preparing for this new role for years. She has worked directly with both of us, learning the ins and outs of the company, learning directly from Wendi-Lynn about finding and cultivating superb talent, and working daily with leaders and contributors across the organization to carry out the executive strategies and plans that keep our operational efficiency at the highest level. 

With Colby now turning his attention to the company’s strategic management as CEO, we are promoting Carl Gould to the new role of Chief Technology Officer to ensure the continued success of our technology efforts.

Serving most recently as the Director of Software Engineering, Carl has been a driving force behind the creation of Ignition, from its foundations to the most recent innovations. He is a master software engineer, a great collaborator, and a natural leader, all qualities he’s employed to make Ignition the leader in our marketplace. Like Colby, Carl has also worked in the field, learning our customers’ pain points first-hand and developing practical solutions to real problems. We’re fully confident that Carl will excel in his new role as CTO.

Industrial Manufacturing M&A Stable Despite Market Headwinds

PwC sends industrial manufacturing market updates periodically. They focus on business level merger and acquisition activity. They report industrial manufacturing M&A was strong in the first half of 2022 but slower than in 2021, which was driven by pent-up demand.

Average deal value decreased over 30% in the first half of 2022 from the second half of 2021. Activity in the first half of 2022 was  focused less on transformational megadeals (transactions exceeding $1 billion in deal value) and more on smaller, targeted acquisitions and divestitures. This was driven by buyers building out platforms and filling in strategic market gaps, sellers divesting non-core divisions or assets and broad concerns of US regulatory scrutiny.

Recognizing concerns such as inflation and war in Europe, they continue, companies, however, face ongoing market headwinds of economic and geopolitical uncertainty, including record-high inflation, which will likely continue to influence the M&A landscape into the second half of 2022. 

The future looks interesting for those who are prepared.

While some expect the global economy is headed for a near-term slowdown, underlying economic fundamentals remain strong. Private equity firms with dry powder and corporations with significant cash balances are expected to drive significant M&A activity. This, coupled with a large number of carve-out divestitures being contemplated, provide supply for potential transactions. 

A few nuggets of advice:

  • A targeted focus may be necessary to manage headwinds from global and economic uncertainty.
  • Given global forces are likely to continue to drive uncertainty into M&A processes, private equity and strategic buyers alike should critically evaluate individual transactions in a targeted and strategic manner. 
  • Sellers may find setting a realistic projection plan and addressing these market risks to be a moving target. They may instead find assessing upside and downside risks to the projection plan to be a more successful approach for discussions with potential buyers. 
  • Buyers, on the other hand, may then have the challenge of securing lending for a transaction in uncertain global market conditions. M&A success may depend on using a focused approach to acquisitions, including factoring in downside market risks.

Patented Lithium-Sulfur Battery Technology

This was a strange press release that I almost just trashed. The lede, the news, was about a PR agency getting work. PR is never the news. PR executives and agents do not want to be quoted. Their job is to help people like me get to the news. They help point out new things and help us get interviews with the right people.

However, the real news concerns battery technology for electric vehicles. That news is timely and relevant. Batter technology constrains the utility of all electric vehicles from automobiles we drive to autonomous guided vehicles in warehouse and factory settings.

In brief (and in the words of the new PR agency):

  • Nevada-based NexTech holds the patents in process and materials for groundbreaking lithium-sulfur battery technology
  • The semi-solid-state technology is set to revolutionize EVs, renewable energy, aircraft, personal electronics and more with unprecedented energy density, overall power and safety
  • DRIVEN360 will spearhead global launch – driving strategic communications and brand – emphasizing superior performance, push for U.S.-sourced materials and no reliance on expensive and/or foreign commodities

First point:

NexTech Batteries, the global leader in proprietary lithium-sulfur battery technology, has selected DRIVEN360 – a world-class integrated communications and brand marketing house – as its global public relations agency of record (AOR). With deep expertise across mobility, technology and a wide range of industries, the DRIVEN360 team will oversee NexTech’s disruptive entry into multiple markets, championing the most powerful, patent-protected semi-solid-state battery technology to date. Strategic communications efforts will also spotlight the company’s goal to maximize U.S.-sourced materials.

Key points:

Lithium-sulfur called “the most powerful semi-solid-state battery with unprecedented energy density. Emphasize US-sourcing.

From its research facility in Carson City, Nevada, NexTech will focus on creating a domestic supply chain prioritizing U.S.-sourced materials, reducing the use of foreign suppliers and without the need to source unethically mined or rare materials used in current generation batteries. The company has already inked deals with North American-based lithium suppliers.

NexTech Batteries was founded in early 2016 and initially was the result of the exclusive license to the rights and patents to the lithium-sulfur battery technology developed at Lawrence Berkeley National Laboratory.

Reports On Cobot and Global Manufacturing Production Markets

Following the post of a personal account from Shanghai from an Interact Analysis research director, I have two market research reports from the firm. One report is global collaborative robot market; the other global manufacturing. Both are updates stemming from geopolitical events.

Interact does the best job of digging up data of any of the firms I’ve talked with. I’d recommend taking all projections with a grain of salt. As Yogi Berra (or any of a dozen other prophets) has said, “Predictions are difficult, especially about the future.”

China to buy half of the world’s collaborative robots from 2023

• Overall cobot sales hit record high in 2021 at 31,325 units

• Cobot market to exceed $2 billion by 2026

• Logistics and service industries will be the long-term market drivers

Updated cobot research from Interact Analysis shows that the market enjoyed 45% growth in 2021 as part of a post-pandemic rebound. The market for collaborative robots will continue to grow strongly out to 2026 with annual growth rates sitting at just over 20%. Logistics and service industries are likely to be the long-term growth drivers. 

The Chinese market for collaborative robots continues to lead over the EMEA and Americas regions. Interact Analysis predicts that China’s market share by shipments will increase from 49.1% in 2021 to a staggering 54.4% in 2026 (at which point annual unit ship ments will exceed 50,000). The research shows that China’s 2022-2026 cobot CAGRwill be 29% – the highest of all the global regions. The Americas – where uptake of cobots particularly in manufacturing is much more cautious – are likely to retain the smallest market share overall with a still impressive 5-year CAGR of 19.4%. 

By 2026 the collaborative robot market will be three times the size it was in 2021, exceeding $2bn that year and with shipment rates hitting the roof at 100,000 units. The outlook is positive for the long-term, with the research showing that growth rates of 20% will be maintained right out to 2030.

A key focus for cobot companies right now is on making their products suitable for new application scenarios. Currently, we are seeing a strong uptake in collaborative robot usage within the medical, education, logistics and catering fields. Moving forward, it is likely that we will see greater uptake within the industrial manufacturing industry where cobots are helping to plug the gaps caused by ongoing labor shortages.  

Maya Xiao, Senior Analyst at Interact Analysis comments, “As we emerge from the COVID-19 pandemic, the issue of labor shortages is seemingly never ending. This is leading many to invest in collaborative robots. Our research shows that once one competitor invests in collaborative robots, and it is seen to work, there is a ripple effect. In 2021, global cobot shipments achieved a phenomenal year-on-year increase of 44.6%. Collaborative robots are being used as a form of ‘future-proofing’ because the pandemic creates so much uncertainty that companies don’t know what to expect next. Annually, we predict a 20-30% growth rate for the market, right out to 2026.”   

Global manufacturing production value to hit $44.5 trillion in 2022

  • Manufacturing output to decline to $44.3 trillion in 2023
  • Ukraine conflict creates perfect storm for automotive
  • Shanghai lockdowns exacerbate China’s supply chain struggles

New research from Interact Analysis projects that total manufacturing industry output will grow by 4% in 2022, then decline by $0.2 trillion in 2023, before rising again in 2024 and 2025.

The new research profiles Russia and Ukraine to ascertain stress points for MIO regions. Despite a GDP of over $1.7 trillion, Russia is considered an ‘emerging economy’ due to its small manufacturing base. However, since the largest companies in Russia are energy suppliers, the country is considered an ‘energy superpower’. Escalating fuel prices, which will impact Europe far more severely than the USA, are an obvious fallout from the conflict. Ukraine on the other hand had a GDP of just over $155 billion in 2020 according to the IMF, of which just over 30% was industrial production. Ukraine produces 70% of the world’s Neon – a key input in semiconductor production – and half of Ukrainian Neon is from Odessa and Mariupol. Since both these cities are key Russian targets, we expect one fallout of the conflict to be severe increases in the price of Neon. This will be a further big problem for the already beleaguered chip industry, which will turn to cheaper suppliers in China for relief.

The Shanghai lockdowns have also had an undoubtable impact on the manufacturing industry, particularly because the city hosts a port that handles over 25% of all Chinese freight traffic. Shanghai is primarily a finance center, however if the Chinese government were to implement similar measures in one of their major manufacturing hubs, it could spell disaster for the global economy, since China accounts for 44.4% of total global production output.

Adrian Lloyd, CEO at Interact Analysis says, “Automotive is particularly worthy of comment at the moment. The sector was already facing severe pressures following the pandemic, and the Ukraine conflict has made matters far worse for the industry. One of these problems is the new pressures on semiconductors, which already hit the automotive sector hard. Another is that Russia provides the majority of the world’s palladium which is used to produce catalytic converters and is now inaccessible. And yet another problem is that Ukraine is a key manufacturer of components for Western Europe’s automotive industry, particularly wire harnesses, supplies of which are now intermittent. As a result of all this, we predict minimal growth for automotive of 2.8% in 2022.

Responsible Computing Consortium

We thought of Artificial Intelligence as something magical. Then we figured out that much of the output of AI depends upon how the application is trained. Then, duh, we discovered bias underneath the AI training. Perhaps concepts we have learned since ancient times such as ethics, morals, and responsibility are important. My adolescent self hates hearing me say things like that. But, it’s true.

Sometimes I despair at the general lack of taking responsibility for our words and actions I too often observe.

In a bit of mining that same vein, the Object Management Group announced last Friday, May 20, a new consortium called Responsible Computing (a trademark of IBM, by the way). The founding members of this group are IBM and Dell. Its purpose is to focus on sustainable development goals.

From the news release, “Responsible computing is a systemic approach aimed at addressing current and future challenges in computing, including sustainability, ethics, and professionalism, stemming from the belief that we need to start thinking about technology in terms of its impact on people and the planet.”

“Responsible Computing aims to shift thinking and, ultimately, behavior within the IT industry and affect real change,” said Bill Hoffman, Chairman, and CEO of RC and OMG. “We’ve made our manifesto and framework freely available, and we’ve asked every RC member to implement RC principles. Our goal is that someday every IT professional will adhere to RC principles.”

The new consortium’s manifesto defines RC values to restore trust in IT by responsibly applying technology and by sharing experiences with other organizations. These values include sustainability, inclusiveness, circularity, openness, authenticity, and accountability.

The consortium’s RC framework focuses on six domains of responsible computing, including:

  • Data centers – are designed and operated with a focus on efficiency and sustainability, including emphasizing green energy and improving the handling and disposal of chemicals, toxic materials, and rare metals.
  • More sustainable infrastructure – monitoring the energy usage of products and technologies. Efficient and more sustainable operations, including proper disposal of products.​
  • Code – choosing code that optimizes environmental, social, and economic impact over time. Optimal code includes efficient algorithms, frameworks, and tools and KPIs to accelerate decision-making and pinpoint areas requiring more scrutiny during software development.
  • Data usage – the safe use of data will drive transparency, fairness, privacy, and respect for users.
  • Systems – that address bias and discrimination by driving equality for all, for example, the use of Artificial Intelligence (AI) for transparency.​
  • Impact – the technologies and innovations that drive a positive impact on society at large such as building to improve human conditions and mitigate social risk.

Through interviews with over 100 CTOs concerns were raised around developing practical actions to progress Environmental, Social, and Governance (ESG) programs. They wanted to contribute to becoming more sustainable businesses and demonstrate progress through consistent metrics. In November 2020, IBM’s Academy of Technology (AoT)’s responded to these challenges and created the Responsible Computing Council, an international team of technology and computing leaders who collaborate in validation and the implementation of the RC framework and lead by example in becoming a responsible computing provider. Object Management Group (OMG) was an early member of the council, and shortly after that, the OMG board approved the formation of the RC consortium.

“Now is the time for companies to adopt a holistic approach that places sustainability strategy at the center of their business,” said Sheri Hinish, Global Lead, IBM Consulting Sustainability Services. “IBM is proud to be a founding member of the RC consortium. Through this collaboration, we hope to help companies establish new and innovative ways to transform their business operations through ethical, impactful ways that can help contribute to a more sustainable future.”

“Dell is proud to be a founding member of the RC consortium. We are aligned with and driven by a similar passion to help leading technology organizations realize their sustainable development goals, in line with the planet’s,” said Marc O’Regan, CTO EMEA, Dell Technologies. “In addition to being socially and environmentally responsible, we also expect that RC members will see improved go-to-market solutions, strategies and bottom-line results by following RC principles.”

An organization can become more operationally efficient and demonstrate a return on investment (ROI) when meeting sustainability goals. The ROI can potentially include:​

  • Reduced power consumption
  • Waste reduction for packaging
  • Cost-effective heating and cooling solutions​
  • Supply chain efficiency, and more

Emerson and AspenTech Complete Transaction Creating New AspenTech

I consider the Emerson Chief Marketing Officer the best branding expert in our market. She must have lost a battle this time. Emerson and AspenTech announced the successful closing of the combination of Emerson’s industrial software businesses – OSI Inc. and its Geological Simulation Software business – with AspenTech “to create a global industrial software leader.” The new entity is called—new AspenTech. Evidently they are using the lower case “new” on the name.

With the close of the transaction, Emerson owns 55% of new AspenTech on a fully diluted basis and AspenTech shareholders own the remaining 45%. Shares of new AspenTech will begin trading on NASDAQ under the ticker symbol “AZPN” (previously AspenTech’s ticker symbol) starting May 17, 2022.

This reflects the new wave of bringing software businesses into mainline hardware businesses. Don’t do a complete acquisition. Restructure the investment so that the company owns a majority of shares and the “acquired” company becomes the minority holder. I’m not a financial genius, but from an organizational point-of-view it makes sense. The finances of a hardware business are much different from those of a software business. This keeps the messy part separated.

This deal also makes sense in that AspenTech has been one of those tech companies with good technology but has struggled financially. I’m sure Emerson brings strong financial controls along with its investment that should help stabilize the company. This should be good for customers.

“I am excited to announce the close of our transaction with AspenTech, which accelerates Emerson’s software strategy and creates an enhanced, high-performance, leading industrial software company with immediate scale and relevancy in a fast-paced, evolving market. Today marks a significant milestone for Emerson and is a testament to our commitment to continue building a higher growth, more diversified portfolio. Together with new AspenTech, we expect to realize significant revenue and cost synergies, while having the platform and flexibility to strategically deploy capital for growth through continued investment and M&A,” says Lal Karsanbhai, President and Chief Executive Officer of Emerson.

“We have now begun a new era at AspenTech, expanding our global leadership in industrial software by providing capabilities that support the entire lifecycle of complex operations across a wide range of industry verticals,” said Antonio Pietri, President and Chief Executive Officer of new AspenTech. “With a comprehensive software portfolio, an expanded global sales channel and an even stronger balance sheet reinforced by Emerson, new AspenTech will be uniquely positioned to help our customers address the dual challenge of meeting the increasing global demand for resources in a sustainable manner. As we move forward, I am confident that new AspenTech is poised for significant growth and continued success as we deliver value for our customers, employees and shareholders.”

Goldman Sachs & Co. LLC and Centerview Partners LLC served as financial advisors to Emerson, and Davis Polk & Wardwell LLP served as legal counsel. J.P. Morgan Securities LLC served as financial advisor to AspenTech, and Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel.