Rockwell Automation’s recent huge investment in PTC for only 8% of the company has sparked a number of thoughts on strategies not only of Rockwell Automation, but also other companies in the market. We’re looking not only at Rockwell Automation in this brief analysis, but also Siemens, Schneider Electric, and ABB.
I’ve left out Emerson, Honeywell, and Yokogawa. The only interesting thing in that part of the market is Emerson’s abortive run at acquiring Rockwell. That was strange. I don’t think that Emerson could have digested such a meal.
The analysis is not to knock anyone but to look for trends and strategies of some of our major suppliers.
I think it begins with Siemens. An executive explained the company’s digital factory strategy and vision many years ago. Then the company acquired UGS and added PLM, CAD, and other digital technologies. There followed other similar acquisitions. I’m thinking mainly of the COMOS product, here.
If you are looking for an articulation of the strategy, I suggest looking no further than Industrie 4.0 and cyber-physical systems.
Sticking with Europe and the competition over there, let’s consider Schneider Electric. This company has been building the “electrification” side of the business which also brought industrial control products and some automation–think Modicon. While it lost considerable market share in PLCs, it did remain in the market. Then it acquired Invensys adding a lot of software (something it never really was good at) but especially process control (Foxboro, etc.). This latter helps it in the power market segment and positions it well against ABB. Siemens of course is the main competitive target. Then is a strange move, Schneider used its software businesses (Wonderware, etc.) as an investment in AVEVA grabbing 51% of the company. Now it, too, has a digital factory strategy in place.
ABB, a strong competitor in the power side of the business and also in process control, acquired B+R Automation. That company was a strong second-tier machine automation supplier fleshing out ABB’s portfolio in the discrete, or machine, automation market. Then it acquired GE’s industrial business strengthening ABB in the “electrification” market. Sounding familiar.
Now look at Rockwell’s investment. That company has flirted with Dassault Systemes over many years for a PLM-to-Control strategy. But nothing ever came of it.
A couple of years ago it acquired thin-client manufacturer ACP and systems integrator Maverick Technologies and MagneMotion a supplier of motion control and conveyor technologies. Then came a large investment in PTC for a small percentage of the company. I speculated that this could be a Digital Factory play along with the respected analyst Joe Barkai, but my friend Keith Larson writing for Putman Publishing (and someone I trust to accurately report on what suppliers are saying) reported that the sought-after prize was a closer integration with ThingWorx. This would be a piece of the Rockwell strategy of “Connected Enterprise” and Larson reported that the target RA product is its MES offering.
In other words, Rockwell Automation seems focused not on the current buzz of Industry 4.0/Industrial Internet of Things/Cyberphysical systems/Digital Factory, but on “making our customers more productive.” Its roots are plant floor and it remains a plant floor supplier.
I am NOT predicting any acquisition of Rockwell Automation, but I do believe that the market needs some continued consolidation. The next five years will be interesting in this market.
I’m on a bit of a break. World Cup. Brazil v Mexico was a passionate game (unlike Denmark v Croatia). But Belgium v Japan was one of the greatest games I’ve ever seen. What a lead! What a comeback!
Notice at the final whistle there was little celebration? All the players had given everything in the match. They were worn out.
Just like when we are (or should be) passionate about something. Give it your all–then recuperate.
I’m pondering during times between matches:
What is Rockwell Automation really going to get for its $1B investment in PTC?
What does the ABB acquisition of GE Industrial mean for the electrical balance of power in Europe, America, the world?
Will ThingWorx be the ultimate connectivity tool? How much is that really worth financially?
Will the IT companies I’m following (Dell Technologies, Hewlett Packard Enterprise) be big players in edge and IoT?
Will there be another process automation acquisition/merger? (The tea leaves seem ripe.)
Feel free to join the conversation. For the Americans–Happy Independence Day.
Fourth in the series of posts as I digest all of the information I gathered at Hewlett Packard Enterprise (HPE) Discover 2018 in Las Vegas. This post focuses on use cases. Yes, people, there are people some in manufacturing and some not who are using HPE IoT and Edge computing for fun and profit.
First off, a panel assembled by Tom Bradicich, VP and GM IoT and Edge and Ph.D. entitled Intelligence at the Edge.
Nathalie Elad of Comcast- We are an aggregator of data from homes sending this data from local server to cloud. He is working with HPE on virtualization. No, it doesn’t collect individual family usage to sell to others (yes, it came up). But the company does need data to know how to channel bandwidth. The challenge-“we double bits every 18 months and need to flex up and down during the day.” Interesting stat—there used to be 3.3 devices per house, now may be 20 or even 30.
Tim Thai, Tesla- OT—IT is still a challenge. “The Edge is dynamic, wherever business sets up shop.” Regarding IoT, there are “Things” in manufacturing-control and sensors. They incorporate sensors in testing of technology in cars. Not to mention “there are a ton of sensors in a car.”
Philip Rostle, Alfa Romeo Sauber F1 racing, discussed F1 race car as the edge. There are lots of channels coming off the car during a race. They measure performance versus predicted. You think you have connection problems, he described connection in race as “variable”. Every car has a GPS. They track all cars in the race trying to predict status of the other cars. They run scenarios, analytics, quickly at the edge during a race to help determine strategy. Took “moonshot” server power to the edge so that they get maximum performance within the rules of F1.
In a special breakfast session, we talked with the CTO of the Ryder Cup and European PGA Tour. Think you know golf? Ever wonder about some of the stats that the TV announcers can quote during an event? Well, the tour requires a lot of data. And to get that data, they need connectivity. Golf is also an entertainment event. There are 50,000 spectators at the Ryder Cup. They all expect WiFi to access real-time information about the tournament.
First the data. Every shot has a dozen parameters to capture for every golfer. These are logged on the course. To connect, they use Aruba wireless networking devices. There are 30 switches and 700 access points. They collect 20K data points for scoring; 140K data points for other shot information. “Data drives insights that leads to performance for golfers.” They can track each golfer and also track spectator traffic patterns. An untold story, they lay 18km of fiber cable each tournament; ready to go for Wednesday morning and tear down beginning Sunday evening.
Mike Orr, director of digital transformation at Murphy Oil, uses Edgeline on oil platforms. He noted that his biggest hurdle was working with IT mostly due to its legacy software systems. He made this technology economics point—when oil went from $140 to $20, company laid off many workers. The only way he could get his work done was with technology.
I’ve already discussed the Texmark Chemicals “Refinery of the Future” use case, but I learned a few additional points at this conference.
Intel supplied streaming video analytics—used for physical security/monitoring, open gate for railway access allowed humans and critters into the site, monitored for exception to alert operators.
Deloitte is developing an IoT practice. It assembled an ecosystem including NI, Allied, ThingWorx, OSIsoft, SparkCognition AI for pumps. It also developed the operator dashboards for the project.
All together there were 12 partners in the ecosystem that completed the project that included predictive maintenance for two critical pumps and the video surveillance system.
HPE coordinated the entire project.
The insurance company was impetus to do something to upgrade the technology. Texmark kicked off the project by renting a party bus and taking 15 employees to the HPE IoT lab in Houston. They saw a demo of a pump with FlowServe monitoring and analytics. Employees discussed and picked the initial project targets—two critical pumps in the process plus the “video as a sensor” for the railway access. Getting early employee involvement was the key factor for successful implementation.
So I decided not to make a cross country trip to San Diego for Rockwell Automation’s RATechEd event this year. I have cross country trips coming up the next two weeks followed by family time. So, I’m doing a one-day business trip plus taking my wife out for dinner in Chicago this week. Anyway, they had informed me that they wouldn’t be setting up interviews but that I’d be welcome to sit in any sessions I wanted. I passed.
Then I see a tweet from PTC today. Blockbuster news. Rockwell Automation’s Connected Enterprise just became connected. It has invested $1B in PTC for an approximate 8% ownership. PTC has [ERP], PLM, and IIoT (Kepware and ThingWorx). By connecting with these technologies, Rockwell now has the possibility of a technology convergence rivaling its rivals in Europe.
There are three of my questions about Rockwell answered:
- Other than a refreshing change of culture, what else was Blake Moret going to do to put his stamp on the company?
- When was Rockwell Automation going to really connect the enterprise like its slogan has held for several years (about the time I came up with Manufacturing Connection for the new title for my blog)?
- How was Rockwell going to answer the digital manufacturing and Industry 4.0 moves made by its European competitors Siemens, Schneider Electric, and ABB?
This is far from an acquisition and just a partnership right now. But it is a big step in the right direction.
Here is the press release I downloaded from Business Wire.
PTC Inc. and Rockwell Automation, Inc. today announced that they have entered into a definitive agreement for a strategic partnership that is expected to accelerate growth for both companies and enable them to be the partner of choice for customers around the world who want to transform their physical operations with digital technology.
As part of the partnership, Rockwell Automation will make a $1 billion equity investment in PTC, and Rockwell Automation’s Chairman and CEO, Blake Moret, will join PTC’s board of directors effective with the closing of the equity transaction.
The partnership leverages both companies’ resources, technologies, industry expertise, and market presence, and will include technical collaboration across the organizations as well as joint global go-to-market initiatives. In particular, PTC and Rockwell Automation have agreed to align their respective smart factory technologies and combine PTC’s award-winning ThingWorx IoT, Kepware industrial connectivity, and Vuforia augmented reality (AR) platforms with Rockwell Automation’s FactoryTalk MES, FactoryTalk Analytics, and Industrial Automation platforms.
“This strategic alliance will provide the industry with the broadest integrated suite of best-in-class technology, backed by PTC, the leader in IoT and augmented reality, and Rockwell Automation, the leader in industrial automation and information. Our combined customer base will benefit from two world-class organizations that understand their business and deliver comprehensive, innovative, and integrated solutions,” said Jim Heppelmann, President and CEO, PTC. “Leveraging Rockwell Automation’s industry-leading industrial control and software technology, strong brand, and domain expertise with PTC’s award-winning technology enables industrial enterprises to capitalize on the promise of the Industrial IoT. I am incredibly excited about this partnership and the opportunity it provides to fuel our future success.”
Blake Moret, Chairman and CEO, Rockwell Automation, said, “We believe this strategic partnership will enable us to accelerate growth by building on both companies’ records of innovation to extend the value of the Connected Enterprise and deepen our customer relationships. As IT and OT converge, there is a natural alignment between our companies. Together, we will offer the most comprehensive and flexible IoT offering in the industrial space. Our equity investment in PTC reflects our confidence in the partnership and the significant upside we expect it to create for both companies as we work together to profitably grow subscription revenue.”
Rockwell Automation’s solutions business will be a preferred delivery and implementation provider, supported by a robust ecosystem of partners that both companies have established. The strength of both companies across geographies, end markets, and applications is complementary.
Under the terms of the agreement relating to the equity investment, Rockwell Automation will make a $1 billion equity investment in PTC by acquiring 10,582,010 newly issued shares at a price of $94.50, representing an approximate 8.4% ownership interest in PTC based on PTC’s current outstanding shares pro forma for the share issuance to Rockwell Automation. The price per share represents an 8.6% premium to PTC’s closing stock price on June 8, 2018, the last trading day prior to today’s announcement. Rockwell Automation intends to fund the investment through a combination of cash on hand and commercial paper borrowings. Rockwell Automation will account for its ownership interest in PTC as an Available for Sale security, reported at fair value.
The 2018 EY Industrial Products Survey was conducted among 500 Industrial Products (IP) executives whose businesses yield over $1B in annual revenue. These surveys are coming in with similar results. You can look at the results and say “Wow, almost half of executives at these companies see innovation as important, or see technology as important” or “How can half of all executives surveyed not see how important innovation is”.
I’ve had experience in manufacturing and marketing leadership and have studied it for many more years—and I lay most of the problems with manufacturing business squarely with (lack of) managerial leadership. I see these results and think that there will be many winners and just as many losers in the coming years.
The study surveyed executives from a variety of sectors including, aerospace and defense, industrial and mechanical components, machinery and electrical systems, chemicals and base materials, packaging and paper and wood. The survey was conducted between February 22, 2018 and March 22, 2018. The purpose of the study was to evaluate where IP companies fall on their journey towards continuous innovation.
Move over R&D: IP companies see digital technology and innovation as their path to success
- 48% Percentage of respondents who view innovation as quite/extremely important for company success
- 43% Percentage of businesses who are learning from and/or following the technology industry to influence innovation at their company
- 67% Percentage of companies who plan to make significant levels of investment in innovation past traditional R&D over the next three years
- 52% Percentage of businesses that say the adoption of emerging technologies will be quite important or critical to the success of their business in the next three years
Additional results from the survey include:
Facing a culture crisis: The perception of the IP industry is hindering the talent search
- 67% agree/strongly agree that the image of the industrial products industry hurts when recruiting for needed skills
- 38% that difficulty competing with tech-first companies for top talent is a leading barrier in filling the skills gap
- 25% say that attracting/retaining top talent is one of the biggest drivers of their company’s technology investment
- 64% agree/strongly agree that the IP industry needs to change their culture to thrive
IP is looking for outside inspiration. While the tech industry is the leading source, IP has a ways to go
- 43% of respondents are learning from and/or following the technology industry to influence innovation at their company
- Only 29% of business say they are extremely or quite innovative compared to close competitors
- 82% of respondents have made minimal or no investment in AI today
- 22% are learning from and/or following the automotive industry to influence innovation at their own company
- 21% are learning from and/or following the consumer products industry to influence innovation at their own company
Robotics, mobile and big data, oh my! What is getting the largest share of investment attention?
- 63% of respondents say that technology investments have driven measureable returns in agility to a significant/meaningful extent
- 46% are making substantial or major investments in robotics and 56% predict they will in the next three years
- 31% of businesses are increasing investment in emerging technologies in response to US tax reform
- 31% says that big data/analytics will be most influential on their business over the next three years
Not a matter of if but when disruption will hit. IP companies are staying nimble in order to prepare
- 49% of businesses say that preparation for disruption will be quite important or critical to the success of their business in the next three years
- 52% of businesses say that flexibility to adapt to trends will be quite important or critical to the success of their business in the next three years
- 53% of businesses say that access to specialized skills for emerging tech will be quite important or critical to the success of their business in the next three years
The HMI SCADA software space continues to evolve into areas unthinkable only a few years ago. The competitive landscape is similarly evolving as some larger companies face corporate challenges and smaller players are finding new ways to compete.
Inductive Automation’s growing Enterprise Integrator program is a case in point. The company has built its distribution with integrators and has been adding partners. While I’ve been on the road, I’ve learned of two additions to this program. Grantek Systems Integration joins as a new member of the Enterprise Integrator Program. Inductive Automation defines Enterprise Integrators as those with a high level of Ignition certification, a global presence, the ability to take on enterprise-wide projects, and 250 or more engineers, among other requirements.
“Grantek has been working successfully with Inductive Automation for many years,” said Ian Tooke, chief innovation officer for Grantek. “The Ignition platform allows us to provide our clients with integrated solutions for MES, HMI, SCADA and the IIoT. Being an Enterprise Integrator will allow us to deliver even more value to our clients. The addition of an Ignition solution to our suite of enterprise-level offerings will bring great benefits to customers across the globe.”
Grantek has provided large-scale solutions in numerous industries, including food & beverage, energy, pharma/life sciences, and consumer packaged goods. The company focuses on smart manufacturing, automation, industrial networking, and industrial safety. Solutions include serialization, ERP integration and IIoT.
“We’re very pleased to designate Grantek as an Enterprise Integrator,” said Don Pearson, chief strategy officer for Inductive Automation. “Grantek has proven its expertise with our Ignition software platform on a variety of projects. The people at Grantek have done outstanding work, and we look forward to working with them on many more large projects in the future.”
A second integrator joining the program is ATS Applied Tech Systems.
“We are proud to be associated with Inductive Automation as a leading global partner,” said Rob Valent, managing director of ATS. “Being part of the Enterprise Integrator Program is a testimony to our strong engagement with Inductive Automation. ATS has delivered projects all over the world, and we’re leveraging Ignition to create scalable and flexible Industry 4.0 solutions for our customers. With this formal recognition from Inductive Automation, we look forward to a more powerful partnership delivering a smart digital transformation everywhere!”
ATS is one of the world’s premiere automation integrators and advises its customers independently on the best product portfolios for their technical and business needs. The company serves clients in a variety of industries, including aerospace & defense, automotive, electronics, food & beverage, life sciences, and metals & mining. The company has offices in the United States, United Kingdom, Germany, Australia, Canada, Mexico, and numerous other countries.
“We’re very pleased to designate ATS Applied Tech Systems as an Enterprise Integrator,” said Don Pearson, chief strategy officer for Inductive Automation. “ATS has shown over the years that it really understands its customers, and how to leverage the Ignition software platform to benefit those customers. ATS has done some terrific large projects, and we look forward to working with them on many more in the future.”