Another company's treasure
Intellution acquisition gives GE Fanuc instant clout in process management space
By Dan Sussman, contributing editor -- Manufacturing Business Technology, 12/1/2002 12:00:00 AM
It's too early to judge the full impact of the recent announcement that GE Fanuc Automation has purchased Foxborough, Mass.-based Intellution from Emerson Process Management. Nevertheless, comments from principals in the deal and industry analysts strongly suggest that Intellution, which has more than 180,000 installations worldwide, will propel Charlottesville, Va.-based GE Fanuc into the ranks of major process management system providers.
Process management systems, also known as supervisory control applications, include computerized interfaces for management and control of production processes, often operating in tandem with programmable controllers (PLCs) and other type devices.
While the acquisition promises to bolster GE Fanuc's position in the process management space, it also will allow Austin, Texas-based Emerson Process Management to separate itself from a company that did not fit well into its portfolio, observers say.
Kevin Roach, vice president of GE Fanuc's Global Solutions business, says his company's decision to acquire Intellution was the product of its ongoing efforts to generate growth and gain new technological capabilities. He also says Intellution's products and its strong presence in process-oriented manufacturing companies will complement GE Fanuc's strength in discrete industries, such as automotive.
Forming a growth strategy
"We don't have a batch product, but Intellution does. We don't have as good of an historian product as they have, and if you look at their data analysis application, infoAgent, we don't have that at all," says Roach. "So they bring a lot of very specific technologies that are going to help us drive growth.
"And if you look at the verticals where they are successful and we are successful, it's almost a dovetail fit," Roach adds. "They're great in pharmaceuticals, and that's a new initiative of ours; they're great in consumer packaged goods, and food and beverage, and they'll strengthen us in those areas."
By beefing up its process offerings through the acquisition of Intellution, GE Fanuc—a 50-50 joint venture of General Electric and Japan's FANUC Ltd.—joins a number of other systems and software providers seeking to broaden their portfolios, say analysts with ARC Advisory Group, Dedham, Mass. Craig Resnick, an ARC research director, notes that Intellution has been among the industry leaders in helping process manufacturers meet FDA requirements for electronic filing of data that documents their products and processes meet government standards—another factor that may have made the company attractive to GE Fanuc.
Continuing support
The sale ends seven years of Emerson's ownership of Intellution. The business, which will become known as GE Fanuc Intellution, will be based in Foxborough, and will operate as an integral part of the GE Fanuc Global Solutions Business.
"The core focus of Intellution and its expertise in the stand-alone human machine interface [HMI] space no longer fits in our growth plans," says John Berra, Emerson's executive vice president with responsibility for the process management business. Although Intellution is strong in the process industries, Berra said the company was a better fit for GE Fanuc because "a significant part of Intellution's business is putting software on top of PLCs."
Berra adds, however, that Emerson will continue to support any Intellution software integrated into an Emerson solution. In addition, Emerson will continue to source Intellution's software for its integrated solutions "the same way we source from any other supplier."
Resnick notes that the relationship between Intellution and the rest of Emerson's process management business was unusual, in that Emerson seemed to keep Intellution at arm's length. Even in Intellution's dealings with other Emerson companies, it was "handled like an OEM relationship," he says.
"For a company with the technical talent that Intellution has, we thought it would have been better integrated into the Emerson organization," says Resnick.
While Roach plays up the complementary nature of Intellution and GE Fanuc, both companies derive significant income from their separate HMI products: Intellution's iFix, and GE Fanuc's CIMPLICITY HMI.
"There are no specific plans yet, but an educated consumer could imagine these two best-of-breed products coming together to blow away everybody in the market," says Roach.
Resnick says the task may be a difficult one, however. "One of the things we've cited with GE Fanuc is that it tends to 'buy first and integrate later.' And I think that's going to be the challenge going forward. It can be done, but it's going to take time and money, and decisions that make life easiest for the end users," he says.
Bob Yeager, president and CEO of Intellution, agrees that there will need to be a well-thought-out migration path for the two product lines. However, the introduction of Internet technologies onto plant floors already has been "disruptive" to supervisory control markets, says Yeager, "because it was a fat client, and there is a transition now. We're about 24 months away from a complete Web-based human-machine interface system."
Yeager agrees that Intellution is a great fit for GE Fanuc, including complementary products, great market share, and combined development resources. Other issues, however, may prove trickier.
"We're [Intellution] a shrink-wrapped, high-volume software seller, says Yeager. "But to really double or triple the size of the company, we need to be in services. GE does that very well. That's not to say they will compete with our systems integrators. They have great respect for our distributors and partners because that channel has a lot of value."
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