Last week Schneider Electric announced that it made a $5B offer to acquire Invensys, an energy management and controls software company, which is known for its widely used Wonderware software. If successful, the Invensys portfolio adds to an already large portfolio of Schneider's demand-side, energy management related software and systems.
The proposed deal comes after a series of recent energy management software-related acquisitions including the following:
- 2013: SCL Elements, wireless building solutions
- 2012: M&C Energy Group, procurement and sustainability specialist
- 2011: Lee Technologies, data center products
- 2011: Summit Energy, utility bill management, energy management software and procurement, purchased for $268M
From what we hear, Schneider Electric is doing an excellent job integrating these acquisitions - retaining key management, developing a broader Schneider marketing story and cross-selling to the newly acquired customers.
While large major rivals such as ABB, Emerson, General Electric, Honeywell, Johnson Controls, Rockwell, and Siemens have also completed software acquisitions, none can keep up with the pace set by Schneider Electric. Schneider clearly sees a massive market for selling products and services for Enterprise Smart Grid and is picking up key assets in the industry to establish a competitive advantage.
We think Schneider's acquisitions are well thought-out.
While large customers will continue to have lots of options, over time they will seek broader and more integrated solutions. Customers don't simply want more point hardware and software solutions; the days of customer lock-in with proprietary hardware and closed software are over. Schneider sees this and wants to develop a wide yet integrated portfolio of products to create more selling opportunities within each customer's organization.
If Summit Energy is the example, expect rapid and effective integration for Invensys.
Manufacturers of physical products have historically had a difficult time expanding into the software, but Schneider appears to be an exception. Schneider rapidly moved to get Summit employees excited about the new combined opportunity and committed to investing a lot more money into software, which pleased everyone. Schneider's field selling organization penetrated Summit's accounts to deliver the message that the story was bigger and better. We expect the same with Invensys.
What does this mean for companies buying Enterprise Smart Grid solutions?
It means that Schneider Electric has strengthened its leadership position. Look also for more acquisitions in general over the next 12 months as large companies pick up the remaining unique, independent vendors in the market (we have our internal list of smaller, innovative firms that we expect will be acquired at some point).