What Happened?

Two significant announcements from global automation suppliers hit the wires on Wednesday, October 3rd:

• Emerson announced its intention to purchase GE’s Intelligent Platforms division.

• Honeywell unveiled details regarding its new industrial cybersecurity solution, CyberVantage Security Consulting Services.

VDC’s View

Let’s start with the bigger of the two announcements: Emerson’s agreement to purchase GE Intelligent Platforms for terms undisclosed. GE Intelligent Platforms (GEIP, also known as GE Automation & Controls) offers a wide range of automation and control products that are complementary to Emerson’s business. [The company had also offered a range of embedded computing products, but that business was spun off as Artesyn in 2015.] As explained in a statement from Emerson’s CEO David Farr, “adding GE’s Intelligent Platforms business makes Emerson an even stronger player in the automation space and expands our capabilities to serve the needs across process, hybrid, and discrete markets.” More specifically, Emerson hopes to be able to streamline its customers’ systems by integrating GEIP’s components―such as its unique machine control technology―within its own distributed control systems. By owning a greater portion of the control layer, Emerson expects its customers will be better positioned to optimize system performance and make improvements in other areas such as safety and reliability.

From a competitive standpoint, this move is a continuation of Emerson’s strategy following its failed acquisition of Rockwell Automation in late 2017. After Emerson eventually pronounced the deal dead―Rockwell had rejected several offers―it then indicated it would return to its strategy of pursuing smaller acquisitions in the coming years, with Farr even expressing interest in some of GE’s assets. This would be the fifth acquisition since the failed Rockwell bid, with Emerson already having purchased Cooper-Atkins (temperature management and measurement devices), ProSys, Inc. (software and services for the chemical, oil and gas, pulp and paper, and refining industries), Textron’s Tool & Test business, and Aventics (smart pneumatics) in the last year.

Competition in the industrial automation space has been intense as of late. ABB (which earlier this year completed its acquisition of GE Industrial Solutions), Schneider Electric, and Siemens have each made a number of key acquisitions in recent years, each identifying targets to fill gaps in their portfolios and develop synergies for their customers. The short-term impact of Emerson’s smaller moves isn’t as notable as the Rockwell acquisition likely would have been. However, given its smaller size, Emerson’s ability to remain patient in identifying and pursuing the right strategic acquisition opportunities will pay dividends in the long run. The key for each of these companies will be ensuring the proper integration of every new asset, otherwise the intermingling of disparate technologies may become more burden than benefit.

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Which brings us to Honeywell, whose latest move centers industrial cybersecurity, which has become a key battleground for automation suppliers. Honeywell’s new cybersecurity consulting service, part of the CyberVantage portfolio, provides system hardening and penetration testing (among other services) and is intended to address the widening cybersecurity skills gap within industrial organizations. CyberVantage Security Consulting Services adds to Honeywell’s existing end-to-end portfolio of industrial security offerings, which ranges from software products to managed security services and professional field services. Honeywell had also previously acquired the industrial cybersecurity vender Nextnine in June 2017. Nextnine’s flagship product, ICS Shield, is a security management solution that enables industrial organizations to meld their OT and IT infrastructures within connected ICS environments.

Honeywell’s foray into industrial cybersecurity consulting follows that of Schneider, Siemens, and a number of traditional IT security vendors such as Kaspersky Lab and Symantec. Considering how quickly the opportunities in the industrial cybersecurity space are mounting―as driven the rapidly growing number of connected industrial systems and devices and a tightening of data security and privacy regulations―the aggressive assembly of a comprehensive industrial cybersecurity portfolio should be a priority for every major automation supplier. Honeywell, Schneider, and Siemens have made their moves; could a cybersecurity supplier be the next acquisition target for Emerson? Only time will tell.

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