In a move that further consolidates the manufacturing execution systems (MES) software market, SAP AG today said it would acquire Visiprise, a privately held developer of manufacturing planning, execution, and quality software. Terms of the deal were not disclosed.
The acquisition will bring Visiprise formally within SAP following a close partnership between the two companies that has lasted several years. The relationship started in March 2005, when Visiprise entered into a collaborative development and marketing agreement with SAP on its NetWeaver platform for discrete manufacturing.
That agreement led SAP to make a minority investment in Visiprise in November 2006. One year ago, SAP agreed to resell the Visiprise software under the name SAP Manufacturing Execution by Visiprise.
The announcement today is the latest in a string of acquisitions in the MES market. In the past few years, automation platform vendors have been attempting to expand their technology footprints beyond the shop floor. Rockwell Automation, Siemens, Schneider Electric, Invensys’ Wonderware unit, GE Fanuc, and Honeywell, for example, have acquired MES software products to broaden their capabilities. But a number of independent companies, such as Camstar, Intercim, and iBASEt, remain in the market.
For SAP, the acquisition crystallizes its manufacturing integration vision, which consists of linking plant floor operations to production planning and operations management. SAP has been assembling components of this vision, which it refers to as the “Perfect Plant,” through the acquisition in June 2005 of Lighthammer Software Development Corp., with its manufacturing intelligence technology; in December 2006 with the purchase of Factory Logic, a supplier of software for lean scheduling and supply synchronization; and today with Visiprise.
“Organizations are now looking at MES much more strategically,” said John Zepecki, senior vice president and general manager of SAP’s supplier relationship management strategy and development, in an interview. “Historically, MES has been a plant-level decision, but now it is at the enterprise. And as it moves from a point solution, size and scale become important.”
Asked why SAP decided at this time to acquire Visiprise, Zepecki said that SAP reacted to what it heard from customers in the field, namely, that they wanted SAP to do more to bring its integration vision to reality faster. He said that by acquiring Visiprise, SAP will now be able to more closely link product roadmaps between the two companies as well as domain expertise and, therefore, will “accelerate” what the two companies have been bringing to the market.
“We’re taking a leadership position here,” Zepecki said.
Following completion of the acquisition, which is expected in July, Visiprise President and CEO Sean McCloskey will report to Zepecki, who said SAP will review whether to continue with the Visiprise brand name.
Visiprise has about 300 employees and has been backed by a number of venture capital firms, in addition to SAP’s investment. Visiprise focuses on such vertical markets as aerospace and defense, electronics, automotive and specialty vehicles, medical devices and industrial machinery, and components. Visiprise’s more than 200 customers include Lockheed Martin, Goodrich, Philips, Schneider Electric, and Hitachi.
Visiprise came into being under its current name in March 2003, when NetVendor, a developer of product data management software, acquired Teradyne’s Manufacturing Software group. At that time, Carter Johnson, now a senior vice president at Visiprise, said, “The strategy is to incorporate MES within a larger product lifecycle management [PLM] strategy.”
That broader context was a point that industry analysts emphasized today in commenting on the acquisition announcement.
“This is more than just an MES product buy for SAP,” said Bob Parker, vice president at IDC’s Manufacturing Insights, in an interview. “Visiprise had made the shift to product information management, as opposed to just work order traffic. This kind of rounds out SAP’s PLM strategy.”
AMR Research analyst Simon Jacobson agreed. “I think this does help their PLM strategy in the long run. They will use the Visiprise piece to connect the dots.”
Both Parker and Jacobson also noted that Visiprise would bring its maintenance, repair, and overhaul software capability to SAP. In December 2005, Visiprise acquired HMS Software, Inc., which provided technology to define, execute, and document manufacturing, assembly, and maintenance information for complex and quality-critical products.
Parker said that strong buying intentions exist in the aerospace and defense sector, for example, for the kind of capabilities the erstwhile HMS technology provides.