Earlier this week, Honeywell International completed the acquisition of the Advanced Process Control & Optimization (APC&O) business of PAS Inc., a privately held maker of specialized software and consulting services for the process industry.
The acquisition includes optimization and simulation technologies geared toward complex chemical processes, as well as the transfer of key customer contracts and personnel. Officials from both companies maintained that moving non-linear adaptive control — a key technology within the APC&O business — under the Honeywell Process Solutions umbrella is a logical move for both parties that will have valuable long-term effects for end-users. Purchase terms were not disclosed.
The deal includes linear and non-linear controls and optimization software. Linear control addresses physical properties or chemical processes in a product that are consistent even when a change occurs. Conversely, non-linear processes will change dramatically when something is altered. The non-linear space is extremely complex and very difficult to manage.
"A lot of process problems have not been tackled historically because the technology has not been there in a mature way," Zak Alzein, Honeywell's director of marketing for chemical and life sciences, told Managing Automation. "This allows us to bring in a technology that is somewhat unique, as it is not prevalent in the process industry, and tackle a set of challenges nobody else has been able to tackle."
PAS obviously had the tools to tackle the problem, but not the resources. "PAS didn't have the scale and capacity to take this globally," Alzein said. "That's where Honeywell comes in."
Indeed, PAS founder and CEO Eddie Habibi noted that the APC&O business was not growing as fast as the company's other groups, which include Automation Asset Management, Critical Condition Management, and a systems integration group. Last year, the company said it grew 44% overall, but much of the software revenue came from sales of PAS's configuration management and critical condition applications.
"We could not see how we were going to become the number-one player [in advanced control and optimization] with the resources we had and the condition of that market," said Habibi in an interview, noting that the chemical and refining markets for which the technology is intended are saturated with bigger vendors such as Honeywell.
The technology it sold to Honeywell is solid, Habibi said, and Alzein concurs. In fact, PAS is somewhat of a Honeywell expert, as much of the software it designed was built to fill a gap in earlier models of Honeywell's DCS systems, like the TDC 3000, which lacked functions for documentation and change management.
In 1996, PAS developed a Windows-based software package called DOC3000 that captured all of the information associated with the configuration. The software performed integrity checks related to the genealogy of everything from field instrumentation to advanced process control and historians, for example. Since then, PAS has expanded the technology to work with other process vendors' solutions, and is phasing out DOC3000, replacing it with a new multi-vendor configuration management solution called Integrity.
Integrity falls under PAS's Automation Asset Management group, which is in growth mode, Habibi said. The Critical Condition Management business is on a similar track. "In these areas...we are the number-one player and we want to grow those," Habibi said. "So [the sale of APC&O] was a no-brainer."
It was a no-brainer for Honeywell as well, Alzein indicated. The company intends to first offer the new advanced control and optimization software to the chemicals industry, but will quickly deploy it across all verticals, Alzein said, adding that the software will be included as part of Honeywell's next-generation DCS, called Experion PKS.
Alzein said there is a lot of untapped value-add that Honeywell will provide its customers by offering them a way to control non-linear processes and simulate process and product design. That ability is heightened by the fact that Honeywell now has the related in-house expertise, as about a dozen of PAS's 100 employees will be relocating to Honeywell's Houston office.
And since Honeywell and PAS have a history together — Honeywell has resold some of the PAS software — customers won't feel any interruption, analysts said. "End users will benefit from the long-term PAS and Honeywell partnership, which will facilitate a seamless transfer of ownership to Honeywell and continued support for the technology," said Tom Fiske, director of research for ARC Advisory Group, in a statement.