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Rockwell Snaps Up Pavilion Sign Up to receive Daily News Alerts in your E-mail Inbox
Posted on Friday, October 26, 2007 7:20:00 PM |
In a move that will accelerate its push into process manufacturing markets, Rockwell Atuomation Inc. yesterday announced it has signed a definitive agreement to acquire 16-year-old advanced process control software provider Pavilion Technologies Inc.
Rockwell did not reveal terms of the acquisition of privately owned Pavilion. Rockwell, in a prepared statement, said the Pavilion employees and management team — including CEO Ralph Carter — will operate as a business unit reporting through Rockwell Automation's Architecture and Software unit. Carter will report to Kevin Roach, vice president of Rockwell's software business.
The Pavilion8 modeling platform and application will be integrated with Rockwell's FactoryTalk production and performance suite and its Logix control platform, Rockwell said.
"We see this as a serious statement," said Kevin Zaba, director of Rockwell's process business, in an interview with Managing Automation. "We see process as a heavy growth area for us."
Analysts today praised the deal, noting that Rockwell, for the past three years, has been making a push to expand beyond its discrete manufacturing roots into hybrid and process manufacturing. In February of this year, Rockwell acquired Proscon Holdings Ltd., a maker of automation systems mainly for life sciences companies. And, in July, the company bought process manufacturing safety software vendor ICS Triplex plc for 110 million pounds.
"Pavilion is a great fit given Rockwell's push into process industries and given Pavilion's strengths where Rockwell wants to be," said Alison Smith, a senior research analyst at AMR Research. "Rockwell is leaving Pavilion to operate as its own business, at least in the near term, so this shouldn't be disruptive to Pavilion's installed base," she added.
Pavilion brings to Rockwell a strong and growing base of about 100 customers, particularly in process manufacturing verticals such as polymer chemicals, biofuels such as ethanol, and cement, analysts noted. Pavilion's customers include Atofina Petrochemicals, Dow Chemical, Eastman Chemicals, Cemex, and several units of British Petroleum.
In addition to affording Rockwell a stronger presence in process industries, Pavilion delivers software functionality that, in some respects, is a step ahead even of other process manufacturing-focused automation vendors, such as Honeywell and Emerson, analysts said.
Pavilion's products bring neural networking technology to the task of modeling complex process manufacturing processes and predicting the impacts of changes to those processes. Combining real-time production data with process models, for example, Pavilion's tools can give manufacturers insight into how they can dynamically maximize production or minimize energy use while making product grade changes.
While Pavilion has had competition from some vendors such as Aspentech in the polymers manufacturing market, major process automation competitors have largely lacked the kind of advanced process control capabilities that Pavilion delivers, Smith said.
"Emerson doesn't have anything that compares to what Pavilion has," she noted. "And Honeywell has some advanced process control capabilities that are tightly coupled with its DCS hardware. The beauty of Pavilion is that it is not closely tied to any one hardware platform. It is able to operate in heterogeneous environments."
Although Rockwell has said it will integrate the Pavilion products with its Logix and FactoryTalk platforms, Zaba said the company also will continue to ensure that the Pavilion products interoperate with other process automation platforms. "We want to maintain the ability for Pavilion to layer on top of other DCS systems," Zaba said. "We don't want to lose that independence."
Over the long run, Smith predicted, the Pavilion software may uniquely be able to take advantage of some capabilities in Rockwell's control hardware, a concept the vendor has called "preferred integration."
Rockwell will focus first on integrating Pavilion with its FactoryTalk platform. Specifically, Rockwell will enable Pavilion to share FactoryTalk services, such as security, audit, and the FactoryTalk data model, Zaba said.
Rockwell also will allow the Pavilion applications to integrate with Logix using existing and new Logix advanced process control instructions expected to be released next spring.
Besides bringing new advanced process control functionality, Pavilion also brings to Rockwell a strong partnership with enterprise software giant SAP. "That's something that Rockwell did not have until now," Smith said.
The deal for Pavilion comes as the company has begun to show impressive growth. After taking its first few years to establish its neural networking technology in the market, the company has been increasing its project wins by as much as 50% per year over the past couple of years, estimated ARC senior analyst Tom Fiske.
Still, analysts said, the company was running into problems finding the resources to support continued rapid growth.
"Pavilion was having trouble scaling on its own," said AMR's Smith. "Often, companies get to a certain level, have trouble getting the resources to grow, and become acquisition fodder."
Smith speculated that Pavilion's management and venture capital backers may have preferred selling the company rather than further diluting current ownership through an additional round of venture financing. It is unknown whether Pavilion considered an initial public stock offering. Carter and other Pavilion officials today declined to comment on the acquisition by Rockwell.
Pavilion's venture capital backers include Bank of America Ventures, William Blair Capital Partners, SEED Capital Partners, and Lee Walker.
In attempting to make the Pavilion acquisition pay off, Rockwell may need to make additional investments in training and developing its own sales and implementation services organizations both in the United States and around the world, analysts said today. The Pavilion product, Smith noted, often requires a good deal of technical service support.
"The transferring and development of skills to support Pavilion will be a challenge for Rockwell," Smith predicted. "They don't have a very large internal services or engineering organization as it stands. But they understand [this] and are circling the problem now."
Rockwell plans to invest in hiring new application delivery professionals to support the Pavilion applications, Zaba said. The company also plans to work on breaking the Pavilion applications into smaller, more modular pieces that can be more easily implemented by customers, he added.
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