St. Louis -- On the heels of outlining a major initiative around plant-wide information systems, Rockwell Automation Inc. today announced it will acquire Datasweep Inc., a privately-held maker of manufacturing execution software (MES). Terms of the deal weren't disclosed.
The acquisition agreement, announced here at Rockwell's 14th annual Automation Fair, will move the Milwaukee, WI, company squarely into a space that it believes is becoming more important to manufacturers -- the convergence of control systems and business systems information. Rockwell believes it must be a major player in this long-term trend.
Rockwell's immediate objective with the Datasweep deal is to accelerate its movement into the MES market while building out vertical expertise in industries in which the company currently does not have a strong foothold. Datasweep, headquartered in San Jose, CA, offers an MES package called Advantage, which is based on J2EE technology -- an emerging standard for developing component-based, multi-tier enterprise applications. The company has about 50 customers in the automotive, electronics, life sciences and industrial markets.
"The timing is right," said Rockwell chairman and chief executive Keith Nosbusch, in an interview with Managing Automation. "Datasweep has a contemporary technology platform, deep domain expertise such as in life sciences, and its product can be integrated into our Logix (automation and control) platform. This accelerates our entrance into the market."
The market opportunity was $1 billion in 2004, according to AMR Research Inc. (Boston), a direct result of manufacturers demanding more actionable information from the plant floor. MES players, however, have traditionally offered small niche products and have struggled in their efforts to build sustainable businesses.
As a result, the MES market has undergone considerable consolidation over the past few years. Just last month, Visiprise said it would acquire HMS Software Inc., which has focused on the aerospace and defense market.
In 2003, Tecnomatix acquired USData and a year later was itself acquired by product lifecycle software provider UGS.
Automation companies have targeted the MES area as a functional space in which they need a presence. GE Fanuc, for example, bought Mountain Systems, and Siemens acquired Orsi.
Rockwell, too, noticed the opportunity early on, buying Propack Data several years ago. But Propack is firmly routed in pharmaceutical manufacturing, whereas Datasweep, which also plays in pharmaceuticals, comes at such markets as life sciences from the packaging side.
"It's a logical next step," said Nosbusch.
Moreover, acquiring another MES vendor fits well with Rockwell's vision of the future.
Last month, Rockwell executives outlined an initiative that breaks plant-wide performance into six process disciplines as part of Rockwell's FactoryTalk production management and performance suite, which it positions in the important territory between enterprise business systems and automation and control systems. These disciplines are: performance management, data management, quality management, asset management, production and visualization. (Don't miss the December print issue of Managing Automation for more details.)
According to Nosbusch, the company already has strong visual and design tools, but it needs to fill in other areas of expertise. As a result, more acquisitions -- even in MES -- are likely to occur, he noted, without mentioning specific targets.
"The goal is to create a platform that allows us to go across industries with commonality, yet customized at the 20% level," Nosbusch said.
Steve Eisenbrown, Rockwell senior vice president of the Automation Control and Information Group, of which Rockwell Software is a part, added in an interview that the strategy to build out the suite has three parts: development, acquisition and partnerships.
The acquisition of Datasweep will help fill out the data management, quality management and production pieces of the suite, according to Keith Chambers, Datasweep's director of product marketing. The Datasweep Advantage product will be integrated into FactoryTalk and re-branded under that name.
Eisenbrown also said that, on the partnership front, Rockwell will be extending its Encompass partnership program to companies in the information technology market.
While the Datasweep acquisition accelerates its initiative to build out a plant-wide suite -- a market space which Nosbusch claims will eventually be a revenue opportunity in the "hundreds of millions" -- the outlook for the immediate future remains conservative.
"There's no rocket ship rides here," Nosbusch said. "We need to slug it out, make the investments and, in the next five to 10 years, it will be a big part of our portfolio. Right now, we need to show customers that we have a roadmap."