This article will highlight LNS Research’s take on ABB’s solutions after attending its biennial North American user conference in Houston on March 2 and 3, 2015. This article is targeted towards anyone who is currently leveraging or planning to invest in ABB’s solutions.
With more than 8,000 attendees, including customers, distributors, press, and employees from over 73 countries, ABB’s user conference had great representation across demographics. In this post, I’ll highlight some of the key announcements and insights garnered from the conference, with a special focus and analysis on ABB’s current software offerings and its vision in the marketplace.
Key Announcements and Insights from the Conference
ABB is a multinational corporation headquartered in Zurich, Switzerland, with annual revenues at approximately $40 billion. The conference keynotes were the Head of ABB’s Americans Operations Greg Scheu and the CEO Ulrich Spiesshofer. Over the years, ABB has grown organically on top of making several significant acquisitions as well. Putting the company’s core business in plain terms, Spiesshofer said, “We do power and automation for utilities, industry, transport and, infrastructure globally.”
Discussing the breakdown of revenues, Spiesshofer highlighted the company had the following split among key focus areas:
- 35% in utilities
- 45% in industry
- 20% in transportation and infrastructure
Also, between its two businesses of power and automation, ABB has received higher revenues from the former, and approximately 60% of revenue is derived from the automation business. Some of the other major announcements made at the conference include:
- A strategic partnership with Ericsson to bring together Ericsson Cloud System and ABB's Decathlon® for Data Centers, a data center infrastructure management (DCIM) system
- To further the acquisition of Thomas & Betts, ABB will be investing $30 million to build a new plant to manufacture low voltage product lines in Memphis, TN
ABB’s Vision in the Software Business
The conference also featured a prime focus on the Internet of Things (IoT), as a panel was presented on stage, containing key event sponsor Microsoft, ABB, and an ABB customer. The trio provided insight and examples into how the IoT trend is impacting the industry. Highlighting ABB’s solution in the IoT space, Spiesshofer discussed the following key areas of focus
- Intelligent devices
- Control systems
- Advanced communication infrastructure
- Enterprise software
- Analytics solutions
A notable fact that was highlighted at conference was that—to my surprise---more than 50% of what ABB’s currently offers is software related. ABB had made a few major acquisition over the last decade to build its software offering. The most impactful was the acquisition of Ventyx for $1 billion in 2010.This gave ABB a major boost in asset, operations, energy, and workforce management solutions in some of the asset intensive industries. ABB has also made some other acquisitions such as Insert Key Solutions and Mincom to build its Enterprise Asset Management software offerings. It seems clear the company understands the importance of its software business to remain competitive, and has also developed a separate Enterprise Software group that houses some of these acquisitions.
LNS Research’s Analysis – Can ABB Really Compete in the Software Business?
During my attendance at the conference, I spent significant time on the technology showcase where the company had all of its major solutions on display. It was impressive to see the effort that ABB has invested to bring its acquisitions under one brand. Between the many software and hardware acquisitions that have occurred over the past few years, this is no easy task. ABB has taken a first step in building a technology roadmap by bringing some of the software offerings together as part of the Enterprise Software group. LNS sees this as a big step in the right direction strategically, and should prove of great benefit to current ABB customers as well as prospects.
However, ABB currently has important software products that remain outside of its Enterprise Software group and it remains to be seen if these solutions will receive the required attention, especially when considering the breadth of ABB’s portfolio. Two examples of this are the company’s Manufacturing Execution System (MES) offering, and the aforementioned Decathlon for Data Centers. ABB has a full-fledged MES offering with some good customers currently leveraging this MES across discrete, process, and batch industries. I also got a chance to see the MES solution live and to connect with the head of the MES business. ABB might have some ground to cover compared to some of its closest competitors in this space. Companies like GE, Siemens, Schneider Electric and Rockwell Automation have been heavily focused on the software business with many announcing reorganizations to increase resources allocated to software over the past several years and.
Another area we would like to hear from ABB is around their offerings in IoT. While there were number of products that were categorized as IoT solution, ABB will need a holistic offering and vision around how their industrial clients can leverage these solutions to drive value. ABB could also leverage IoT applications as an intelligent way to consolidate their software offering together. Finally, partners like Microsoft can also play a critical role in bringing the software vision together for ABB.
To answer the question, yes—ABB can compete effectively in the software business. But there is still some grounds to cover. ABB has had a lot of critical parts of the software business for quite a while and has been slower than many of its competitors in pulling it all together. ABB understands the importance of software and the creation of the Enterprise Software group is a testament to that fact. There is a lot of opportunity for ABB to grow in this business and acquire increasing market share. We will continue to track ABB’s progress and inform the readers on the progress they have made in maturing their software business.