ABB and the Ventyx acquisition: Why now, what next?

By Charles W. Newton, Newton-Evans Research Company, Inc.

The May 2010 announcement of the ABB acquisition of Atlanta-based Ventyx is likely to serve as a wake-up call to the major competitors of ABB in the electric power T&D and operational smart grid market, primarily the likes of Areva T&D, GE and Siemens.

This week’s acquisition puts ABB squarely in the heart of smart grid activities – both from an operational perspective, where it has been a global market co-leader, and now set to gain a significant market position in the burgeoning enterprise utility smart grid software market, a perspective beyond that of any direct competitor.

ABB will now be in a better position for more smart grid-related opportunities than any other of the IT-centric smart grid players, none of whom can compete directly in the operational side of smart grid with smart field equipment offerings.

Overall, this eases the “shopping/procurement” burdens of utilities. The effect of ABB’s acquisition of perhaps the best available and largest independent energy industry applications software provider positions ABB for a larger role in the hundred-billion dollar-plus market for operational equipment and for energy enterprise software.

Ventyx has grown in recent years through a combination of strong organic growth and especially well-thought-out inorganic growth through its acquisition of market segment leaders in a number of smaller energy applications software areas.

In this regard, the company’s roadmap to marketplace success has been similar in many respects to that of Quanta Services. Both companies also serve gas energy and telecommunications markets. Both firms (Ventyx and Quanta) have relied on inorganic growth measures to fuel expansions, and both have successfully integrated multiple acquisitions of their own.

For those of us with a history of involvement in the energy industry, just think of the names of firms that are now part of ABB, by virtue of its acquisition of Ventyx.

A partial list of historical segment-leading brands that are now part of ABB-Ventyx includes such familiar names as MDSI, Indus, Global Energy, New Energy Associates (once part of Siemens Energy), and the energy trading software recently acquired from Houston-based The Structure Group (that firm’s highly regarded nMarket offering).

By virtue of its acquisition of Ventyx, ABB is now a global leader in ETRM (energy trading and risk management), which will enable its Houston-based energy management systems business unit to more effectively compete with its traditional competitors.

The bigger question for the industry is what will be the industry’s reaction to ABB’s acquisition of Ventyx? Will others rush to make their own “enterprise IT” acquisitions?

Of the three major competitors, GE Energy is probably the best-positioned with an array of IT offerings to accompany its operational side equipment and automation offerings. However, Siemens and Areva T&D as well as GE have the ability to match almost any utility or ISO/RTO request for proposals related to smart grid initiatives, either directly or with partners or via project-specific teaming arrangements.

Our own assessment of Ventyx in the North American market for applications that Newton-Evans has recently measured indicates that Ventyx is the major (or a leading) participant in the following market segments:

Energy Trading and Risk Management — ETRM (perhaps 20-25 percent);

Customer Information Systems — CIS (18-22 percent);

Mobile workforce management (30-33 percent).
 
Asset Management software (25-30 percent).

Power Generation Analytics Solutions: 20-25 percent

Clearly, Ventyx is also an international leader in each of these markets. Global shares of its offerings are typically above 10 percent in served segments.

In terms of the size of the total energy market now addressable by ABB, the value has been increased from transmission and distribution to automation and now to enterprise IT. The acquisition adds an incremental 7-10 percent to the company’s addressable global energy market, totaling annual opportunities well in excess of $200 billion. In 2009, ABB total revenues exceeded $32 billion.

 

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ABB and the Ventyx acquisition: Why now, what next?

By Charles W. Newton, Newton-Evans Research Company, Inc.

The May 2010 announcement of the ABB acquisition of Atlanta-based Ventyx is likely to serve as a wake-up call to the major competitors of ABB in the electric power T&D and operational smart grid market, primarily the likes of Areva T&D, GE and Siemens.

This week’s acquisition puts ABB squarely in the heart of smart grid activities – both from an operational perspective, where it has been a global market co-leader, and now set to gain a significant market position in the burgeoning enterprise utility smart grid software market, a perspective beyond that of any direct competitor.

ABB will now be in a better position for more smart grid-related opportunities than any other of the IT-centric smart grid players, none of whom can compete directly in the operational side of smart grid with smart field equipment offerings.

Overall, this eases the “shopping/procurement” burdens of utilities. The effect of ABB’s acquisition of perhaps the best available and largest independent energy industry applications software provider positions ABB for a larger role in the hundred-billion dollar-plus market for operational equipment and for energy enterprise software.

Ventyx has grown in recent years through a combination of strong organic growth and especially well-thought-out inorganic growth through its acquisition of market segment leaders in a number of smaller energy applications software areas.

In this regard, the company’s roadmap to marketplace success has been similar in many respects to that of Quanta Services. Both companies also serve gas energy and telecommunications markets. Both firms (Ventyx and Quanta) have relied on inorganic growth measures to fuel expansions, and both have successfully integrated multiple acquisitions of their own.

For those of us with a history of involvement in the energy industry, just think of the names of firms that are now part of ABB, by virtue of its acquisition of Ventyx.

A partial list of historical segment-leading brands that are now part of ABB-Ventyx includes such familiar names as MDSI, Indus, Global Energy, New Energy Associates (once part of Siemens Energy), and the energy trading software recently acquired from Houston-based The Structure Group (that firm’s highly regarded nMarket offering).

By virtue of its acquisition of Ventyx, ABB is now a global leader in ETRM (energy trading and risk management), which will enable its Houston-based energy management systems business unit to more effectively compete with its traditional competitors.

The bigger question for the industry is what will be the industry’s reaction to ABB’s acquisition of Ventyx? Will others rush to make their own “enterprise IT” acquisitions?

Of the three major competitors, GE Energy is probably the best-positioned with an array of IT offerings to accompany its operational side equipment and automation offerings. However, Siemens and Areva T&D as well as GE have the ability to match almost any utility or ISO/RTO request for proposals related to smart grid initiatives, either directly or with partners or via project-specific teaming arrangements.

Our own assessment of Ventyx in the North American market for applications that Newton-Evans has recently measured indicates that Ventyx is the major (or a leading) participant in the following market segments:

Energy Trading and Risk Management — ETRM (perhaps 20-25 percent);

Customer Information Systems — CIS (18-22 percent);

Mobile workforce management (30-33 percent).
 
Asset Management software (25-30 percent).

Power Generation Analytics Solutions: 20-25 percent

Clearly, Ventyx is also an international leader in each of these markets. Global shares of its offerings are typically above 10 percent in served segments.

In terms of the size of the total energy market now addressable by ABB, the value has been increased from transmission and distribution to automation and now to enterprise IT. The acquisition adds an incremental 7-10 percent to the company’s addressable global energy market, totaling annual opportunities well in excess of $200 billion. In 2009, ABB total revenues exceeded $32 billion.