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AVEVA’s $5 Billion OSIsoft Acquisition Reshapes The Industrial Software Landscape

Craig Hayman, AVEVA’s CEO, today dropped the bombshell news on the industrial software market that his firm – with the backing of its majority shareholder Schneider Electric – has acquired OSIsoft for a cool $5 billion. Since its founding in 1980, OSIsoft had been majority-owned by its original founder Dr Patrick Kennedy. In 2011, the California-headquartered firm raised a $135 million minority investment from venture capitalists Kleiner Perkins Caufield & Byers, TCV and Tola Capital. Mitsui & Co, bought a 5% shareholding in 2016 as part of a strategic alliance to sell OSIsoft’s PI System products through its business network. In 2017, SoftBank’s Vision Fund bought out the VC investors but Mitsui held onto its shares until AVEVA came knocking. At the time of the acquisition, OSIsoft employed approximately 1,400 people and had annual revenues of around $400 million.

This acquisition will send shockwaves through the industrial software market. Firstly, the price tag which is approximately 10x annual revenues shows the commitment of Schneider Electric and AVEVA to be the number one industrial software provider. Secondly, AVEVA will grow its employee numbers to more than 6,000 which puts it head and shoulders above direct competitors. Thirdly, the OSIsoft PI System product portfolio has incredible penetration in the industrial world. Verdantix analysis indicates that elements of the PI System are deployed at more than 20,000 sites worldwide, have been adopted by over 1,000 power utilities and manage data flows from close to 2 billion real-time sensors. This will open up a wide range of cross-sell opportunities for AVEVA’s other products such as APM software, control of work, operations management and engineering design. Fourthly, the deal accelerates the convergence of industrial software applications with real-time operational data flows. This will speed up AVEVA’s visual APM and digital twin product strategies.

To succeed with the acquisition AVEVA will need to handle the famously friendly OSIsoft culture with kid gloves and stay committed to the philosophy of a “play nicely” open architecture. This deal doesn’t create the potential to take an “AVEVA shop” approach comparable to only-SAP strategies. The complexity of industrial systems and IT/OT integration means that even the largest market players need to be careful not to adopt a “centre of the universe” mentality because that doesn’t solve customer problems such as improving asset reliability, ensuring safe operations, optimizing maintenance spend and enhancing engineering designs.

OPEX AVEVAs 5 Billion OSIsoft Acquisition Reshapes The Industrial Software Landscape Verdantix Blog

David Metcalfe

CEO, Verdantix
Verdantix
Verdantix

David is the CEO of Verdantix and co-founded the firm in 2008. Based on his 20 years of experience in technology strategy and research roles he provides guidance on digital strategies to C-level executives at technology providers, partners at private equity firms and function heads at large corporations. His current focus is on helping clients understand their market opportunity tied to ESG investment trends and their impact on corporate sustainability strategies. During his 12 years running Verdantix – including 4 leading the New York office – he has helped dozens of clients grow their businesses through fund raising, acquisitions and international growth. David was previously SVP Research at Forrester and Head of Analysis & Forecasting at BT. He holds a PhD from Cambridge University and also worked as a Research Associate at the Harvard Business School.