Honeywell is reportedly close to buying supply-chain software vendor JDA for roughly $3 billion, in a move that would continue the industrial giant's push into software systems, as the Wall Street Journal reports:
Honeywell, like rival General Electric Co., is betting that software layered atop heavy machinery will help lock in long term service revenue from its customers. Honeywell is rolling out newly connected versions of equipment from its traditional business lines—like aviation power generators—to convince customers that it can better service the machines in part by harvesting data.
In July, Honeywell said it would pay $1.5 billion to purchase Intelligrated, a privately held maker of automation systems for warehouses and supply chains.
The JDA acquisition will bolster the building side of Honeywell’s business, which makes gas detection monitors and thermostats. Included in that portfolio is a suite of small computer products like those used by package delivery workers, and JDA software could eventually help guide consumer goods from factories to the cash register.
In April, it emerged that Honeywell was shopping around its building solutions business, hoping to garner between $3 billion and $4 billion for the unit, which sells fire safety and other systems for buildings. It's a component of Honeywell's larger automation and controls unit.
By adding more software companies to its mix, perhaps with cash from such a divestiture, Honeywell's goal may be to grow the remaining components of the unit with an emphasis on IoT (Internet of Things) applications for advanced building monitoring, energy management and other areas. Its Process Solutions division has already developed Uniformance, an IoT-powered analytics platform that gives manufacturers real-time insights into their operations.
The JDA acquisition would certainly tie into an overall IoT strategy for Honeywell, but one thing to watch down the line is for the congolomerate to pick up a vendor such as PTC, which offers the Thingworx IoT development platform.
Meanwhile, news of the JDA deal comes after a long string of other acquisitions this year in the enterprise software industry. There are a couple of overarching reasons for the trend, says Constellation Research founder R "Ray" Wang. "Capital is cheap," he says. "Everybody's looking for growth and people are still betting on tech. And every company that doesn't have software knows that it needs to."
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