SAP Acquisition of Visiprise Could Shake Up MES Market

The deal sets the stage for more competition between SAP and top automation vendors, as well as more consolidation in the manufacturing execution system market.

John Zepecki, Senior Vice President and General Manager, Suite Edge Solutions, SAP AG
John Zepecki, Senior Vice President and General Manager, Suite Edge Solutions, SAP AG

In a move that puts it into more direct competition with several of the major automation suppliers, SAP AG, the German-based enterprise software giant, announced plans on June 17 to acquire Visiprise Inc., a provider of manufacturing execution system (MES) software. Terms of the deal were not disclosed. SAP expects the deal to be completed in July.

In recent years, automation vendors including GE Fanuc, Rockwell Automation, Siemens and Wonderware, among others, have acquired or developed MES products in an effort to extend their reach beyond the plant floor. And SAP’s acquisition of privately-held Visiprise, based in Alpharetta, Ga., sets the stage for more head-to-head face-offs with this group.

“Certainly, within the discrete manufacturing space, we’ll become more competitive with some of the MES players that typically are more software driven,” said John Zepecki, senior vice president and general manager of Suite Edge Solutions for SAP, in Palo Alto, Calif. “Our intention is to continue to have partnerships with folks like Rockwell, Siemens and others going forward. We’ll try to be complementary where we can, and then in cases where we’re competitive, we’ll obviously try to win the business,” Zepecki told Automation World during an interview.

At Cambashi Inc., a Cummaquid, Mass., market research firm, Principal Industry Analyst Julie Fraser pointed out that under terms of a partnership, SAP’s sales force has actually been selling Visiprise for some time. Nonetheless, she said, the acquisition “still changes their competitive stance to some of the other players, both the big automation vendors, and also some of the companies that have been SAP’s partners in other industry segments.” SAP has had long-term partnerships with manufacturing software provider Wonderware, for example, as well as several other MES vendors, said Fraser. “And I think it will be interesting to see how that moves forward.”

More acquisitions?

Fraser also believes the SAP/Visiprise deal could set the stage for more MES industry consolidation. “The MES companies have not been acquisition targets for ERP (enterprise resource planning) companies yet. So this is really kind of a breakthrough in a lot of ways,” Fraser said. “And I do expect to see more activity along this line, now that SAP has sort of broken the ice.”

The Visiprise acquisition is the latest in a series of investments made by SAP as part of its “Perfect Plant” initiative to deliver an end-to-end solution for manufacturing customers, Zepecki said. It started in 2005 with the acquisition of Lighthammer, a manufacturing intelligence software provider, and included core investments in SAP’s manufacturing and Business Suite products along the way, he noted. SAP also acquired Factory Logic, a Lean Manufacturing software supplier in 2006.

SAP began a relationship with Visiprise in 2005 that eventually included investments in the company, and SAP endorsement and certification of its products. Then, in June last year, SAP agreed to resell and market the company’s flagship Visiprise Manufacturing product under the name SAP Manufacturing Execution by Visiprise.

Adoption acceleration

After working with Visiprise and getting confidence in its product, and also receiving positive feedback from customers, SAP management decided that “it made sense for us to really take the next step and continue to make our commitment in the manufacturing space with the [Visiprise] acquisition,” Zepecki observed. By bringing Visiprise in-house, SAP believes it can accelerate adoption among customers, while finding new opportunities and ways to solve customer problems that may not have been evident through the partnership arrangement, Zepecki said.

The SAP executive said the company does not have a current plan for rebranding the Visiprise name, but that likely will happen over time. The manufacturing intelligence product from Lighthammer is now known as SAP Manufacturing Integration and Intelligence (MII).

In its press release announcing the acquisition, SAP noted that Visiprise serves more than 60 industry-leading, global customers including many existing SAP customers in discrete manufacturing industries including high tech, aerospace and defense, automotive and medical device. The acquisition of Visiprise is consistent with SAP’s strategy to complement existing applications and solutions with smart purchases that offer innovative technologies and capabilities while maintaining its successful organic growth track record, SAP said.

“The automation of business processes for manufacturing companies has been core to the SAP strategy for more than 30 years,” said Jim Hagemann Snabe, corporate office and member of the executive council, SAP AG. “We are excited to combine Visiprise’s industry-leading manufacturing execution solutions with the power of the SAP Business Suite. This combination will offer manufacturers better visibility by linking the operations of the plant floor to production planning and operations management, enabling manufacturers to respond profitably to the growing demands of their global customers.”

“Best-in-class manufacturers understand the value of the integration of MES with ERP to provide a comprehensive manufacturing control solution,” said Sean McCloskey, president and chief executive officer, Visiprise. “The compatibility between the Visiprise offering and SAP is undeniable and proven. We are excited to join the SAP team and work together to further serve our customers as their needs continue to evolve and grow.”

Cambashi Inc.
www.cambashi.com

SAP AG
www.sap.com

Visiprise Inc.
www.visiprise.com



 


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