I will write a range of posts on this over the next few weeks to try to capture what has happened in our industry and where it is headed across technology, service provision, contracting and
In the past couple of weeks there have been some major shifts in the structure of the software side of our industry. I believe this is a tectonic shift that will change the systems our industry uses.
- eMaint has been purchased by Fluke for an undisclosed sum (Online CMMS)
- iSolutions was purchased by Runge Pincock Minarco (RPM) in a deal purportedly worth $8 million plus an additional $6.5 million buy out over three years based on performance (Mobile / fleet management software)
- Meridium was purchased by GE Digital in a deal worth a purported USD $495 million
In every case the impact will be determined not by the value of the product itself, but by how mid to large sized multinationals will be able to replace the drive and enthusiasm of the product developers and owners.
eMaint Sale
The CMMS market has always fascinated me. As with all B2B software spaces it is an extremely competitive market where entrants come and go in a tidal fashion.
On one side they compete for niche spaces among sharp elbowed giants, on the other side they engage in hand to hand combat at the cutthroat edge with small, hungry new entrants.
This company has long been a favorite of mine. Partly because I liked the people involved and the on-demand platform, but ultimately because it is a good company.
They were in the on-demand space before the rest of the world knew it existed, they have slowly and continually grown their subscriber base showing a customer focused discipline and sense of purpose, and they were able to remain competitive within a highly competitive space.
Fluke has a great challenge on its hands. They need to continue with the discipline and customer practices that enabled eMaint to maintain its subscriber base. This alone will be difficult as the eMaint team have regularly boasted of a re-subscriber rate in the high 90% range.
If they do it well it will provide them with a lot of additional sales avenues on both sides of the online divide. That is, they will find new clients for their electronic test tools, as well as new clients for eMaint. However, it has to be noted that either client base is not naturally looking for the others products. They are complimentary, but not very closely aligned as products go.
If they do it badly it will whither on the vine as often happens once the driving force of the entrepreneur is taken out of these companies. With eMaint however it has been a functioning business system for many years, so I find this to be a positive.
iSolutions Sale
This is a very interesting deal to me as I know people on both sides of this deal.
iSolutions build and sell a product called AMT which is a mining focused asset management tool with a core product capability around financial management and modelling. They are particularly focused on mobile fleet.
The founders and former owners of iSolutions are extremely professional, very focused, and have followed a well planned strategy to dominate the fleet management space within the mining industries. Purportedly managing half the worlds large mining fleet assets today.
On the buyers side (PRM) I am both aware of the history and value of Runge to the mining sector, as well as the current leadership in Latin America in particular. These people know their core market, know their products, and know how to build and run a professional sales and delivery service. I'd invest in them if I could.
Coupling the AMT product with RPM provides tremendous value both to the new owners and to the products growth. RPM will be able to provide the AMT tool to underground and longwall miners, to dragline operators, and to the maintainers along the remainder of their client base; it will also provide them with access to clients who may not yet be familiar with the breadth and capabilities of their remaining software products.
This is a win win deal as I see it. You would have to try very hard to ruin the potential upside here.
Meridium Sale
Meridium are the big fish in the small pond of niche reliability tools. Their background is risk management in the oil and gas sector and they have been able to leverage this market in particular to build a global presence across many capital intensive industry sectors. They also have a product within the native SAP universe.
Technical veracity built on strong professional workforce is a cornerstone of this company. This is particularly noticeable in the RBI and Instrumentation space although they also have very niche products in the performance and evaluation and defect elimination.
They also have a very professional sales and marketing capability, a very strong consulting capability, and an ongoing technical development arm that has continually pushed their product along.
Meridium already has many of the big players as clients and has good mid-to-high level management contacts. They fall short of board level engagement which makes it harder for a consulting firm of this size, but they show no signs of being affected by it.
This compliments the GE focus away from consumer facing product lines and back to B2B industrial services so championed by former CEO Jack Welch. GE is THE industry leader at rapidly developing multi-billion dollar service sectors and running them professionally. I witnessed the growth of their Turbine service / maintenance offering in the middle east, a growth stage beyond anything else I have seen in my life.
They have purchased meridium to "develop an industry-leading software business." it already has Predix, its own operating system for industrial equipment, and has recently purchased other mid sized products like ShipXpress Inc.
The risk here is a little different in my view. Meridium created its own space where none existed previously. Instead of a handful of small niche reliability products companies could now buy a reliability tool with a global tool suite matching most fo their asset performance management requirements.
But of course, when you build a pathway others will follow it. The two up and coming players I have seen include Reliasoft and Isograph. Neither of whom are native to resource sector, but both of which are being aggressively marketed by Australian entrepreneurs.
The danger therefore for GE is not that they are unable to outdo competitors on an equal footing, but that they are undercut by products that have a strong entrepreneurial protagonists, and are able to be packaged and delivered in a way that challenges the big implementation style of an enterprise level package.
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