Honeywell acquisition of Elster & IIoT Strategy

  • March 28, 2016
  • Honeywell Process Solutions
  • Feature

By Bill Lydon, Editor

In January, Honeywell completed the acquisition of Elster for $5.1 billion. Elster is a leading provider of gas, water, and electricity measurement solutions used in commercial, industrial, and residential applications. Offerings include smart meters, software, and data analytic solutions.

I recently discussed the acquisition with Jason Urso, Vice President and General Manager at Honeywell Process Solutions. Jason Urso has been with Honeywell Process Solutions since 1991 holding several engineering and marketing roles during that time. Currently he leads a global team responsible for the strategy of the company’s portfolio that includes process and analytical instrumentation, as well as natural gas regulators and associated services.

Honeywell plans to sell Elster’s products through its world-wide distribution channels and increase the company’s participation in emerging markets. Elster will benefit from more research-and-development funding to create new products and technologies.

Elster was founded in 1991 as EnergyICT nv, a privately held company designing and offering highly advanced energy information and communication technology products and services to utilities, energy suppliers and end customers. EnergyICT nv built a wide product portfolio for all aspects of the international energy sectors including advanced meter management, smart metering, data concentrators, and cloud-based energy intelligence solutions. One of their major products was the EIServer - a multi-vendor, data metering and data capturing software platform to support the dynamic business processes of end customers and utilities.

In 2009, EnergyICT nv was acquired by the Elster Group SE, one of the world's largest providers of electricity, gas and water measurement and control systems. Subsequently the company developed specific product offerings for Smart Grid and Energy Management applications. The company’s EIServer product is the Smart Grid platform offering, and Enacto is the Energy Management platform. Enacto has evolved into a cloud-based solution.

Elster utility-grade energy management solutions have been implemented worldwide by energy retailers, industrial, commercial, government, military and energy supply companies. Elster participates in the new field of Smart Metering with end-to-end meter data management solutions serving utilities of all sizes.

Last year, Elster had about $1.8 billion of revenue with a split of 65% gas, 20% electric, and 15% water industry. Elster offerings fit into Honeywell commercial and industrial groups. The product offerings are a good fit for the infrastructure development of emerging countries such as China and India.

Publically, Honeywell Chairman and CEO Dave Cote noted, "The acquisition of Elster adds outstanding technologies, strong well-recognized brands, energy efficiency know-how, and a global presence to the Honeywell portfolio." "We see Elster as a great opportunity to deploy HOS Gold to drive new growth and greater profitability in each of Elster's businesses.” Editor’s Note: The Honeywell Operating System (HOS) is the company’s initiative to improve productivity, safety and quality in factories.  HOS aligns all of the major Honeywell internal processes to grow sales and become more productive.  HOS is implemented through 74 discrete business enterprises.

Urso discussed how the Elster acquisition “overnight” has broadened Honeywell’s flow offerings with industry leading solutions. He noted that HPS has been traditionally focused on control systems and associated services.  In addition, they have built out the instrumentation portfolio over some time. During the last 4-5 years, Honeywell invested heavily in organic growth of the portfolio. Elster provides new products to further expand the offerings to broaden and strengthen the portfolio.

Urso noted how the Elster acquisition provides opportunities for multiple businesses in the Honeywell Corporation including the Automation and Control Solutions (ACS) business. Process solutions will pick up Elster’s industrial gas business that sells to natural gas transmission/distribution companies with products including turbine meters, rotary meters, ultrasonic meters, flow computers, gas chromatographs. The ACS group will benefit from now from being able to offer Elster’s residential and commercial products including things like diaphragm meters and low pressure regulators.

Jason Urso described that over the next months the teams will be brought together using Honeywell’s acquisition and business process to integrate each of the major organizations such as common sales organization, common service, product teams, and marketing teams with the goal of delivering greater value to customers and solving bigger problems.

IIoT (Industrial Internet of Things)

Urso discussed how Honeywell is looking out into the future with the development of the Industrial Internet of Things (IIoT) and they want to be a big player. “You have to own those edge devices,” said Urso. “Owning the metering device from homes to buildings to industrial customers and bringing those back to Honeywell control systems and analytic software really opens a lot of doors for us. It is really exciting and well aligned with where we want to be with the IIoT vision.”

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