UPDATE: Autodesk Acquisition of Innovyze a $1 Billion Bet on Wet Infrastructure

UPDATE March 31, 2021. Autodesk finalized the acquisition and confirmed it was the company's largest acquisition ever.

Autodesk has announced that it will be acquiring Innovyze, a water-systems software company, for $1 billion, all of it in cash. It will be the largest acquisition ever in Autodesk’s history, topping the $875 million spent on PlanGrid. It is a big bet but Autodesk can cover it. The company had $1.5 billion in cash and equivalent at the end of October, 2020.

But Bass’ successor, Andrew Anagnost, an aeronautical engineer by education, is not content to be serving up floor plans. Andrew has set his sights over a much broader territory, the multi-trillion-dollar construction industry with civil engineering mega-projects, a territory that has, until now, been ruled by Bentley.

Bentley Systems, quietly behind Autodesk in AEC software market share, mindshare and media attention, has nevertheless become #1 in use among government agencies and the engineering, construction and design firms, used by almost every state department of transportation, most of the ENR Design 500 firms -- and so many international customers that its annual customer showcase (Year in Infrastructure) has to alternate between Europe and Asia locations to show off just a few of them.

The two titans of CAD in the built world seemed to be content to divide the territory between themselves, with Autodesk supplying design software for every small and medium sized firm under the flag of democratization. They called their market AEC. Bentley Systems called their market “infrastructure” and sold to the elite, large firms. Autodesk was going to help build homes, small office building and get into prefabs. Bentley operated on a larger scale of bridges, dams, sports stadiums, highways and railroads. Their businesses may have intersected in big and tall buildings, where both companies shared customers. There seemed to be enough business for both to be doing well. There was peace in the land. 

But the Innovyze acquisition changes everything.

Bentley acquired its water systems company, Haestad Methods, long ago (2004). Haestad, a pioneer in water modeling, had a 100 employees and annual revenue of $16 million. Terms of the sale were not made public. At that time, the acquisition was given a solid endorsement by infrastructure analyst Alan Farkas, who said the 10% annual growth in water quality engineering is the “most attractive engineering market segment in the U.S.” Bentley was to buy the Portuguese Action Modulers (environmental simulation) in 2017, Plaxis and SoilVision (geotechnical engineering software) in 2018 and Digital Water Works (digital twins for water systems) in 2019, giving it a formidable arsenal to preserve its territory.

Autodesk thinks the Innovyze acquisition will let it address $1.7 billion in new business. Water infrastructure investments globally are expected to be $1.9 billion, according to Global Infrastructure Hub 2020. Innovyze counts 3,000 customers, though many of them (Jacobs, Black and Veatch, AECOM, for example) were already Autodesk customers.

Innovyze was founded in 1996 in Broomfield, Connecticut as MWH Soft. In 2009, it merged with Wallingford Software. It changed its name, a fusion of “innovation” and “analysis,” in 2011.

Innovyze has 240 employees, with about half of them in R&D. It may have been transferring its software and users to the cloud and incorporating AI/ML (machine learning), both initiatives much valued in acquisition targets by Autodesk in the Anagnost era.

Innovyze has headquarters in Portland, Oregon. Autodesk’s Portland office is only 10 minutes away. Innovyze will slot under Autodesk’s AEC division headed by EVP Amy Bunzel. Both Amy and Andrew worked at Autodesk’s Lake Oswego office (near Portland) before both moved to the San Francisco area.

Innovyze is in the business of supplying software for water, or “wet infrastructure,” whether that’s water utilities to clean water, sewers systems to flush water and waste away, managing stormwater, storing stormwater in reservoirs rather than having it run off unused, and predicting floods, and designing other drainage systems.

Its products are arranged by type on its website:

Asset Management

InfoAsset, for water asset management, with InfoAsset Manager, InfoAsset Mobile, InfoAsset Online and InfoAsset Planner modules.

Drainage Design

InfoDrainage and XPSite3D.

Operational Analytics

Info360, a cloud-based application software as a service (SaaS) platform. This appears to be Innovyze’s offering of the future, the next generation of water management. It lists one module so far (Insight) but is said to work working with InfoWater Pro, InfoWorks WS and the company’s SCADA and IoT applications.

Storm, Sewer, and Flood Modeling

•  InfoWorks ICM and InfoWorks ICM SE, 1D/2D simulation of above-ground and below-ground drainage networks.
•  ICMLive, live modeling and operational forecasting.
•  InfoWorks ICM and InfoWorks ICM SE, storm, sewer and flood modeling
•  XPSWMM, XPStorm, and XPRAFTS, creating hydrologic and hydraulic models for analysis and design. FEMA approved 1D/2D dynamic modeling of stormwater systems, sanitary sewer or combined sewer systems.
•  InfoSWMM, ArcGIS-centric tools for engineers and watershed managers to model stormwater, sanitary sewer, and combined sewer systems.
•  InfoSewer, FEMA approved 1D/2D dynamic modeling of stormwater systems, sanitary sewer or combined sewer systems.
• ArcGIS-centric 1D modeling for capacity analysis and planning of gravity sewer systems.

Water Distribution Modeling and Management

•  InfoWater and InfoWater Pro, geocentric advanced smart water applications that work with Esri ArcGIS and ArcGIS Pro.
•  InfoWorks WS Pro, relational database combined with hydraulic engine and spatial analysis tools, able to deal with large distribution networks.
•  IWLive Pro, operational modeling tool for water supply networks with hydraulic and water quality simulations, predicts demand and optimizes pump schedules.

Water is one of those necessities, like electricity, that most in the US and western countries take for granted. Until they don’t have it (California droughts and wildfires or Texas cold spell and almost state-wide blackout), and then it becomes critical, a first priority and a life threat. 

While there has been no recent headline making calamity (knock on wood) to warrant this recent interest in water systems, so one might think this recent interest is due to some forward planning and a most welcome long-term vision extending past the next quarter. Investments in water utilities had been on a 12- month tear, reported a 2020 Wall Street Journal, with 24% return, more than twice that of other utilities.

Concern about water lends itself well to the bigger concern about the environment and humanity. Water has been recognized as a world-wide concern by the UN. 25% of the global population lives in countries experiencing “high water stress,” according to the US EPA.

Dassault Systèmes has launched a Water for Life environmental education initiative which was recently covered here.

“An estimated $1.9 trillion is required to address global water infrastructure needs by 2030 and by fundamentally changing the way systems are designed, constructed, and operated, we are best positioned to overcome this challenge and realize the better world we’ve imagined,” said Autodesk CEO Andrew Anagnost in the company issued press release.