Rockwell Automation to Acquire Plex Systems and Expand into Multi-Tenant SaaS Manufacturing

Industrial automation in mass production manufacturing ensures quality consistency, compliance, material flow, supply chain and cost management.

Rockwell Automation built an interesting value proposition during its history, combining the power of IT and OT, and strengthening a portfolio ranging from manufacturing execution systems (MES), augmented reality (AR), Internet of Things (IoT) and product lifecycle management (PLM) that was powered by its partnership with PTC. The latter was kicked off by a strategic $1 billion investment in PTC in June 2018, which combined the world of smart factories and wider enterprise digital platform solutions.

Over the years, Rockwell Automation has grown from acquisitions, with no less than five in 2020. This includes the acquisition of Fiix in November 2020, a provider of artificial intelligence (AI)-enabled computerized maintenance management systems (CMMS). Further to the cloud-enabled CMMS platform from Fiix, Rockwell Automation is now adding the cloud-enabled MES-enterprise resource planning (ERP) platform from Plex Systems—connecting the dots between production quality control, maintenance optimization, manufacturing planning and execution.

Rockwell defines industrial automation as “the elimination or reduction of repetitive manual processes/tasks in an industrial environment or application through the substitution of labor with capital.” It elaborates that “industrial automation is the enabling of machines, installations, and facilities to operate independently; a process of integrating industrial machinery to automatically perform tasks such as the controlling of speeds, the monitoring of sensor- and temperature-based specifications, or the converting of raw materials into finished goods.”

Broadly speaking, automation is about productivity and continuous process optimization that works toward value creation, cost and performance management. When it comes to production control, automation is critical to manage production, component inventory, supplier orders and quality control. This includes the diffusion of operational data to the shopfloor and production performance feedback loops to business operations, which track material usage and substitution, providing implications for production line setup and execution.

From a quality management perspective, production control helps ensure timely delivery and compliance across the production part approval process (PPAP), failure mode and effect analysis (FMEA), routing, control plans, work instructions, technical specifications and more. MES drive real-time production and assembly control, inventory traceability, accuracy and connected data-driven quality.

Gartner defines MES as “a specialist class of production-oriented software that manages, monitors and synchronizes the execution of real-time, physical processes involved in transforming raw materials into intermediate and/or finished goods. These systems coordinate this execution of work orders with production scheduling and enterprise-level systems like ERP and product lifecycle management (PLM). MES applications also provide feedback on process performance, and support component and material-level traceability, genealogy and integration with process history, where required. These capabilities extend from product/process design release (PLM) and work order release (ERP) through completion of the manufacturing process. Gartner’s view of the MES market does not include production automation software such as supervisory control and data acquisition (SCADA), distributed control systems (DCSs) or programmable logic controllers (PLCs).”

Interestingly, in its June 2021 update of the MES Magic Quadrant, Gartner positioned Rockwell Automation and Plex Systems very closely in the “Challenger” quadrant. I note the following opportunities in terms of complementary value proposition and vertical/industry strategy synergies.

On the one hand, Gartner highlighted Rockwell as a Challenger with its focus on enterprise customers with high-volume manufacturing. Gartner’s report pointed out Rockwell’s complex MES proposition and roadmap—most likely with several successive acquisitions and the joint development of the PTC-based offering requiring complex integration.
On the other hand, Gartner also highlighted Plex as a Challenger thanks to its “multi-tenant cloud solution that offers MES stand-alone or as part of a broader ERP solution,” focusing more on “midsize businesses that use MES in combination with their smart manufacturing platform or other incumbent ERP providers.” The reports also praised the attractiveness of Plex’s pricing model and the flexibility of its software as a service (SaaS) portfolio, especially when it comes to gradual adoption to support business expansion.

Gartner Magic Quadrant for Manufacturing Execution Systems as of March 2021. (Image credit: Gartner.)

Expanding on these capabilities, Gartner defined manufacturing operations management (MOM) as the extended MES function to cover MOM that combines resource management, manufacturing process management/model-based manufacturing, analytics, quality management and production planning/scheduling. These capabilities often source input data from upstream PLM and ERP platforms, where most product and material components are authored and mastered. With such complementarity, it is essential to look at how PLM, ERP and MES combine technical, strategic and operational qualities with the required level of data integration and traceability to support the decision-making process throughout (Grealou, 2017).

In a nutshell, connected manufacturing aims to drive traceability downstream across shopfloor jobs from scheduling, planning, costing, production, inventory, inspection, simulation and maintenance, driving productivity, readiness and scalability across production, manufacturing and assembly operations. This is equality that is relevant for discrete, hybrid or process manufacturing operations, extending to data feedback loops between MES, ERP and PLM platforms.

As quoted in Rockwell’s press release: “Plex’s software capabilities will be further differentiated by Rockwell’s global market access, complementary industry expertise, and ability to turn real-time data into actionable insights.” It will be interesting to see how the Plex acquisition contributes to bringing Rockwell one step closer to building end-to-end data threads and supporting manufacturers as they ramp up their production capacity and scale their operations.

“This acquisition will accelerate our strategy to bring the Connected Enterprise to life, driving faster time to value for our customers as they increasingly adopt cloud solutions to improve resilience, agility, and sustainability in their operations.”
—Blake Moret, chairman and CEO of Rockwell Automation

The press release also mentioned that “Plex will be reported as part of Rockwell’s Software and Control operating segment, which provides leading hardware and software offerings for the design, operation and maintenance of production automation and management systems.” Software and Control is one of the three new operating segments presented in Rockwell’s second quarter report for fiscal year 2021.

New operating segment breakdown as presented by Rockwell Automation in its second quarter report for fiscal year 2021. (Image credit: Rockwell Automation.)

Brian Shepherd, senior vice president of Software and Control for Rockwell Automation, also highlighted that “together with the advanced asset maintenance and management capabilities provided by our recent Fiix acquisition, Rockwell will have a strong portfolio of cloud-native solutions for our customers’ production systems upon completion of the Plex acquisition.”

In addition, Bill Berutti, CEO of Plex, declared, “We have been a leader in the movement to smart manufacturing and a trusted partner to more than 700 manufacturing companies around the globe. Joining forces with Rockwell is great for our customers, our partners, and our employees as we move to expand our reach and impact and accelerate our mission to bring manufacturing to the cloud.”

Finally, Rockwell highlighted that “the acquisition will be financed with a combination of cash and short-term and long-term debt. Subject to customary closing conditions and completion of regulatory review, the acquisition is expected to close in Rockwell’s fiscal fourth quarter.”

What are your thoughts?

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