998-2095-02-25-15AR0_EN

By ARC Advisory Group

ARC WHITE PAPER

FEBRUARY 2015

Schneider Electric and Invensys:

Better Together For Customers

Executive Overview ...................................................................... 1

Greater Business Value for Plants and Factories ............................... 3

Greater Business Value for Process Automation ................................ 7

Greater Business Value for Software Solutions ............................... 10

Path Ahead: Ensure Installed Base Value, Future Proof Investments . 14

Summary and Conclusions .......................................................... 17

VISION, EXPERIENCE, ANSWERS FOR INDUSTRY

ARC White Paper February 2015

2 Copyright ARC Advisory Group ARCweb.com

Schneider Electric announced the completion

of its acquisition of Invensys on January 17,

2014. The acquisition of the $3 billion

software, automation, and controls company

enhances Schneider Electrics position as a

single source solutions provider, especially

for automation in the process and power

generation industries.

Executive Overview

Schneider Electric announced the completion of its acquisition of Invensys

on January 17, 2014. The acquisition of the $3 billion software, automation,

and controls company enhances Schneider

Electrics position as a single source solutions

provider, especially for automation and indus-

trial software in the process and power

generation industries. The acquisition was de-

signed to create synergies between the two

companies hardware and software for energy

management, discrete automation, process au-

tomation, and operations management; while providing a wider service

base for its customers as the combined company will be able to reach more

market segments throughout the world due to the minimal overlap of mar-

kets and customer base.

Both companies bring complementary technologies, knowledge, capabili-

ties and value to their customers worldwide. Both firms

appear to have a high degree of cultural match, and posi-

tion the merger as a growth deal, rather than just an

acquisition of an installed base. Both have stated that In-

vensys developments and operations will continue.

From Schneider Electrics perspective, the Invensys ac-

quisition augments its business in industry and infra-

structure by boosting its positions in key process segments and strengthen-

ing its software for operational efficiency. As a global specialist in energy

management, the solutions of the Schneider Electric Industry business unit

are a key part of its portfolio. The Invensys assets help the company better

address its customers challenges relative to productivity, input cost man-

agement, workforce scarcity, wage and raw material inflation, complexity

of production constraints, and sustainable development.

But questions arise as to exactly how the acquisition will benefit customers;

how the combined process automation and software solutions will work

together and be enhanced; what new solutions are in the works; and the

future path for protecting the considerable investments that customers have

already made (and will make) in their installed base of software and sys-

tems.

Schneider Electric FY 2013


Copyright ARC Advisory Group ARCweb.com 3

In other words, customers want to know if the combined company is in-

deed Better Together, and how it can help them increase productivity

and profits.

Greater Business Value for Plants and

Factories

To obtain either capital expenditure (CAPEX) or operational expenditure

(OPEX) funding, manufacturers and processors must first demonstrate

measurable business value. This applies to both the information technolo-

gy (IT) and operational technology (OT) needed to run their factories and

plants. Ideally, each has clear key performance indicators (KPIs), such as

return on invest-

ment (ROI), return

on assets (ROA), and

overall equipment

effectiveness (OEE).

Process end users in

industries such as oil

& gas, power, water

& wastewater, food

& beverage, metals

& mining, hydrocar-

bon processing, and

cement & glass, re-

quire secure interoperability among their enterprise and automation solu-

tions. This creates a demand for solutions that employ a multitude of

different drivers, networks, and standards; adhere to the principles of con-

vergence (which requires transparent access across all automation

functions; real-time information; and easy integration to the enterprise

though the use of Internet and other IT standards.

In this environment, end users are often challenged to find automation and

enterprise suppliers that can provide these converged solutions that gener-

ate measurable business value. According to the company, this was one of

the primary drivers for Schneider Electric to purchase Invensys.

Schneider Electrics Comprehensive Portfolio of Solutions



Combining Schneider Electric and Invensys Portfolios

As the needs of manufacturers and processors continue to evolve to meet

their ever-increasing challenges for productivity, flexibility, efficiency, and

profitability; the requirements placed on automation and enterprise solu-

tion suppliers have also evolved.

For example, todays factories and plants must have more rapid

changeover capabilities as the life cycles of the products produced

continues to shrink and consumer demand constantly shifts. This makes it

critical to be able to change automation configurations and architectures on

the fly, without stopping the process.

With the need for both real-time control and information, manufacturers

and processors must optimize connectivity and communications that pro-

vide a high level of security.

The automation and enterprise solutions must also have an architecture

geared for maximizing production flexibility; data and information

transparency; and openness for diagnostics performed both locally and

remotely.

Schneider Electric believes that the combination of the two companys port-

folios enable this architecture. Schneider Electrics EcoStruxure

framework, and specifically PlantStruxure, the companys collaborative and

integrated automation architecture, can tie together the offerings for re-

mote, discrete, hybrid and continuous process automation (with complete

lifecycle services). From initial design to modernization, PlantStruxure was

designed to connect the control, operations, and enterprise levels of an in-

dustrial enterprise.

Todays manufacturers and processors increasingly employ

open technologies to be able to take advantage of an open

integration environment, higher information bandwidth,

standardization, cost savings, flexibility to physically move

portions of manufacturing, and increased data visibility at

all levels. The increasing need for distributed intelligence

makes seamless connectivity of automation and enterprise

solutions critically important, especially for connecting to

on-premise or cloud-based applications. These can include

enterprise resource planning (ERP), manufacturing

execution sytems (MES), enterprise asset management Schneider Electric Brands



(EAM), and supply chain management (SCM). PlantStruxure has the

capability to connect the full portfolio of Schneider Electric and Invensys

automation and enterprise solutions.

Integrating Schneider Electric and Invensys Solutions

Todays connected applications demand tighter integration and more

information. Control systems are expected to initiate communication,

update the controller at the device level in real time, and serve up

potentially massive quantities of information. Automation platforms with

a single network architecture and consistent functionalities, such as

PlantStruxure, can help meet these requirements in a highly flexible

manner. They can support instant access regardless of hierarchy and avoid

the limitations of proprietary software interfaces and protocols.

Todays business

requirements

accelerate the

trend towards full

data transparency,

regardless of

whether the appli-

cation is remote,

discrete, hybrid, or

process. PlantStruxures architecture is designed to enable full data

transparency across applications. It is also designed to provide common

device integration and management plantwide, including motor control,

power distribution and protection, process instruments, and even third-

party solutions. This architecture extends to control blocks and HMI

faceplates, supporting both generic and segment libraries. This reduces

installation, start-up, and commissioning costs for customers to increase

business value.

The PlantStruxure platform has gone through Schneider Electrics rigorous

tested, validated, documented architcture (TVDA) process; offering

customers both increased business value and peace of mind by being able

to deploy efficient, risk-reduced engineering. It offers libraries of tested,

proven functionality to ensure process integrity. It also provides a common

user experience during operation through standardized libraries, faceplates

and diagnostic capabilities to enable users to quickly identify and fix issues.

Schneider Electrics Foxboro Evo and Modicon PAC Integration



Issues of security hardening, safety process

implementation, improving ease of

operations, situational awareness, and being

able to capitalize on the additional information

available by deploying the latest technologies

also provide tremendous business value to

help justify modernization solutions.

This efficient operation and optimization is achieved through the use of the

widely installed and field proven Wonderware software stack.

At the control level, manufacturers and processors seek an increasingly

more flexible, expandable, interchangeable, and reliable control platform

that covers the widest range of required applications. Theyre looking for

the ability to easily interface their control platforms with both fixed/wired

and mobile/wireless HMIs, serial devices, motors, thermocouples, analog

and digital I/Os, and other equipment and devices. Since control room and

rack space is at a premium, they want automation platforms with the

smallest practical footprint. And since power consumption affects both

electricity and air conditioning costs, theyre looking for more energy-

efficient solutions. PlantStruxures business value is that it not only brings

together systems with HMI, motors, sensors, and I/O, but the energy

management component as well.

Justifying System Modernization Solutions

System modernization issues are becoming more important than ever.

Several years ago, ARC estimated that worldwide, about $65 billion in

installed process automation systems are reaching the end of their useful

life, with most over 20 years of age. This

figure is likely to be even larger today. When

evaluating automation system modernization

projects, manufacturers and producers

should seek solutions that minimize

downtime and risk, while providing a

tangible business value proposition.

ARC believes that the combined Schneider Electric and Invensys solution

portfolio is well-positioned to provide cost-justifiable modernization solu-

tions.

Obsolescence or end of useful life are not the only reasons for moderniza-

tion. Issues of security hardening, safety process implementation,

improving ease of operations, situational awareness, and being able to capi-

talize on the additional information available by deploying the latest

technologies also provide tremendous business value to help justify mod-

ernization solutions.



ARC recommends manufacturers and processors follow a stepwise

approach that allows them to evolve selected components of their legacy

systems (those that have the greatest impact on their operations), while

preserving the components that are still viable. Manufacturers and proces-

sors require an approach that leverages automated tools and a range of

services targeted at reducing or even eliminating the downtime required to

complete a migration project. When modernizing, the combined Schneider

Electric and Invensys global service organization can provide customers

with a migration plan designed to minimize downtime.

Greater Business Value for Process

Automation

Extending Schneider Electrics PlantStruxure architecture to be compatible

with the full portfolio of Invensys process automation solutions will enable

customers to connect an

extremely wide range of

assets, from discrete ma-

chinery to large process

units to create a strong

business value proposi-

tion for the combined

offerings.

Consider the scope of this

combined offering that includes, for example, Modicon Quantum and

Quantum Safety PLCs and PACs; PlantStruxure PES hybrid PAC/DCS;

SCADAPak RTUs; Trio Radios; Accutech wireless instruments; Foxboro

Evo process automation systems; Triconex safety and critical control sys-

tems; Foxboro SCADA systems; and ClearSCADA software for telemetry

and remote SCADA applications. This was part of the vision that Schnei-

der Electric had in acquiring Invensys in the first place; a global architecture

ranging from discrete to continuous applications. This helps customers re-

duce risks in project design and commissioning. The long-term goal is to

provide a consistent user experience ranging from PLCs and PACs to DCSs;

improve operations through more data for decision support; and enable

packages to be truly integrated, rather than just interfaced, which provides

a more cost-effective and secure way to integrate large amounts of data.

Schneider Electrics Integrated Process Automation Offering



Consistency in design, reliability, and common supplier support and re-

sponsibility can make it simpler for process automation customers to obtain

services and better manage inventory and spare parts. Ultimately, the

companys natively interoperable discrete, telemetry, and DCS offerings in

a unified flexible architecture will also benefit customers by providing

seamless connectivity, reducing risk, and providing consistent, in-context

data and information to improved decision support. This will also enable

common operating procedures to be developed for applications such as

alarming, historization, and HMI reducing training costs and optimizing

operator efficiency.

Single Source for DCS, PAC, and PLC Controllers

Process automation customers also benefit from having a single supplier for

all of its controllers. By using the correct mix of fit-for-purpose DCSs,

PLCs, and PACs for a given application, customers can minimize costs

without buying more or less performance or functionality than required.

An expanded automation solutions portfolio enables a broader range of

problems to be solved, often in a more cost-effective manner. For example,

it is possible to complement the DCS offerings from Foxboro with integrat-

ed Modicon PACs running high-performance tasks simultaneously in the

discrete, hybrid, and process domains. By optimizing the mix of control

and I/O classes, users can increase flexibility and reduce costs.

Motor Control Together with Process Automation

One of the interesting opportunities that process automation users have

today is to integrate electrical and power equipment (motors, motor control

centers, AC drives, etc.) into their automation systems. In this manner,

fans, pumps, and

other electrical

equipment can be

integrated into the

overall process au-

tomation system to

help improve asset

maintenance and

optimize processes.

The combined

Schneider Electric

Integrated Motor Control with Process Automation



PlantStruxure is Schneider Electrics

collaborative and integrated

automation architecture for industrial and

infrastructure customers. It brings

together the companys remote, discrete,

hybrid and process automation offerings

with a complete range of safety solutions,

delivered with lifecycle services.

and Invensys portfolios and unified architecture from process instruments

to electrical and power equipment can directly address this opportunity.

Another tangible example of Better Together is the ability to perform fac-

tory acceptance tests (FAT) and commissioning on all process automation,

electrical, and power systems for optimum operational performance and

performance integrity. Testing for each component of the system can be

done at the Schneider Electric facility to ensure compliance to specifica-

tions. All hardware and much of the software can be tested and then

shipped to the customer site. For example, proper integration of controls

and MCCs can be verified as part of factory acceptance tests.

Bringing Energy Management to Process Automation

Energy management in electro-intensive industries requires deeper

architectural integration. Schneider Electric has significant positions in

energy and infrastructure, industrial processes, building automation,

residential applications, and data

centers/networks. The companys Industry

business unit plays a significant role within

Schneider Electric's energy management

landscape, with over 30 percent of global

revenue generated from Industry customer

energy efficiency solutions. Within this

industrial arena, process plants are by far the

highest consumers of energy.

PlantStruxure is Schneider Electrics collaborative and integrated

automation architecture for industrial and infrastructure customers. It

brings together the companys remote, discrete, hybrid and process auto-

mation offerings with a complete range of safety solutions, delivered with

lifecycle services. This can help make operations more efficient from initial

design to modernization and through consistent user experience and func-

tionalities. By enabling visibility and control of multiple processes across

industrial sites in a single architecture, PlantStruxure enables energy and

process data to be measured, analyzed, and used in a holistic manner to

optimize operations and improve both ROI and ROA.



Process Automation Needs Single Version of the Truth

Todays end users demand the breaking down of the barriers between

energy management, process automation and

operations management to achieve data

transparency and a single version of the

truth. This requires a common environment

where production management applications,

such as asset management, performance

management, and scheduling can plug

seamlessly into the same communications

infrastructure as the energy management,

process automation, and control system

functions (HMI, system engineering and

configuration, control, etc.).

Schneider Electrics vision for the full

spectrum of control functionality encom-

passes a common infrastructure and common

data. This should enable all control and man-

agement decisions to be made based on common and accurate information.

Greater Business Value for Software

Solutions

In industrial software, Invensys has been a major supplier and has a strong

business, with particular strengths in HMI/plant intelligence, design,

simulation, optimization, operations management, and asset management.

Schneider Electrics new software business will integrate Invensys Avantis,

SimSci, and Wonderware product lines with its existing Citect and Ampla

offerings. The combined software offering, tied together with Won-

derwares System Platform, creates plant- and enterprise-wide synergies for

energy management, factory automation, and process control.

Software is critical to converge IT and OT to enable operational efficiency.

The ability to provide converged IT and OT solutions is another major ele-

ment in the combined Schneider Electric and Invensys software portfolios.

Convergence involves integrating a multitude of factory and plant IT and

OT systems:

Data Transparency Enables a Single Version of the Truth



Business Systems, such as customer management, order management,

supply chain management, and document management

Operations Management, such as production management, quality

compliance, asset utilization, process analytics and decision support

Control and Supervision, such as production automation systems,

SCADA and interfaces for operators (HMI)

Design and Simulation, such as supply chain planning, process design,

operator training and simulation

Schneider Electrics strategy and vision is to provide software solutions for

visualization, collaboration, and

execution at all levels of its customers

organizations in any location. The goal

is to enable users to visualize domain-

specific information, such as real-time,

historical, and KPI data, and events

exposed by business and plant/site level

productivity applications. Collaboration

is another key element. This leverages

voice, video, messaging, and task

management/workflow using resources

inside and outside of the organization.

Finally, customers should be able to

execute domain-specific tasks, such as

quality and maintenance through a growing suite of plant/site level

productivity applications. The scale of a combined Schneider Electric and

Invensys make this strategy and vision possible.

Combined HMI and MES Software Portfolio

The Wonderware brand will be Schneider Electrics flagship for HMI

software, particularly for discrete and batch manufacturing. The company

recently released its new InTouch 2014 R2 HMI and System Platform 2014

R2 SCADA products, as well as its Wonderware MES 2014 offering. This

features a new web-based client and line performance monitoring as well as

advanced recipe and formulation management capabilities. Integration

with Wonderware Skelta BPM workflow software helps enable model-

driven MES, enforce production rules and manufacturing procedures,

enhance knowledge management, and drive collaboration across the

workforce. To help reduce data management and reporting costs,

Common Software Infrastructure



Wonderware Online adds a suite of Big Data features in a SaaS package;

plus mobile and web-based clients for on-demand analysis. To address the

demand for new packaging, more SKUs, new formulas and complex

recipes from its food and beverage

customers, the companys new Recipe

Manager Plus product is designed to help

reduce the cost and complexity associated

with new product introductions and help

improve food safety-, quality-, and

compliance-related activities.

Schneider Electric will continue to offer

its Citect and Ampla software in their

traditionally strong markets with large

installed bases, such as mining, metals,

and minerals processing. In one example,

the company has made significant investment in its integrated planning

and optimization solution for the mining industry. This includes both its

Ampla MES and Supply Chain Operation Advanced Planning & Schedul-

ing (APS) solutions. The Ampla 2014 release adds new features around

production and inventory accounting and conformance to plan metrics.

Thanks in part to Amplas well-known strength in delay accounting and

with reported productivity gains of up to 20 percent, Schneider Electric is

seeing keen interest from companies looking to optimize their mining

supply chain, from resource to market.

Also part of the HMI software portfolio is InduSoft, a provider of HMI and

embedded intelligent device software primarily for industrial computer

manufacturers and machine and system builders.

Process Design, Simulation, and Optimization

The SimSci brand is Schneider

Electrics flagship design, simulation

and optimization software. The

company recently released its new

SimSci Suite 2014 software along with

a unified supply chain management

solution focused on the hydrocarbon

processing industry. Built on its Sim-

Sci Spiral Suite, the new offering can

Wonderware InTouch 2014 R2

SimScis Design, Simulate, and Optimize Software



help close gaps left by legacy tools that were not integrated. By improving

collaboration across the refinery (in conjunction with the full portfolio of

Schneider Electrics software solutions), Spiral Suite software is well posi-

tioned to help traders, planners, and schedulers make better decisions,

manage risks, and ultimately increase refinery profitability.

Enterprise Asset and Condition Management

To catch an issue before it becomes a problem, diagnostics must be availa-

ble to perform predictive maintenance on the complete system. This

approach helps avoid unscheduled downtime and manage device

replacement before it can fail and impact production. This is why Avantis,

the companys flagship enterprise asset and condition management

platform, adds a critical component to Schneider Electrics software portfo-

lio solution set for real-time maintenance execution. It provides work order

management, spares and inventory management and procurement

functionality. Avantis Condition Manager collects real-time diagnostics

from plant production assets, performs analysis, and generates an alert

when needed.

PRiSM software, from the recent

acquisition of InStep, complements the

Avantis solutions by providing

predictive analytics for power trans-

mission and distribution networks.

InStep is designed to manage and

analyze real-time operational and elec-

trical asset-health-related information.

PRiSM uses predictive algorithms to

identify subtle changes in system

behavior that are often the early

warning signs of equipment

performance and health problems. eDNA historian software collects,

stores, analyzes, displays and reports on real-time operational and power-

related sensor data. EBS energy management software helps universities

and campuses reduce their utility costs by analyzing energy consumption

and streamlining the utility billing, cost allocation, and reporting processes.

Avantis Condition Manager Software



Portfolio of Mobility Solutions

Schneider Electrics mobile portfolio covers HMI visualization and control

via Wonderware InTouch Access Anywhere, planned work tasks and

execution via Wonderware IntelaTrac, real-time work tasks and

collaboration via Wonderware Workflow, reporting via SmartGlance, and

analytics via Wonderware Intelligence.

InTouch Access Anywhere, an InTouch extension, provides access to

InTouch applications via HTML5-compliant web browsers, maintaining full

InTouch functionality and enabling customers to deploy bring your own

device (BYOD) policies to the plants. As a result, employees can use their

choice of smart phones and tablets to access information and make critical

decisions. Wonderware IntelaTrac focuses on standalone procedural-

driven mobile data collection for assets typically found in production

environments or geographically dispersed locations. Wonderware

Workflow industrial workflow software provides the ability to

standardize work processes across multiple domains, such as production,

maintenance, and quality control. For mobile reporting, SmartGlance

provides real-time, graphical reports on mobile devices. Wonderware

Intelligence enterprise manufacturing intelligence (EMI) is designed to

help industrial enterprises improve business performance by empowering

employees with self-service access to real-time, contextualized operational

metrics.

Path Ahead: Ensure Installed Base

Value, Future Proof Investments

The ability to retain existing automation components when expanding an

existing platform or modernizing to a new platform helps protect invest-

ments. Managers in process plants are always anxious to select solutions

that can take advantage of changing technologies to help protect their in-

vestment. While system reliability is important, its also important to

consider the technology choices integrated into automation solutions. With

todays rapid advancements in technology, it can be challenging to select

technology that will not soon be made obsolete by newer technologies.

Any solution intended for use on the plant or factory floor must also be

reliable, robust, and sustainable to help ensure safe, non-stop operation.

SmartGlance Mobility

Reporting



For many applications, new products must be able to operate without

problems for the next 20 years. This is often the highest priority for any

processing application. Industrial applications require zero unplanned

downtime, as the financial and human consequences could be tremendous

if an automation process stops for any unplanned reason. As a result, it is

critical to invest in solutions from companies that are not only committed to

servicing their legacy installed base, but that will remain leaders in the con-

trol space for generations to come.

Due to Schneider Electrics financial strength, Invensys customers can have

confidence in its ability to invest to keep the technology current over time.

Invensys customers have long relied on the provision of a path to new

technologies, while retaining their investments in existing systems and

software. This ability to future-proof customer investments will remain a

cornerstone for Schneider Electric.

IoT, Analytics, and Big Data Evolution

There is little doubt that the Internet of Things (IoT) can change the way

large industrial plants, factories, and infrastructures operate. Across most

industries, the limit of traditional architectures is being reached. Both

enterprise and plant applications are gravitating towards IoT, Big Data, and

analytics to access stranded data and transform todays massive amount of

data into actionable information.

Schneider Electric believes that IoT provides

the context, Big Data the scale, and analytics

the action that are not universally present at

both the enterprise and control levels. The

company also believes that control

architectures will need to evolve towards

data-centricity and truly distributed

intelligence. Operational intelligence promises

compelling ROI and will be embraced by in-

dustry. This will drive systems on a chip

with built-in IP connectivity to all Schneider Electric devices.

The company believes that future business success will require cross-

domain collaboration between enterprise and control to make it happen

and is committed to making investments to enable this collaboration.

Schneider Electric Extending IP Connectivity to All Devices



Protecting Operational Integrity

Schneider Electric knows the constant challenge of maintaining operational

integrity in a connected world, and how safety must always be priority one.

The paradox is how commercial off-the-shelf systems improve capabilities

and interconnectivity increases operational insight; but also

create challenges to system security which can threaten

operational integrity. Schneider Electric recognizes that cyber

security is absolutely critical for safety in OT; is foundational

to industrial IoT; and must be secure through initial design,

not a late stage add on. It recognizes that connectivity may a

given, but must be inherently secure; and that Big Data is less

important than the right data.

The Invensys acquisition helped move Schneider Electric

forward in the process market with its industry knowledge,

industrial software, automation and safety systems, safety

and security expertise (including safety processes), and its

critical cyber security knowledge of hardware, software, and services.

Schneider Electric regards operational integrity as the foundation for

business performance.

Link the Legacy to the Future to Protect Installed Base

Most established plants and factories have many generations of technology

installed that can range from the latest analytic software to paper-based cir-

cular chart recorders. These customers expect that their automation

solution suppliers will not only help them migrate to the latest technology -

such as the Wonderware System Platform, a Foxboro Evo DCS, or a Mod-

icon M580 ePAC - but also support their legacy products, which may be

over 20 years old. Examples of legacy products still in place after 20 or

more years could include an early version of a Foxboro I/A DCS or a Mod-

icon 984 PLC. Customers also expect automation supplier to protect their

investments in software such as OASyS, Citect, Ampla, and ClearSCADA.

Schneider Electric acquired Invensys in part to tap into the companys over

100-year legacy as an automation supplier. With this, came the responsibil-

ity to support Invensys extensive installed base, much of it in the process

industries, to ensure the value of customers past and future investments.

Based on extensive discussions with company executives, ARC is confident

that Schneider Electric fully intends to live up to this commitment.

Schneider Electric Security Model



Schneider Electric will no longer be

viewed largely as a strong factory

automation company; with Invensys,

it clearly becomes a strong process

automation company as well.

Summary and Conclusions

There were many reasons why Schneider Electric acquired Invensys, a

global automation player with large installed base and a major software

presence. Invensys had strong credibility with end users in the refining,

chemical, power, pharmaceutical, and food & beverage industries. It

brought major brands in process automation and safety and global reach in

process automation, safety, and instrumentation systems via its Foxboro,

and Triconex brands. In industrial software, Invensys brought HMI/plant

intelligence, design, simulation, optimization, operations management, and

asset management strengths via its Wonderware, SimSci, and Avantis

brands. These brands filled gaps in Schneider Electrics software offering.

The combination provides Schneider Electric with global market share and

installed based leadership in revenue and units for HMI/SCADA software,

according to the latest ARC worldwide Human Machine Interface (HMI)

Software & Services market research study.

With Invensys, Schneider Electric became a leader in

process safety via Triconex safety and critical control

systems. Schneider Electric got a DCS offering with a

large installed base via Foxboro, with significant

brownfield expansion potential. Schneider Electric can

expand this potential with its own portfolio of low

and medium voltage drives, motor control, and smart infrastructure. The

company also gained domain expertise and execution capabilities in key

segments, including refining, petrochemicals, and power generation.

Schneider Electric will no longer be viewed largely as a strong factory

automation company; with Invensys, it clearly becomes a strong process

automation company as well.

The combined software and product portfolio offers a more complete suite

of automation and power solutions. However, executives need assurance

that Schneider Electrics acquisition of Invensys will be in their respective

companys best interest. Based on the substantial progress made since the

acquisition was completed and what has been delivered to the market to

date, it certainly appears to be the case. New and legacy customers alike

stand to benefit from the combined strength of Schneider Electric and In-

vensys and derive value.



In summary, heres why ARC Advisory Group believes that Schneider Elec-

tric and Invensys are Better Together:

Strong Vertical Industry Segmentation: The combination of Schneider

Electric and Invensys results in industry-specific expertise in the full

range of discrete, hybrid, and process industries spanning virtually all

plant and factory automation solutions. ARC observes that there was

minimal overlap between the two companys offerings.

Operating Model to Support Customer Solutions from Cradle to Grave:

This model is designed to protect and support the legacy solutions of

both companies and offer scalable, future-proof solutions.

Global Project Execution and Support: Ability to deliver consistent cus-

tomer and project experiences, global product rollouts, taking

ownership of the full portfolio of solutions, global customer support for

multi-national organizations with single point of accountability.

Strong Global Network of System Integrators: A network of 3,000 sys-

tem integrators (SIs) certified to provide project services for the full

portfolio of Schneider Electric solutions, including legacy Schneider

Electric and Invensys Solutions.

Long-Term Stability: Invensys is no longer a target for acquisition.

Schneider Electric brings long-term stability and solid financial strength

and is committed to substantial future investments and joint develop-

ments in technology and new product and solution development.

From ARC's perspective, Schneider Electric's acquisition of Invensys is a

positive development for both companies customers. Legacy investments

will remain key parts of the portfolio moving forward. The joint entity is in

a strong position to supply synergistic solutions in key areas such as energy

automation, factory automation, and process automation.



Analyst: Craig Resnick

Editor: Paul Miller

Acronym Reference: For a complete list of industry acronyms, please refer

to www.arcweb.com/research/pages/industry-terms-and-abbreviations.aspx

APC Advanced Process Control

BYOD Bring your own device

CAPP Collaborative Automation

Partners Program

CAPEX Capital Expenditures

CPU Central Processing Unit

DCS Distributed Control System

EAM Enterprise Asset Management

ELM Electronic Liquid Measurement

EMI Enterprise Manufacturing

Intelligence

ERP Enterprise Resource Planning

GOSP Gas Oil Separation

HMI Human Machine Interface

I/O Inputs/Outputs

IoT Internet of Things

KPI Key Performance Indicators

MCC Motor Control Center

MES Manufacturing Execution System

MOM Manufacturing Operations

Management

M2M Machine to Machine

OEE Overall Equipment Effectiveness

OPEX Operational Expenditures

OT Operational Technology

PAC Programmable Automation

Controller

PLC Programmable Logic Controller

ROA Return on Assets

ROI Return on Investment

RTO Real Time Optimization

RTU Remote Terminal Unit

SCADA Supervisory Control and Data

Acquisition

SCM Supply Chain Management

SI Systems Integrator

TVDA Tested Validated Documented

Architectures

Founded in 1986, ARC Advisory Group is the leading research and advisory

firm for industry. Our coverage of technology from business systems to

product and asset lifecycle management, supply chain management,

operations management, and automation systems makes us the go-to firm for

business and IT executives around the world. For the complex business issues

facing organizations today, our analysts have the industry knowledge and

first-hand experience to help our clients find the best answers.

All information in this report is proprietary to and copyrighted by ARC. No part

of it may be reproduced without prior permission from ARC. This research has

been sponsored in part by Schneider Electric. However, the opinions

expressed by ARC in this paper are based on ARC's independent analysis.

You can take advantage of ARC's extensive ongoing research plus experience

of our staff members through our Advisory Services. ARCs Advisory Services

are specifically designed for executives responsible for developing strategies

and directions for their organizations. For membership information, please

call, fax, or write to:

ARC Advisory Group, Three Allied Drive, Dedham, MA 02026 USA

Tel: 781-471-1000, Fax: 781-471-1100

Visit our web pages at www.arcweb.com

Documents

998-2095-02-25-15AR0_EN