CIMdata PLM Industry Summary Online Archive
18 May 2005
Acquisitions
Acceleration Of VNET Business And Acquisition Of Realitywave
AVEVA Group plc announced a wider rollout of its solution VANTAGE Enterprise Net ('VNET'). This represents a strategic commitment by AVEVA to exploit an important market opportunity in IT engineering information asset management solutions.
VANTAGE Enterprise NET (VNET)
VNET transforms the efficiency in accessing correct information, improves collaboration between the various teams on a project, highlights inconsistencies between data sources, assists in decision support and better manages the flow of information between applications. As a result, it removes significant costs from the engineering process.
VNET is an internet based technology that enables common applications to be integrated to create an internet-based information portal. It allows customers to view and manipulate information throughout the lifecycle of an engineering project. In addition, it can be integrated with AVEVA and competitor products, as well as other complementary applications such as SAP and Documentum. AVEVA is successfully delivering both the underlying VNET product and the associated integration services to clients worldwide.
Acquisition of Realitywave
To support the development of this opportunity, AVEVA acquired Realitywave, Inc. for £3.2 million in March 2005. Realitywave's patented technology is a critical component of the VNET offering, allowing users to efficiently access and manipulate large amounts of information (be it data or designs) by way of a unique streaming technology. This acquisition supports existing business requirements and secures a key technology as AVEVA invests in this important strategic opportunity.
Market opportunity
AVEVA will initially focus on its target sectors of oil and gas, power and marine. The objective is to establish relationships with leading clients in these sectors in order to secure first mover advantage in IT engineering information asset management solutions.
Over £3 million has already been invested by AVEVA in technology development, generating revenue of £3.2 million since its launch in April 2003. As VNET is rolled out this year, a team of additional resources will be required to strengthen AVEVA's current development and deployment capability. In addition, AVEVA plans to enlarge its team to provide pre and post sales support and introduce new sales management processes and sales skills. As the business grows, considerable extra resource will be required for implementation and client support. These extra resources will require an additional investment of £2 million over the next 12 months in addition to our current commitment. Whilst this will constrain earnings in the short term, it represents a significant opportunity to accelerate profitability in future years.
This investment will enable AVEVA to exploit a growing demand for flexible IT engineering data asset management solutions. AVEVA estimates that net revenues from VNET product and services can grow by 50% compound over the next three years. To date, VNET has been profitably and successfully implemented on a number of major projects including BP's Angola FPSO Project, Shell's Nanhai Chemical complex, Woodside's EDM project and Jacobs' JIAF Project.
Richard Longdon, Chief Executive of AVEVA commented: "VNET is an important opportunity for us to build on our success in existing markets, and gives us a platform to penetrate a growing market for data delivery in the maintenance and operations arena. Moreover, we have a unique product that has enormous potential within the engineering community. Our investment to exploit this major opportunity represents an additional growth opportunity that will generate significant future returns. As a result, it will transform our position as a much broader supplier of IT engineering solutions and establish AVEVA as an open product lifecycle management provider."
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