AVEVA is attempting to break new ground by bringing a recurring revenue model to industrial plants.

The industrial software vendor has launched a service that provides supervisory, visualization, collaboration,and analytics software via subscription. The AVEVA Operation Control bundles are designed to help its large engineering plant customers better leverage their data.

AVEVA’s Kerry Grimes

Kerry Grimes is AVEVA’s global SVP partner sales. “Customers are shifting their business models to want to operate plants, not just build them,” he said. “This gives a new business model.”

AVEVA’s HMI/SCADA software-based control system uses networked data that allows plants to monitor the performance of equipment. It has traditionally been sold perpetually, with licences that are based on hardware. But now the firm can price the software on a recurring revenue basis, it per site.

“We can take a manufacturer with 100 sites and look at each site … and price it appropriately for our software.

“The customer sees value because we’re moving it from a CAPEX to an OPEX model. It’s priced on a user basis, as opposed to the equipment basis. This is beneficial for the customer as they get into the new normal and potentially have even less people in a plant.”

Grimes noted that it has always been a struggle to bring a recurring revenue model to the plant floor.

“Much of that is, those on the plant floor haven’t wanted it,” he said. “They would design and build a plant, putting software on the equipment. And then just leaving it for 10 years and not even wanting to touch it, let alone, do a system upgrade,” said Grimes.

But Grimes said the new bundles will “change the game on the manufacturing floor”.

AVEVA completed its $5 billion acquisition of operational data platform developer OSIsoft in March. The company says OSIsoft’s operational data management together with AVEVA’s industrial software unlocks ‘Performance Intelligence’ for customers.

“We see a lot of partners starting to do that,” said Grimes. “Which is making a really interesting revenue opportunity for us that we haven’t even begun to capitalise on.”

Increase in Channel Revenues

About a third of AVEVA’s business currently goes through its distribution network. However Grimes said he wants to get this to 50% within five years. He also laid out a three year timeframe to get to 85% to 90% subscription revenue.

“We are helping our partners build customer success practices that gives them another revenue opportunity to sell that service. We’re making all of our tools and processes available to them to do that.” As part of this, AVEVA is also renaming a portion of its customer success team ‘partner success’.

“We have to change that go-to-market a bit to make sure the partners understand the whole ‘land adopt expand’ model. It’s not just getting a big deal and running off. It’s about landing and continual customer support and expanding that deal,” said Grimes.

“We’re giving ourselves a three year journey to do that, as opposed to saying, “okay overnight, everyone’s subscription only.’ I believe our model of recurring revenue is going to allow them to adopt that slowly. We actually hope to do nearly $100 million in business with the Operation Control bundle this year. My goal for subscription is to get a good portion of our business there.”

Winning SI Mindshare

AVEVA has 100 distributors globally, which work with around 5000 system integrators. However, moving forward Grimes wants to “get more visibility” of those system integrators.

“I believe we can generate more demand by taking more control, of operating a better system integrator programme ourselves. That’s one of the key things that we’re working on,” said the exec.

“I want to win more mindshare of the system integrators. There are plenty out there, and I frankly believe they have more mindshare with some other competitors. But my strategy is to change the game…to give them something where they can get to a recurring revenue model. It brings more services to the system integrator along the way as well. And so if we can build more attention there, we want to do that.”