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AspenTech Completes Another Piece of the Refining Puzzle With Petrolsoft

Written By: Steve McVey
Published On: June 22 2000

AspenTech Completes Another Piece of the Refining Puzzle With Petrolsoft
S. McVey - June 22, 2000

Event Summary

In an effort to broaden the compass of its supply chain management software suite, Aspen Technology has acquired Petrolsoft Corporation, which makes software to support downstream petroleum distribution and replenishment operations. Aspen will exchange 2.6 million shares of common stock for Petrolsoft in a pooling of interests transaction valued at nearly $60 million. Privately held, Petrolsoft currently has approximately 50 employees and posted calendar 1999 revenues of approximately $4.0 million.

On a relative revenue basis, Aspen is offering nearly twice as much for Petrolsoft as it did for Chesapeake Decision Sciences, a supply chain management software company acquired in April 1998. All evidence indicates that Petrolsoft, a private company, is financially sound and self-funded. Aspen indicated that it won out over other potential buyers that included some of the leading vendors in supply chain management and process control systems.

Market Impact

The scope of Petrolsoft's product suite covers two primary activities, those involved in terminal-to-retail customer and refinery-to-terminal workflows. These segments complement Aspen PIMS crude selection and refinery operations planning and execution capabilities. For the most part, the combination of Aspen PIMS and Petrolsoft is a clean one, however, Aspen MIMI does offer a toolkit for developing distribution planning capabilities. Although this may present an overlap from a high-level functional perspective, the two packages are apples and oranges when it comes to the details. Aspen will likely emphasize the canned functionality for downstream distribution afforded by Petrolsoft and reserve MIMI for cases that require extensive customization.

The acquisition will offer Aspen another product to sell to its vast customer base in the petroleum refining industry. Aspen has a large number of adherents among petroleum refiners for its upstream SCM functionality and its PIMS scheduling product is used in 85% of the refineries in North America. The effective linking of downstream and upstream operations can help petroleum companies and their partners reduce costs inherent in transporting, distributing, and storing petroleum products.

User Recommendations

Users who make their business in retailing or distributing petroleum products should not change their perception of Petrolsoft with the recent acquisition, although few changes will be apparent in the short term. Still involved in the initial planning stages, the two companies expect to spend six months on the integration of PIMS and Petrolsoft, an exercise they say will be facilitated by their similar development philosophies and environments. First steps include developing a common database platform, one that will rely on a combination of Oracle 7/8 and Microsoft SQL. However long it takes, current and potential Petrolsoft users should welcome the planned integration to Aspen PIMS as it can allow them to more easily expand the scope of their IT-enablement in the future.

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