ICARUS Ends Solo Flight With Aspen

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ICARUS Ends Solo Flight With Aspen
S. McVey - September 14, 2000

Event Summary

Aspen Technology, Inc. has completed a transaction to acquire ICARUS Corporation, a maker of knowledge-based systems (KBS) to support decision-making in a broad range of process industries including chemical, petrochemical, specialty chemical, refining, pulp and paper, pharmaceutical, food, mining and power industries. ICARUS applications overlap many areas of Aspen's Plantelligence suite, especially process modeling, simulation, and design analysis. However, ICARUS also offers applications for plant capital cost estimation and project economics, which constitute a big win for Aspen. Aspen will integrate the ICARUS financial decision-making tools with its manufacturing modeling, asset optimization and supply chain offerings.

Aspen paid $24.5 million in a combination of cash and stock to acquire privately-held ICARUS. ICARUS reported total revenues of $11.3 million and profitable operations in its most recent fiscal year. Aspen will account for this acquisition as a purchase, and excluding one-time charges it will be non-dilutive in the fiscal year, ending June 30, 2001.

Market Impact

Aspen estimates that the process manufacturing industries spend over $300 billion each year in new capital investments, making its decision to acquire ICARUS a sound one. Successful combination of economics and supply chain optimization remains one of the more elusive goals of the enterprise software industry. Historically, the two have been separate functions with plant operations personnel responsible for process optimization and accountants in charge of watching capital expenditures. Some separation of authority will (and should) always exist, but there is no reason that data pertinent to both areas should not be sourced from a common location.

Tools for evaluating economic trade-offs in capital investments that arise from process upgrades, new designs, and retrofits require much of the same data as process optimization, simulation, and control with cost as the new layer of information. It remains to be seen how closely cost data are associated with static design data and which of ICARUS' functionality makes its way into Plantelligence, but Aspen has shown competence in assimilating past acquisitions and we see no reason why ICARUS should be an exception. Aspen and ICARUS have collaborated on past implementations and the experience should facilitate the merger.

The completed integration of ICARUS will give Aspen an edge over its competition in the process industries space as well as advancing it further than its counterparts in the discrete manufacturing world, such as i2 Technologies and Manugistics.

User Recommendations

While the acquisition has good potential for synergy, process manufacturers who may be considering a purchase should make sure that they:

  • Understand the level to which ICARUS and Aspen Plantelligence will be integrated. Often, integration of supply chain planning and financial decision-making applications means only that both can be accessed via the same GUI window, not that they incorporate the same data and workflows.

  • Examine current methods and tools they use to evaluate financial alternatives and compare these to ICARUS functionality.

  • Decide how critical plant capital cost estimation and project economics functionality is to their business and assign an appropriate level of importance to this factor relative to other technology needs.

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