If you’ve relied on organic growth throughout your 55-year history, a transformation can’t get any bigger than a large acquisition, especially when it includes a whole new approach to the technology you pitch.
Transformation seems to be the theme for Panduit at the moment – a company with roots in the network cabling and communications industry that has more recently been pushing itself as a Data Center Infrastructure Management (DCIM) player.
Panduit was founded by Jack E Caveney Senior. His son, Andrew Caveney, works as SVP of Global Marketing. The privately held US-based company has annual revenue exceeding €789m and a presence in more than 120 countries around the world, backed up by more than 5,000 employees.
We met with Caveney at Panduit’s systems integrator event at a swanky hotel in Cannes, France, where more than 200 channel partners gathered to hear of Panduits plans – partners whom Panduit now works with to help build data centers.
“For a long time in our history we manufactured hardware, cabling and connectivity components that helped connect networks,” Caveney says.
“But we’ve realized over the past 10 years that we need to transform to become more of a solutions provider. So we got into software and started to get into services. Now when we have a conversation with our customers it can be more about understanding their business needs and their technology challenges in the data center,” the younger Caveney says.
These challenges range from energy efficiency to connectivity, high-speed data transport and copper cabling systems and cooling and power. And they won’t stop there.
Going after data centers
US-based Panduit’s roots are in the electrical industry, but 20 years ago, when public phone companies started to divest, Panduit exploited an opportunity to bring in connectivity solutions for connecting telephones and computers. “Now the telecommunications side of our business is more than half of our sales,” Caveney says.
The business focuses on data centers, intelligent buildings and industrial automation. The data center focus came about 13 years ago, as far as Jeff Paliga, Panduit’s Director of Global Data Center Solution Development, recalls. He joined the company in 1996 and witnessed this transformation.
“Prior to that, we looked at infrastructure as different product sets, but when we walked inside a data center it became clear there were a lot of product sets in there we could provide and offer solutions for,” Paliga says.
“Instead of coming in with copper and fiber and cable management, we became intrigued by the data center itself. This is a highly complex environment and we need to look at this holistically. How can we bring customer value to this, and relevance to the space and these systems, which at the time we could see were starting to become interdependent? This was around the dotcom boom, when the Internet was booming and everything seemed to consolidate back to these facilities.”
Panduit started out with what could be described as an intelligent patching system called Physical Infrastructure Management (PIM), which can track the movement of assets and monitor other activity in the data center through the network.
“You can check connectivity between points A and B, and if there’s a break in the link you can see where it is,” Paliga says. Panduit then started to add toolsets and asset tables to PIM so that everything connected to the network could be viewed online. Now it offers solutions under the branding of United Physical Infrastructure. Caveney, however, makes it clear when we talk to him that Panduit’s main aim is to become a leader in the DCIM space – and for that you need power and cooling added to the mix. It is this new level of asset-tracking that has Panduit reaching for its wallet.
The unexpected buy
“We are very excited,” Caveney says about the Unite Technologies buy – its first ever acquisition. Like Panduit, a lot of Unite Technologies’ DCIM clients are large financial institutions – the industry that seems to see the most value in DCIM today. Both companies aim to bridge the gap between IT and facilities through their product sets, but they come at it from different angles.
UK-based Unite’s products focus on power delivery, environmental management, and cabinet and room security. Panduit’s focus has been the network.
Caveney says the DCIM market is now moving so quickly – numerous newcomers have entered the market and large infrastructure players are adding DCIM capabilities to product sets – that Panduit had to act fast.
Paliga, who is behind Panduit’s technical strategy, says Panduit realized that through acquisition it could get into the power space with aggressive speed. “Unite has a strong presence and a good product set, and we think that will get us down the road quicker to bringing into Panduit more of the power monitoring,” Paliga says.
“Our plan is to integrate to the higher level managers, so we are not an IBM Tivoli, we are not CA, or HP OpenView. Our product set will go from intelligent patching to power and cooling, which will allow us to be proactive, looking at integrated stacks and more traditional deployments where these might need to scale. We want our software visibility to scale out as well as pull in the integrated stacks.”
That said, this purchase was not exactly mapped out. Caveney says Panduit was in no way on the ‘hunt’.
The two companies were simply discussing some alliance synergies when Panduit realized that Unite Technologies was for sale and that it could be a perfect fit to propel it towards its future goal.
Caveney recognizes that the task of bringing the two product sets and R&D teams together will have its challenges. He wants to see Unite retain its brand – it will be known as Unite Technologies by Panduit – but have Unite integrated into Panduit’s own offering. He also wants Panduit to learn from Unite’s strong customer service, which offers high levels of customization, as it builds up its own service offerings for the market.
Paliga, on the other hand, is focussing on the software. “We will definitely end up having a stronger software presence,” Paliga says. Panduit expects to release its first integrated offerings with Unite in Q4 this year. But one of the most interesting points is that this will not stop at the data center – and this could change DCIM as we know it.
The data center is just part of Panduit’s business. Increasingly, it is also becoming just part of Unite Technologies’.
Both companies have been moving down a path that sees management capabilities integrated across the entire estate – be it in industrial or enterprise – from monitoring power used by desktops to machines on the factory floor. This provides a company-wide view for management. Unite has done this in the past to help companies monitor power usage. Panduit, on the other hand, has focussed on keeping company-wide networks up and running.
Caveney says a perfect example of estate-wide management can be seen with a project it carried out with UK-based engineering firm Rockwell Automation. It connected its data center to the factory floor with Ethernet networks and its monitoring tools, helping to ensure uptime.
“As important as uptime is in the data center, it is also important in the industrial space because if a production line goes down, an organization will stop functioning,” Caveney says.
Paliga believes that, for many companies, the data center makes up only 20% of what could be monitored to ensure efficiency and effective uptime. This means the market holds a lot of value if it can be cracked.
Panduit is likely to have an announcement around estate-wide management at some point early next year, according to Caveney. But before it can target the market it has some big challenges to overcome, such as which person in the company to target with that first point of contact for sales.
“We need to find the right decision maker in the network that has responsibility for both the facilities and the applications, and whose priorities are tied to the cost of energy,” Caveney says.
It is likely to depend, also, on the property these people run. From the data center side, according to Paliga, enterprises are much easier to sell to because monitoring makes good business sense.
“If you go to a property management firm – an REIT for example – it probably won’t resonate as much, as they are purely bringing in the tenants and flipping properties,” he says. Either way, Caveney says it is a good time to get into a market – when little in the terms of skills exist.