WA MarketView – Honeywell’s acquisition of SCADAfence
Over the past year, OT Cybersecurity has been a much-discussed topic. The discourse has been marked by a mix of opinions concerning the perceived severity of the cyber threat, the efficacy of current cybersecurity solutions, and the increasingly congested vendor landscape. Amidst the conjecture and debate, Honeywell has made a significant strategic move by acquiring SCADAfence. This not only expands Honeywell’s capabilities but also underscores its ambition to be the leading vendor-agnostic provider of OT cybersecurity services. Following discussions with the wider OT community and with executives at Honeywell Connect in Dallas, we believe this acquisition makes sense for several reasons.
Before delving into why the investment aligns well with Honeywell’s strategic goals, it’s important to understand the current market dynamics which provides both insight and context. The OT cybersecurity market continues to grow, despite an overall slowdown in manufacturing output. Year-over-year investment in OT cybersecurity is at double-digit figures driven by the increased investment in digital operations as asset owners look to improve productivity, efficiency, and customer services. As systems become more interconnected, and OT applications migrate to the cloud, CISO’s are demanding a single, unified platform that delivers asset visibility, vulnerability management, network segmentation, threat detection, and incident response.
However, as the demand for cybersecurity services has grown, so too has the number of vendors providing competing services. This is particularly the case in asset discovery and threat detection resulting in growing competition between vendors. Below the Tier 1 vendors, there is a strong argument for consolidation. SCADAfence is in this category.
There are several reasons why the acquisition works. First and foremost, SCADAfence’s platform addresses a noticeable gap in Honeywell’s cybersecurity portfolio. Prior to the acquisition, Honeywell’s SaaS offering included remote access management, removable media protection, and AMIR, an incident response service, all available on the Forge platform. Honeywell’s end-to-end solution included a combination of native capabilities and partner integrations. Incorporating SCADAfence into its portfolio presents Honeywell with the opportunity to provide its customers with new products (notably visibility, threat detection, vulnerability management and compliance) and to enhance existing services including remote access management. The result for the customer is a seamless, interoperable service, while Honeywell stands to benefit from higher margins on its services by delivering its own solutions rather than acting as a Value-Added Reseller (VAR) for third party offerings.
However, there are other vendors in the market, so why did Honeywell choose SCADAfence? The answer relates mainly to SCADAfence’s market positioning and product quality. Unlike many of the Tier 1 vendors, SCADAfence entered the market somewhat later and secured less private capital. Despite a strong product, the limited resources hindered the go-to-market strategy and constrained growth. This is where there is a strong synergy. SCADAfence provides Honeywell with a highly reputable solution and Honeywell offers the channels to market that were previously lacking. In addition, Honeywell can offer its energy and process intensive customers new solutions, whilst also providing additional services to SCADAfence’s customers who are mainly in the manufacturing sector.
In summary, we feel the acquisition is a strategic move that makes sense for both parties. As the OT cybersecurity market continues to expand due to a growing attack surface, customers are increasingly seeking integrated solutions. SCADAfence has filled an important gap in Honeywell’s portfolio and provides Honeywell with the ability to introduce new services to existing and new customers. In turn, the SCADAfence team has an opportunity to compete more effectively with greater resources at their disposal.
Honeywell announced the acquisition on 10th July 2023 and work started immediately to integrate SCADAfence capabilities into the Honeywell Forge Cybersecurity Suite. Just three months later at Honeywell Connect two new products were launched: Cyber Insights and Cyber Watch.
Cyber Insights is a site-specific offering that provides OT network visibility, asset and vulnerability management, and near real-time threat detection.
Cyber Watch provides a consolidated enterprise view across multiple sites, enabling asset owners to manage risk and enforce compliance across distributed infrastructure.
The product launch demonstrates Honeywell’s ability to integrate SCADAfence quickly into their portfolio. On paper, it appears to be a great match. However, as with any acquisition, success will be dependent on how well the integration continues and how effectively the combined go-to-market strategy is executed.
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