Explained: How Honeywell Automation became a leader in industrial software

Localisation has helped the company posted a compound annual growth rate of 40% in net profit on sales growth of 12% over the last three years.

From a core industrial products company, Honeywell Automation India’s evolution into a digitally-connected company is a stellar transformational story. Besides, its focus on catering to India and China has aided growth. Localisation has helped further, and the company posted a compound annual growth rate of 40 per cent in net profit on sales growth of 12 per cent over the last three years. 

Following in its global parent’s footsteps, the company has converted itself into an “industrial software” company from a pure “industrial hardware” one, thus improving its growth and profitability outlook.

Parent Honeywell Inc is a global leader in building control and home comfort solutions, process solutions and mobility, among other things. Honeywell Automation India (HAIL) provides integrated automation and software solutions, including process solutions and building solutions, with localised innovation being a key strategy. It has a wide product portfolio in environmental and combustion controls, and sensing and control, and also provides engineering services in the field of automation and control to global clients. 

“Five years back our focus was on industrial products but we have since been increasing our work in areas where we can improve human-machine interaction with a software focus throughout, which also means we have been leveraging a lot of the software talent that India offers,” said Ashish Gaikwad, MD, HAIL. 

HAIL has positioned itself at the intersection of engineering products and software technology to leverage growth. Gaikwad adds that while its peers operate on the “Internet” side of the Internet of Things (IoT), HAIL has the distinct advantage of being on the “Things” side. HAIL is also ideally suited to provide analytics across large industrial facilities.

For example, the world’s largest refinery — Reliance Jamnagar — faced the challenge of connecting different departments and operators across the enterprise for real-time analytics to increase efficiency in a large set-up. HAIL helped improve enterprise connectivity and real-time analytics and, ultimately, the profitability of the refinery. 

HAIL has recently introduced outcome-based service for mechanical systems, using data analytics and sensor-based IoT technology. While it has been cautious on commercial growth in infrastructure services, it has indicated good scope for government investment in the area, especially through the Smart Cities initiative to offer smart-city solutions as part of citywide surveillance systems. HAIL has also invested in product solutions around connected buildings. It is also establishing traffic management solutions, CCTV, WiFi and software server solutions across cities.

The company’s primary strategy has been to cater to the growing markets of India and China, and increase localisation. “Not only are we driving localisation and local innovation unique to India for our domestic customers via our east-for-east (E4E) strategy, but also using our global scale and reach to take that innovation to the rest of the world for our global customers through our east-to-rest strategy,” said Gaikwad. In east-for-east, products are developed for a country such as India or China, while the east-to-rest strategy is to take these locally developed products to other parts of the world.

One of the key lessons from the booming markets of India and China was to constantly innovate to offer the best possible technology at a competitive price point. “Also, working on global engineering projects from India provides a natural hedge against currency fluctuation, so it is a win-win situation,” says Gaikwad. 

At present HAIL derives 45 per cent of its revenues from exports of engineering services, which have been consistently growing. In the domestic business, while capital goods companies have declined in recent years given the tough business environment, HAIL has held steady.

Gaikwad recalls that even eight years back a majority of the company’s engineering expertise came from traditional streams like mechanical and chemical engineering. “Today more than half the expertise is software talent.” 

He adds, “We continue to invest in India in terms of growing these talents and getting to do some of the state-of-the-art work through our four manufacturing facilities and five global technology and development centres in India.”