Expanding the Boundaries of Environment, Health, & Safety (EHS) On September 22nd, IHS (NYSE: IHS) announced the acquisition of two environment, health, and safety (EHS) vendors - Atrion International Inc. and Syntex Management Systems Inc. for a combined price of approximately $80 million. IHS described the acquisitions as complementing and expanding the company’s existing health and safety compliance, product stewardship, and incident/crisis management offerings. IHS also recently ac
Incorporating Atrion's Strength in Regulatory Content, ERP and PLM Integration
We recently profiled Atrion (as well as IHS) in our report Technology Selection: Environment, Health, and Safety — A Necessary Foundation for Asset-Oriented Manufacturers (MI224490). Founded in 1989 with 140 employees, Atrion serves a global customer base of approximately 160 companies, including Sun Chemical, Cargill, DSM, LANXESS, PPG, Praxair, and SABIC. Atrion's products include regulatory document authoring and management (hazards communications, such as safety data sheets and labels), chemical management, and supply chain communication, as well as regulatory content. One of Atrion's strengths in the market has been its ability to be the regulatory content provider for ERP and PLM systems, with pre-built integration to products from and partnerships with Oracle, SAP, Microsoft, Infor, and IFS.
Building On Syntex's Operational Risk Management
Syntex, based in Houston with just more than 50 employees, focuses on operational risk management software and services. There is some overlap functionality wise with IHS in terms of incident management, but the real appeal to IHS is Syntex's ability to assess risk and implement corrective measures. Similarly, there's some overlap with Atrion, in product functionality and in the customer base, but one of the fundamental reasons why these acquisitions are so appealing is in their ability to give IHS the "key vendor" position in EHS IT spend among many companies in its expanding customer base.
Syntex also helps bring IHS to a wider audience, from a user perspective and more importantly from a buyer perspective, from the acknowledgement of risk management (like sustainability) as a topic of concern not only within EHS but also within operations in general and across the corporation.
Two Fundamental Issues Driving Change in EHS Vendor Market - Risk Mitigation and Environmental Sustainability
Overall, we view IHS's acquisitions of Atrion and Synex as evidence of two basic points:
â— Manufacturers continue to look for ways to prevent and eliminate "compliance gaps," reduce risk, and build confidence in their health- and safety-related processes.
â— Environment, health, and safety (EHS) compliance is the foundation for important strategic objectives such as improving the company's reputation and reducing its environmental footprint, and the EHS department's role is changing as sustainability increases in importance.
A recent I.H.S. financial announcement detailed revenue for the nine months ending August 31, 2010 as $779 million, a 10% increase over year-to-date 2009 revenue, and net income for the same period as $99.9 million. Financially, the company looks strong, and we wouldn't be surprised if IHS makes additional investments (and acquisitions) in EHS, enterprise risk management, and sustainability.
Although we expect many smaller niche vendors to continue to do well here for some time, we believe the more EHS issues and concerns become elevated into reputation, risk, and sustainability, the more scrutiny IT investments will get and the higher expectations will be for those investments to support company-wide priorities.