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Honeywell partners with Microsoft to reshape industrial workplace

Que Dallara - Honeywell Connected Enterprise President and CEO joins Yahoo Finance’s On The Move panel to discuss how the company is faring amid the pandemic and weigh in on their new partnership with Microsoft.

Video Transcript

ADAM SHAPIRO: Que Dallara. Que is Honeywell's connected enterprise president and CEO, and welcome to the program. What we're talking about is this partnership with Microsoft that, according to the press release, will bring to the market its domain-specific applications built on Microsoft's cloud platform Azure to help new levels of productivity for industrial clients. Help me, as a Luddite, understand what has changed as of this moment.

QUE DALLARA: Well, good morning. We're so excited to announce this partnership. You know, Honeywell's been working to digitize operations, make it really-- we don't enjoy the same technologies that you and I do in the office. We're trying to take that to the physical environment, like a factory or warehouse. And what we're doing with Microsoft is taking the data from the OT environment with what Microsoft does so well in the IT environment, and bringing together a brand new solution for our customers.

JULIE HYMAN: So Que, if you don't mind. It's Julie here. Thank you for joining us. Can you give us some examples of sort of real-world applications of this partnership and how it's going to be implemented, just to help us understand how you guys are going to be using it?

QUE DALLARA: Well just take the facilities team that manage commercial buildings. It's easy to understand there's lots of teams that keep the lights on and make buildings work and hum. But today, they don't really have a lot of information to make decisions and run maintenance more efficiently or to drive energy down. So that's what Honeywell does so well. We're able to pull that data out of a very complex building, drive it to insights. And then what we're doing with Microsoft is driving that to action-- a closed-loop action-- by taking those insights and putting it into the hands of frontline workers through work orders, and then sending that feedback back to the overall system so that the facilities managers can decide what to do next.

ADAM SHAPIRO: You know, this is all part of a transformation of Honeywell that goes back to about 2017. You've got Honeywell Connected Enterprise but then also Honeywell Forge, your-- am I correct when I say kind of it's cloud, your version of cloud-- and this will now be interacting with Azure? Does it make it much easier if all of that is accurate, if I'm operating a large manufacturing facility to operate it more efficiently?

QUE DALLARA: Yes. Honeywell Forge is a set of applications that when put into the hands of people who run factories or warehouses or buildings or airlines, can really drive performance in their operations. We build it on Azure, and we're doing integration into applications that Microsoft has, such as dynamics, so that we can close the loop on actions. It's nice to have a dashboard that tells you what to do, but unless you can drive the action through to the frontline worker, you don't drive as much impact.

BRIAN CHEUNG: Hey, it's Brian Cheung here. So why do you end up going with a partnership to do this as opposed to maybe just trying to R&D in-house, or to maybe acquire the technology through some other merger? You know, what was it about Microsoft specifically that made you decide, we want to partner with this venture?

QUE DALLARA: A couple of reasons. Microsoft is our development partner. Honeywell Forge is primarily built on Azure, so that's one thing. Two is, we can go to market together and bring a combined solution to both our customers. And the third thing I would say is, we don't want to-- we want to invest in areas that Honeywell does very well, and that's in the OT space. But we believe that if you combine what we do in the OT space with the best of what is done in the IT space, we're putting the data real-time into the hands of decision makers. And at the end of the day, that's what drives impact.

JULIE HYMAN: And speaking of impact, by the way, the shares are about 1.4% at the moment, Que. So when you-- if you zoom out a little bit and take a look at Honeywell as a whole, to Adam's point, it does a lot of different things. So your particular business here, how important, strategically, is the aim for it to be for Honeywell going forward? A growing part of the business, clearly. Will Honeywell sort of be relying more on your-- or, what percentage of the business is the goal for connected solutions to be going forward?

QUE DALLARA: Well, we want this business to grow double digit and become consequential to Honeywell, meaning at least 10% of the business in the long run. And even though HOneywell's in a lot of markets, the way to think about the company is, it really does three core things. It helps our customers build next-generation airplanes, warehouses, buildings, manufacturing. Then, we help our customers turn these things on. It's-- they are very complex things. And it's not a trivial exercise. And then we help them operate and maintain. So when you look at what we do in the Honeywell-connected enterprise, we're taking that to another level of performance through software, so it's a very clear extension of what Honeywell already does.