It may not be a tradition yet, but for the third year in a row, Siemens CEO, Joe Kaeser, invited industry and financial analysts and members of the international press to the company’s headquarters in Munich to take a peek at how Siemens thinks new technologies will shape our future. In these times of fast-paced development, even a company like Siemens that serves traditional industrial markets has a lot to say every year. The key operator is digitalization.
The Digitalization of Everything
Siemens’ long-term investment in digitalization appears to be paying off. For FY2017, the company reported growth of 11 percent (not counting the Mentor acquisition) in sales related to digital technologies. Just under 80 percent of that stemmed from software sales and the growing market for digital services. At this year’s Innovation Day, Siemens emphasized the value and use of the digital twin in a wide variety of applications ranging from industry to infrastructure to healthcare.
With the acquisition of Mentor Graphics and the purchase of a stake in Bentley Systems in 2017, Siemens has further broadened its industry software portfolio. At the same time, the company has expanded its digital services offering around MindSphere, its cloud-based IoT operating systems targeted at industrial users. To drive this business, Siemens has opened 20 MindSphere Application Centers in 17 countries, staffed by about 900 software developers, data specialists, and engineers who work with customers to develop applications for data analysis and machine learning.
Siemens recently signed a hosting deal for MindSphere with Amazon Web Services (AWS). With the release of version 3.0 in January 2018, MindSphere will be available to users on AWS as well as on SAP and Microsoft platforms. According to the company, this partnership will provide customers with access to a powerful development environment, additional analysis functions, and expanded connectivity.
Innovation with a Clear Focus
Siemens demonstrated its focus on innovation, which is centered on its core technologies. These include additive manufacturing, autonomous robotics, blockchain applications, connected mobility, connectivity and edge devices, cybersecurity, data analytics, artificial intelligence, distributed energy systems, energy storage, power electronics, simulation, and digital twins. ARC believes these reveal where Siemens plans to deploy its R&D resources moving forward, and how the company is working to improve innovation speed and capital allocation.
Innovation needs a strong ecosystem. Besides Amazon and AWS, Siemens leverages partnerships with many other companies, such as Bentley Systems, Atos, Accenture, Infosys, Tata, Deloitte, Capgemini, and PWC. This ecosystem helps Siemens differentiate its offerings; deepens its do-main know-how across a broad range of markets and industries; increases its installed base and connected fleet; and strengthens its digital port-folio of software, services, and security offerings based on MindSphere. According to the company, this has helped Siemens increase its connected assets by 25 percent in the last 12 months to one million devices and systems, and double the number of customers for digital offerings to over 2,900.
Shaping the Future of Automation
As a leader in automation technology, Siemens is actively shaping the future of this dynamic market. In recent years, the automation industry has increasingly adopted “commercial” information technologies that are now reshaping control system architectures. As these systems become more IT-like by distributing intelligence, it’s just a short step to implement value-adding technologies like data analytics and artificial intelligence (AI) in automation. With MindSphere hosting analytics apps in the cloud, expect to see machine builders and end users in the discrete and process industries take advantage of the wealth of data they can now harvest from their manufacturing processes, analyzing it at the machine or plant level, or transmitting it to the cloud for a multi-plant comparison of process performance.
At this year’s Innovation Day, Siemens emphasized the advantages of using digital twins for simulation in different areas. The digital twin plays a role in a variety of industries, from energy management to healthcare, but its role in manufacturing applications is especially compelling. A digital twin links all models and data related to product design and manufacturing processes, making them available to stakeholders from designers, to engineers, operators, and service technicians. Using its own digital twin, a system can monitor itself and simulate future behavior in real time. When combined with machine learning, a subset of artificial intelligence that uses algorithms to spot patterns in process data, users can create a closed loop of continuous feedback to predict problems before they occur.
To support future IoT structures in automation architectures, Siemens counts connectivity and edge devices as core company technologies. Connectivity refers to industrial networking. The company recognizes the need to explore future communication technologies and network architectures beyond its current reliance on Profinet, a modified version of Ethernet adapted for the requirements of real-time industrial use. Today, gateways with built-in MindSphere connectivity create the “edge environment,” enabling data analytics at the machine level. Future developments such as smart sensors will embed this intelligence and connectivity directly into ruggedized field devices that both monitor and control processes in an industrial IoT network of distributed intelligence.
Software Suite Supports Digital Transformation
Siemens’ integrated digital enterprise suite ties together the virtual and physical worlds to support assets over their entire lifecycle and across the value chain. The company’s integrated software suite consists of its product lifecycle management (PLM) software, Totally Integrated Automation (TIA) portfolio of engineering tools, and manufacturing operations management (MOM) software. Together, this integrated suite supports digital transformation and addresses the need for increased manufacturing production speed, flexibility, quality, and efficiency. This is a unique value proposition in the industrial world.
Siemens’ digital enterprise suite leverages Industrie 4.0 for IIoT, along with industrial solutions for software, automation, communication, security, and services for the full range of discrete and process industries. It also fully embraces Teamcenter, a suite of PLM applications that help create digital twins across the entire value chain, from product design, production planning and engineering, to execution, including a full range of digital services.
Digitalization Enables Smart Buildings and Energy Optimization
Siemens emphasized buildings at Innovation Day, which, according to the company, consume 41 percent of all energy worldwide. Managing the costs of a building’s operations is more important than ever, as 80 percent of the total lifecycle cost of a building occurs in the operation phase. Buildings must be both energy- and asset-efficient, maximizing asset availability and minimizing maintenance costs. This requires software tools to perform preventive and predictive maintenance as well as reduce energy footprints.
Today’s buildings have different needs as they cater to a Millennial workforce (estimated to be 50 percent of the total workforce by 2020), who seek flexible office space, which today makes up 30 percent of corporate real estate portfolios. Besides being energy and asset efficient, smart buildings today must be comfortable, secure, and safe, with optimized room conditions, healthy air quality, and intuitive operations.
As we learned, Siemens smart building solutions leverage MindSphere to enable the digital transformation. These solutions can help building owners maximize occupancy rates, increase property values, comply with standards and regulations, and reduce costs. They help operators lower maintenance costs and increase the operational efficiency and reliability of facilities and equipment. Building tenants benefit from increased employee productivity within a safe and secure workplace.
MindSphere Enables Increased Electrification, Key to Decarbonization
Siemens’ Innovation Day demonstrated how MindSphere can be used to help both the electrification and decarbonization processes, providing digital applications for an all-electric world. With solutions for digital twin and grid simulation, grid control, substation device management, outage management, advanced device management, power quality analysis, and asset performance management, Siemens supports distributed energy resource management, meter data analytics, and other key applications. Siemens’ EnergyIP, powered by MindSphere, is starting to gain traction, connecting to 75 million contracted meters, 20 million connected meters, and 3.5 million connected automation devices.
At Siemens’ Innovation Day, the company demonstrated how it is evolving its product and solutions portfolio to support the digital enterprise in an IIoT environment, centered on the MindSphere platform. ARC sees the ecosystem for MindSphere growing rapidly, with added partners and developers creating apps that will leverage the platform and increase implementations. This value proposition is unique in the industry and is what differentiates Siemens from other automation suppliers.
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Keywords: Siemens, Innovation Day, Digitalization, Automation, Smart Buildings, ARC Advisory Group.