Siemens PLM Enters the Age of Digitalization

Summary
Siemens PLM recently held its annual Analyst Conference in Boston. Here, the company clearly communicated its direction and strategies for both the PLM business unite and its parent division within Siemens, Digital Factory (formally Industrial Automation). Siemens brought in Horst Kayser, Siemens AG Chief Strategy Officer, to present the overall direction for Siemens in the global industrial market for product, process, and production.

Mr. Kayser focused on the importance of digitalization and the digital change that is taking place across business and industry. Digitalization is already big business for Siemens, with vertical software generating revenues of €2.4 billion for FY2014 and digital services a half billion euros. The company currently has 17,500 software engineers and 220 data scientists on staff. With its top-tier position globally in both industrial and building automation, it's clear that Siemens is poised to lead industry into the age of digitalization.

The overall digitalization message and strategy represents the final and full integration of PLM with the Digital Factory. This means that all product design, manufacturing process planning, digital manufacturing, factory floor operations, and production automation from Siemens are totally integrated within the Digital Factory division. This appears to fulfill the initial vision of Anton Huber, CEO of Siemens Digital Factory, and the executive behind the acquisition that made PLM an integral part of Siemens' end-to-end product, process, and production vision.

The Digital Thread: Enabling Smart Innovation across All Product Lifecycle Domains
For Siemens, the message is digitalization across the entire design/build PLM lifecycle. It is also about the Digital Twin, the virtual models and an environment that represents a digital thread of design and manufacturing information. This starts with product design concept and ties the lifecycle together in a continuum with test and simulation, manufacturing planning and factory floor operations, and, finally, product service in the field. The company believes that the digital thread is essential to manufacturing operations and automated production systems, and the Siemens Digital Factory division is basing much of its strategy, products (hardware and software), and services on this concept.

Siemens sees several significant drivers for digitalization. These include:

• Self-optimizing machine and remote maintenance
• Data-driven (analytics) predictive/prescriptive maintenance
• Managing de-centralized and fluctuating power generation
• Mass customization/make to order for products
• Interactive collaborative virtual product design

Chuck Grindstaff, President and CEO of Siemens PLM Software, presented a look at what he referred to as the digital industrial revolution. He pointed out that all industries are entering an era of smart products produced in smart connected factories. This will drive new business models. As an example, he mentioned the emergence of the driverless car as the first link in a total travel experience that involved cars, trains, and planes in a completely connected transportation infrastructure. Mr. Grindstaff pointed out that along with the rise of smart products, the development cycle is getting significantly shorter (by about 25 percent) and the profit margin window is getting smaller. Companies need to introduce more products in a shorter time to meet the "smart" expectations of both consumers and industry.

He provided the excellent example of a completely new business model employed by Siemens customer, Local Motors. This startup car manufacturer leverages technologies like 3D printing, systems-driven product development, and advanced robotics to "print" a composite body electric car, assemble it, and drive it off the production line in eight hours. The vehicle is designed using collaborative crowd-sourced engineering and produced in a modular, mobile micro factory that can fit in a medium-sized warehouse.

Mr. Grindstaff pointed out that smarter products are appearing across all industries from driverless cars, pilotless airplanes, personalized body implants, to self-optimizing energy generation. He stressed that digitalization was the strategy needed to realize smart innovation, since it weaves a digital thread through the entire value creation chain.

Digital Manufacturing Delivers Smart Production Innovation
Ziv Feuer, SVP of Manufacturing Engineering Software, presented a look at Siemens digital manufacturing solutions and how digitalization technologies enable users to create a complete virtual manufacturing environment that accurately represents the physical factory. The role of Siemens, according to Chuck Grindstaff, is to deliver the Smart Innovation Portfolio to its users across the entire design/build lifecycle. Mr. Feuer presented this innovation platform in the context of manufacturing engineering and production operation systems.

The Smart Innovation Portfolio, in the context of digital manufacturing, is predicated upon four principles that digitalization will provide: the Engaged User that gets them the right information at the right time and in the right context; Intelligent Models that represent the virtual definition of the physical factory along with 3D simulation of production systems; the Adaptive System, which integrates PLM and MES IT systems connecting the as-built with the as-designed; and Realized Products, focusing on advanced manufacturing technologies that will enable manufacturers to make the next generation of smart products. He made it clear that the digital twin is the heart of the smart connected factory.

This digital twin strategy for Siemens is also tied to Industrie 4.0, a technology and manufacturing roadmap for the factory of the future. Industrie 4.0 and Industrial Internet of Things (IIoT) share many common goals and represent an ecosystem to support the smart connected factory.

Industrie 4.0 represents a paradigm shift from centralized to decentralized smart manufacturing. Advanced embedded technologies that enable the cyber-physical production systems to support intelligent machine-to-machine, machine to human, and machine to production system communications. This forces a fundamental shift from conventional industrial production to connected, intelligent manufacturing through smart factories, products, and services. It also creates an environment in which the boundaries between the virtual and physical worlds blur (the digital twin) as factory simulation software validates and commissions real machines and production systems communicating and functioning autonomously. In the factory of the future, Industrie 4.0 will operate as an IIoT to redraw new value chains across factories, plants, and supply chains. Siemens' digitalization strategy appears to be fully in line with Industrie 4.0 and the IIoT.

Cloud Deployment and Big Data Analytics
Steve Bashada, SVP of Siemens PLM Software's latest business unit for Cloud, Big Data & Analytics, Mobility, and IIoT, provided an insightful look at where Siemens is going with these market-disrupting technologies. Mr. Bashada made it clear that Siemens is making a very concerted move toward the SaaS (software as a service) deployment model and cloud-ready IaaS (infrastructure as a service) solutions. His message was "cloud thinking first," where SaaS models and cloud deployment enable new business processes with easier online user experiences through repeated automated application deployment. Siemens appears to be responding to the reality that many manufacturing enterprises do not currently have the IT infrastructure in place to support SaaS and cloud deployment.

The Big Data & Analytics area is a particularly interesting one for Siemens since the acquisition of Camstar MOM and, with it, the Omneo Analytics platform. Siemens is offering Omneo analytics as a service only with a focus on product design, manufacturing processes, shop floor operations and quality, and field service and maintenance. In effect, Product Performance Analytics. Data can be sourced from SCM, ERP, IIoT, and CRM products in the field and other areas. There is also a focus on closed-loop PLM, in which the as-built data is analyzed to determine compliance with as-designed data to support process improvement and optimization across the product and production lifecycles.

Conclusion
Siemens Digital Factory and Siemens PLM executives presented a range of messages that revolved around the company's digitalization strategy. Helmuth Ludwig, EVP of the Digital Enterprise Realization group within Siemens PLM Software, summed it up well when he pointed out that transformative technologies are disrupting and revolutionizing global business and creating major challenges for manufacturers. These manufacturing companies will be compelled to meet these challenges and transform product design and production methods or miss the competitive window of opportunity.

This is consistent with ARC Advisory Group's belief that, rather than reducing risk, failure to mindfully embrace the appropriate new technologies and approaches could actual increase business risk for industrial organizations by making it difficult, if not impossible, to compete with other companies in the future.

Siemens is offering its customers a holistic and digitalized industrial integration across product, process, production, and indeed, across the entire value chain. This is not an entirely new concept for Siemens, which began back with its Totally Integrated Automation strategy years ago. But what really resonates and becomes clear at this juncture is that the company has persisted with and expanded this vision beyond just automation. With Siemens PLM Software, the company has achieved a totally integrated set of design/build solutions that comprise the complete digital enterprise.

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Keywords: Digital Twin, Digital Thread, Digital Enterprise, Smart Connected Product Design, Smart Factories, Smart Innovation, Cloud Deployment, Big Data & Analytics, ARC Advisory Group.