LNS Research received an exclusive invite to attend the Siemens Xcelerator in-person launch in Germany last June. The event was anything but a typical Siemens launch, with an admitted “ego-system style” replaced by a refreshing willingness to take a leap of faith.
The live stream Siemens Xcelerator launch audience was a “who’s who” of provider and end-user top executives and marked the start of a strategic step change. NVIDIA, BMW, AT&T, Merck, Thameslink, Elvia, and Space Perspective played an integral part in presenting what an “Ecosystem in progress” could offer manufacturers:
Collaboration and innovation with access to a rapidly growing ecosystem of applications, features, and industry expertise
Transformation of operations across the value chain by combining Siemens’ unique toolset, domain knowledge, and expertise with partner offerings
Accelerated return on investment (ROI) with flexible and scalable cloud-native Software as a Service (SaaS) elements
Could the company’s bold new vision turn promises to accelerate Digital Transformation into solutions for the broader manufacturing community? Entering a highly competitive space offers much to be gained and lost. I returned to Germany for Hannover Fair this April and used the in-person opportunity to assess progress.
One thing is certain, Siemens continues to execute the strategy with no signs of backing down as the one-year anniversary approaches.
The Siemens Xcelerator approach essentially extends initial SaaS offerings with an open, interoperable digital platform to offer industrial clients an ecosystem of Siemens and partner solutions. Fundamentally, LNS Research sees Siemens Xcelerator adding the Industrial Transformation (IX) Platform Vendor Ecosystem Platform as a Service (PaaS) approach to the whole of Siemens solutions with capabilities that:
Run on private or public cloud instances and support hybrid cloud architectures
Include advanced analytical capabilities like AI/ML
Provide a no-code/low-code app development environment and/or an app store with third-party developers
Offers applications across a broad set of the IX Use Cases to include operations, assets, products, supply chain, customer experience, and the Connected Frontline Workforce (CFW)
The broader manufacturing community typically lacks the level of IT/OT systems and/or data science expertise needed to manage custom integrations and Application Programming Interfaces (APIs) and connect applications. We like the more comprehensive approach using standard APIs and transitioning from a robust Industrial Internet of Things (IIoT) Platform focus to better meet industrial needs. We see Siemens Xcelerator as Siemens recognizing the need to transform the business to keep pace within the market.
Siemens has built a portfolio from many acquisitions and a slow-to-integrate reputation. To build a comprehensive portfolio, Siemens has worked to streamline the business, reorganize internally, and integrate acquired solutions sooner. Offerings have matured over time with broader Process and Discrete manufacturing community solutions that include:
MindSphere, an IIoT platform now evolving into Insights Hub
Mendix, a low-code application development platform
Teamcenter X, a cloud-based Product Lifecycle Management (PLM) platform
Siemens Xcelerator, an open digital application development platform for customized functions and features
Industrial Operations X, grouping software, connected hardware, and an ecosystem of partner solutions for shop floor automation
I expected Hannover Fair to better show the historically slow-to-market approach shifting to a more agile approach. Competitors such as Amazon Web Services (AWS) and Microsoft’s Azure have been attracting customers with fast integrations proven to accelerate Digital Transformation. The hurdle Siemens still faces with the “ecosystem in progress” is being overly conservative and limiting the number of vendor offerings in the cloud-connected marketplace.
Accelerating the rate of open, interoperable Siemens and partner solutions available while maintaining an ecosystem of truly seamless solutions is critical to compete with the ferocity of Hyperscalers.
Industrial clients have struggled to turn mounds of data into a common digital thread across the value chain and software systems. Manufacturers face the daunting task of navigating each vendor and each solution to select the best fit for each organization’s Industrial Transformation journey.
One significant Siemens advantage is leveraging digital journey learnings from their manufacturing plants to customers. The domain knowledge and expertise are uniquely suited for supporting industrial clients in evaluating capabilities across the portfolio and creating an effective IX strategy. The trusted industrial software provider and partner reputation has been built through strong partner strategy and remaining resilient with the expertise to refocus.
Where traditional competitors have backed away, Siemens has chosen to commit to a triple-leg parlay. Siemens Xcelerator has essentially doubled down and allows manufacturers to leverage from a variety of comprehensive solutions regardless of the IX architectural path chosen:
Siemens Xcelerator stands today as both a partner and competitor. When in-house and acquired cloud solution trial-and-error didn’t connect customers with external suppliers, expertise, and service providers, AWS was announced as the first-choice cloud platform to facilitate flexible cloud-based analytics. While building the ecosystem is essential, it is equally important to see how Siemens will manage competing solutions and the addition of application providers previously willing or unwilling to partner to continue growing the customer base.
The challenge with the aggressive growth in this space is proving Hyperscalers do not have better positioning to create the critical mass necessary for a thriving ecosystem. Siemens continues to do what many cannot with a portfolio capable of supporting diverse needs across industry verticals. However, it is more likely for pure-play software providers and large industrial companies to struggle in this highly competitive space to match the funding levels of others that have entered bring.
Siemens has long since proven itself as a trusted partner capable of providing digital solutions. Current Siemens customers would be especially wise to take a good look at how Siemens Xcelerator offerings can supplement or replace existing solutions.
Be mindful of the platform’s ability to provide open, flexible vendor-agnostic solutions. Users should actively monitor Siemens’ willingness and capability to ensure seamless integration with easy-to-use, low-code software solutions essential to transformation and advancing digitization.
Determine the level of out-of-the-box and/or customized solutions needed. End-users should consider internal resources and whether a provider can provide the value and scale required by evaluating customer case studies and relatability.
Siemens' transformation continues, even appearing unphased when AWS announced industrial purpose-built services and solutions, the first Hyperscaler out of the gate. LNS Research believes Siemens would better compete against quick Hyperscaler growth by considering the following:
Reevaluate the cautious approach of trickling partners onto the platform. Siemens must accelerate bringing the ~4,000 partners into the “ecosystem in process,” as the Hyperscaler’s ability to innovate and build large ecosystems rapidly should not be underestimated.
Messaging is critical to support customers evaluating multiple vendor portfolios. Siemens must help customers digest the sheer size and scope of the broad portfolio and multitude of solutions to scale applications quickly and widely.
More end-user success stories to prove quick ROI are needed. Siemens can differentiate offerings and build the customer base by increasing the number of industrial transformation wins that are relatable and show minimal sweat equity.
Better leveraging deep industry expertise and domain knowledge for broader appeal. Siemens must continue to create and maintain open, interoperable solutions that can scale across industrial operations with less frustration.
Siemens’ broad and comprehensive vision is being executed faster than the market expected, but soon showing increased agility will be critical to future success.
LNS Research recaps the 2013 Siemens PLM Analyst Event in Boston, MA and advancements in Siemens' PLM offerings.
LNS Research discusses the highlights of Siemens' PLM Software conference, including the company's simplified user experience and PLM-MES integration
The LNS Research analyst team shares insights from Siemens 2014 PLM and MOM Analyst Conference in Boston, MA.
