In the world of industrial automation and software, the past several years have encompassed more innovation, disruption, and transformation than perhaps the previous 20 years combined. With the emergence of Industrie 4.0, Smart Manufacturing, and the Industrial Internet of Things; it is often hard to tell where the hype ends and reality begins. In today’s day and age of Silicon Valley unicorns, it is safe to assume that most vendors spend more time talking about what they hope to do in the future than what they can do today; but not Siemens.
Siemens is one company that has traditionally avoided such forward looking statements, as has many other German and engineering centric companies; staying true to conservative roots and talking almost exclusively about shippable product and real customer successes. Although LNS Research believes it is important for vendors to do what they say and say what they do; as more and more industrial companies also become digital companies, embracing a more flexible and experimental approach to delivering new products and services to the market is critical for enabling innovation.
In a recent blog post LNS Research challenged Siemens to push the Industrial Internet of Things (IIoT) strategy forward, talk about the innovative IIoT work going on behind the scenes, and further extend the MOM, PLM, and Automation vison to enable Digitalization. The Siemens Innovation Day was the answer to these challenges.
A New Culture of Innovation at Siemens
On December 8th 2015, at the historic Deutsche Museum in Munich Germany, Siemens held a press and media event highlighting past accomplishments and more importantly the company’s future direction for innovation management and enabling Digitalization. The event was kicked off with compelling presentations by CEO Joe Kaeser and CTO Prof Dr. Siegfried Russwurm. It was then followed up by a number of additional presentations by other Siemens executives, including Anton Huber CEO Digital Factory division. Although the list of topics of the day were broad, including additive manufacturing, autonomous driving, and power highways; three announcements were of particular note and worthy of additional discussion:
- Sinalytics – At the event Siemens announced the launch of Sinalytics to the broad market, representing Siemens move into the Big Data analytics space, a critical component of the IIoT Platform. Siemens’ approach is unique as compared to other vendors. The platform will be a shared services platform used by all divisions at Siemens, including Digital Factory. The main engine will be proprietary, but there will be open APIs and the potential for internal and external users to build integrations and applications on top of the platform. Siemens already used the platform internally and has 300,000 devices connected with the ability to analyze data locally or at the data center, and also mash up other data types like weather or schedules. However, the real story is Siemens’ concept of offering Sinalytics as a Digital Service where the data scientist is included. This is a potential solution to the challenge LNS Research has identified as one of the key inhibitors to the use of big data analytics in manufacturing; lack of skilled resources.
Sinalytics represents a major change in the Siemens strategy and is a well thought out offering. The challenges Siemens will have to address quickly to see early wins includes a demonstration of a robust and open roadmap that gains the confidence of customers and the ability to offer services that have enough local customer process knowledge to deliver a quick ROI. Longer term, Siemens will have to develop a strategy to acquire and retain enough Data Science expertise to evolve the platform over time, create big data expertise within all of the different divisions, and develop a services team that delivers value to customers. LNS Research is looking forward to a more in depth briefing on Sinalytics but for now more information can be gathered here.
- Web of Systems – The Web of Systems is Siemens’ new framework for understanding the IIoT. The concepts proposed by Siemens, not surprisingly, focuses on the need for combining the virtual and real worlds, the importance of combining hardware and software, the direct connection of devices to the open internet, and the importance of local distributed intelligence at the asset level. There is not much to criticize with what Siemens has presented, any industrial company that built these concepts into a model for Digital Transformation would likely be well ahead of competitors. However, it is a very Siemens centric vision and does not stress the importance of an open environment that benefits mutually from edge as well as cloud capabilities for bringing together entire ecosystems of providers. Over time it will be interesting to see if this vision of the IIoT is broadly adopted and used both by internal Siemens divisions as well as customers.
- Innovations AG – Siemens has been focused on the start-up market for over 15 years through the corporate venture division. At the event, multiple success companies were highlighted that had received early investment from Siemens, including thinkstep (formerly PE International and a successful EHS and Sustainability software vendor) and Sternico (an APM vendor focused on reliability and IIoT). It was clear Siemens believes this is not enough.
At the event, Siemens highlighted a number of important changes when it comes to the business of innovation management. First and foremost was the announcement of the creation of Innovations AG, which will be run as a separate company with the mission to not drive financial gains but rather foster an environment of innovation. In support of this new business and broader goals for a more innovative culture, Siemens also announced an increase in R&D spending year over year for 2016 by €300 Million to €4.8 Billion with new research centers in China and Munich.
LNS Research Take
At the Siemens Innovation Day, all of the executive presentations went well beyond just the art of the possible today and, when viewed holistically, represent a dramatic shift to a more open stance for marketing future directions to the market. This is a welcome change to the company and, in an IIoT world, is a critical transformation that Siemens must make to maintain a leadership role in the new economy.
Unfortunately, culture change is difficult for any organization and a press conference with casually dressed executives is only a start. It is important that over the coming months and years this new posture flows down and through to every facet of the organization. Over time, Siemens will also have to continue to push this new stance even further. Just as consumers push back on lock-in from Apple, Google, and Amazon as each compete for leadership in markets like smart TV and entertainment; industrial customers will push back on Siemens, GE, and Rockwell Automation if similar lock-in is pursued.
Overall, the Siemens Innovation Day can be counted as a success. To win business long-term a company needs to articulate a compelling vision and this is Siemens first senior level foray into doing just that. Hopefully, when we look back on this day several years from now it marks a major turning point in the company’s approach to innovation and how Siemens will work with customers to enable Digital Transformation.
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