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Taxal – Siemens – Analyst 2018

Taxal – Siemens – Analyst 2018

[00:00:06] Hello, my name’s Alan Behrens from Texas. And what we’re going to do today is we’re going to talk about the Siemens Industry Analyst Conference that was held recently in Boston, USA. I’m joined by two esteemed colleagues. I’ve got Monica Snitker from Schnittke Corporation. Monica I. And I’ve got Jim Brown from Tech Clarity. Hi, Jim.

[00:00:31] Hello, Monica.

[00:00:33] And we’re just going to have a casual conversation to give you some some views and observations about what we saw, what we thought and where we think things are going with regards Siemens and Siemens PLM software. Let me hand over firstly to Monica just to explain herself and her company. Monica.

[00:00:55] Thank you, Alan. I’m a naval architect. My first job was at Bath Iwerks, a shipyard, and it was there that I first was exposed to the whole idea of CAD and a very early, primitive kind of way that kind of led to a career ever since then in technologies like computer aided design and all of the things that have come after that. So there’s CAD, there’s simulation, there’s plenty. And my focus and my company’s focus is about the business value of these technologies. A long time ago, I was a software developer and I worked with a guy who did really cool things for the sake of the coolness of them. They had no commercial potential whatsoever. So we’re trying to stay away from that. We’re trying to figure out how these technologies can be used for business benefit. Thank you, Jim. How about you with that focus?

[00:01:42] Right. And actually, interesting, like interestingly, like Monaco, our company clarity, our tagline, it’s making the business value of technology player. So we’ve seen a lot of the same thing where oftentimes people focus too much on the technology and not about what companies can accomplish with it. How can they better innovate? How can they better run operations to drive top and bottom line benefit? So that’s why we get along so well. One of the you know, in terms of my background, I started as a mechanical engineer doing some manufacturing engineering, but then moved into enterprise systems before moving into any of the directly engineering software supply chain, ERP, that kind of thing, and then got back involved in the engineering and innovation side. When we started to see this merge of enterprise and enterprise and engineering, things come together, which is culminating now in digitalisation, which is pretty exciting.

[00:02:39] Great, great. So I mean, just to to Pannovate from my side, Alan Berends non-taxable. My business is again about the interface of information technology and industries and particularly the industrial side and the differences between the industries like Jim and Monicker. I’m very keen to support the ethics of value for money and value propositions, and I’m keen to make sure that the vendors understand what customers want and customers understand what’s available to them to improve their businesses.

[00:03:15] So so let’s crack on from there. I think the first question I’ve got to add to our little forum is what are the impressions that we had from the event there were just to give a bit of background to those listening. There are about 200 people there, probably 100, 100 plus of the people. There were industry analysts and press from all around the world held in in Boston, Massachusetts. So from our point of view, why don’t we start off with yourself. Monica, what were your impressions of the events?

[00:03:51] I think that the event has changed a lot over the years. I think that it started out as very much this is what Seamans PLM technology is and what it acquired over the years as each individual acquisition was kind of brought into the fold. I thought what was really cool about this year’s event is that it was really about Seamans, not so much about the specifics of Siemens plan. It was about how Siemens AG is using Siemens PLM technology in many parts of the business to try to achieve business value. And I think that the PLM business is ever more tighter in how it’s enmeshed, intertwined into the company as a whole. And I think that’s a really good thing. I think it was a very exciting thing to see.

[00:04:32] All right, Jim, how about yourself?

[00:04:35] Yeah, you know, one of the things that I love is that I think Siemens is very generous with bringing their executives and sharing with us directly their updates and their strategy. It was great to see some of the leadership also from, you know, L.M. Mentor starting to join and take leadership roles. You see this broader, more integrated organisation coming across. Also some some key leaders from Siemens ideas. As Monika mentioned, one of the really cool things this time is, you know, the format instead of being focussed on, you know, let’s tell you about all the updates to the software, the software, the software, like our all of our focus on the business value. They focus on initiatives this year and started talking about things like autonomous vehicles, of talking about things like Iot and digitalisation that were industry initiatives and then talked in that context as opposed to the context of their own software, which made it much more interesting and valuable.

[00:05:38] Yeah, I agree. I mean, I definitely got the the news about it’s about it’s about the initiatives and it’s about solutions. It’s not about products. And in fact, Tony Hamilton, the CEO, put up a slide, which we put up two slides. One was the before. One was the after. One was a group of acronyms like and Ploughman and CIA. And the other one was a solution set with buildings and structures and things like that. So just to make sure we were clear that today was a divergence from product to solutions and initiatives, and I liked that as well. I think it was a good thing for them to do because that’s the way customers think of these things, isn’t it? I mean, customers think of their problems, not the solutions they got to buy to. They think of their problems first. We say not what they’ve got to do to address them and worry about the problems. What about the particular discussions? Obviously, there were conversations, as Jim you mentioned, from young Brozak and from Tony Hamilton and the whole set of executives from Siemens, PLM and the Digital Systems Group. Did any of them catch your ear or eye?

[00:07:03] Oh, absolutely. When I thought, sorry, Jim, what I thought was absolutely fascinating was I think it was young Rusick, the CEO of the Digital Factory Division. So the parent part of Siemens PLM within Siemens, he said that Siemens as a whole is now one of the top 10 software companies in the world and that it has over 25000 software engineers. I honestly had no idea that it was that big and that focussed on things that are outside of its traditional realm, which is electrification and power generation and motors and industrial control systems, things like that. So I think we’re seeing a sort of reinvention of what Siemens has historically been to address a much more modern era. So I thought that was brilliant. And then that, excuse me, sort of carried through the entire week with more presentations about what they’re trying to do, as you pointed out, and to solve specific industry needs with a combination of software and hardware and services and how that all fits together depending upon what the problem is. So I thought that that was a terrific way to start it off.

[00:08:08] Yeah, Jim?

[00:08:10] Yeah, I totally agree. One of the things that really struck me was the integration. You know, we had executives there from, you know, electronic aviation, electronic aircraft, great, great talks that we heard more about Siemens Amberg plant, which is a fully automated, great example of a digital plant and talked about ways that they’re getting, you know, a lot size of one at extreme efficiency by using the same force, but also by being a digital manufacturer, being a digital enterprise. And one of the things that I think came across in that integration very clearly was the focus on the digital footprint. And I think digital twin is a pretty profound concept right now. And in digitalisation, what we heard was a lot about how much more complete that is now with the electronic side, both in terms of design and simulation with mentor, but also seeing so much more involved in that. You know, for example, just coming from coming from having the real time feedback from industrial Internet of Things and hearing how hearing how things like mine sphere are playing and and that that showed, I think, the strength and the breadth of all of Siemens coming to bear with Siemens PLM solutions. And as opposed to just the software side, I agree with Monaco becomes powerful.

[00:09:42] Yeah, I definitely agree. And there’s some great demonstrations, especially those that demonstrated the digital twin specifically with all the machinery segment. So they showed a machine with its virtual to an absolutely incredible in fact, you know, the way they did it with people running between rooms just to show that it was truly virtual. It was actually quite elegant. I mean, I want to touch on a point that you mentioned. The whole topic of electrification was was quite prevalent in the in the conversations we heard about electrification of vehicles, the autonomous vehicle. We heard about electrification of aeroplanes and the work that the Siemens is doing as a company, not specifically on the software side, but as a as a service industry towards electrification of aeroplanes in conjunction with, for instance, Airbus. And suddenly we heard about the Eberts sort of concepts in the electrical boat. I mean, actually was quite interesting to find out how all these threads are somewhat common, albeit they are different industries. I mean, from my side, there were two things that certainly I thought were very important as well. You know, one was Tony Hebel gone talking about just quoting here, the most profound technologies are those that disappeared. And that was a quote from Mark Weisser from Xerox PARC.

[00:11:08] And, you know, that to me is exactly what I think is going to happen in the future. People don’t want to be going through technology and fighting technology to achieve their objectives. They want to use it to achieve their objectives without having to wrangle with computer science or language or or interfaces. So making it invisible is actually an interesting way of looking at it. And I think that came out in one of the most recent acquisitions, which is Mendax, which is the low code environment they’re in the process of acquiring. And that that particular technology, you know, we’re talking about 10 times improvement in productivity for development of software applications is actually amazing and that that gets rid of some of these barriers. That we see that sort of artificial barriers we’ve got to create because there’s no way of us being able to achieve our objectives as computer science, should we say, or technologists.

[00:12:13] I think that Mendax, if I may jump in, I think the Mendax acquisition is going to change a lot of things for Siemens and for its customers because it allows companies to take back it in-house. The development of these apps, whether they’re Iot in my sphere apps or something that has to do with how one interacts with the sales force on Wall Street or how how a customer might interface with the utility, that it doesn’t really matter what the application is. But the point is that companies will themselves be able to do these apps, which they’ve now outsourced to an I.T. partner, because they just don’t have the expertise. The idea that they can bring this knowledge back and keep it inside their own firewall, if you will. I don’t mean firewall in the real sense of firewall, but keep it keep that knowledge within their own company, I think is a really big deal because you want that knowledge to persist. You don’t want to have someone who’s a contractor create this app for you. Then they go away and you don’t know how to create the next person. So I think it changes a lot of things. And I think from what I’ve seen of the demonstration technology, it is really fast and really easy. Yeah, yeah. I don’t know about the tech, but it is really something.

[00:13:23] Actually one of my favourite things about and I don’t know, memex. Well we all learn more in the near term. But you know, in terms of model based development, a model based code, you know, I spent time with that before. And one of the one of the exciting things about it is not just the the fact that it’s faster is the fact that it is it is business oriented. So you can have people that don’t necessarily know, you know, Python or, you know, they can maybe spell, you know, e-mail, but they understand business logic and they understand the relationships between data and model based approaches can give them the opportunity to to really contribute at that level and develop applications from a business perspective. So to me, that’s pretty that’s pretty important. I think the comment about having software or capabilities that disappear, being most powerful, I thought Team Centre was the perfect example of that right now because we didn’t hear a lot about Team Centre, but it was behind everything that was happening. And what we saw was just further and further integration, collaboration, coordination between all of these different applications, you know, electrical, mechanical software and no interfacing teams and our teams and our team centre. But at the same time, we recognise that that’s the platform. We recognise that that’s what’s pulling everything together behind the scenes. And the fact that they don’t have to mention it anymore point out, hey, this works with this and that works with this. And it’s because of the common background. The fact that that just is is really a testament to exactly what you were saying.

[00:15:05] Yeah, I mean, I think, you know, for me, you know, on top of that, this connectivity they’ve got between their applications, I mean, it we know we’ve been in the software industry for for long enough to understand how difficult it is to connect different applications. Obviously, one of the one of the enablers is is standards. But if you have the applications yourself, it’s so much easier because you can bypass a lot of the delays that the standards organisations put into into that sort of system. So, you know, it’s particularly interested in how they connect all their equipment, their relays, the controllers, the edge devices, their I.T. system through to their manufacturing systems. I mean, you know, you talked about Amberg. I’ve actually been there. It’s fascinating that, you know, Siemens is one of the few companies, if if not the only company that actually sort of dog food. So, I mean, they talk about their own one million assets that they have within their Iot sphere that they that they look at within Siemens alone. I mean, you know, things like that help them understand the problems of their customers. And I think that’s a valuable asset that they’ve got. And they just started talking about it. You know, we’re doing it. The aircraft was a classic again. You know, they they’re doing it themselves.

[00:16:30] They can learn from that first hand and that helps them with their clients. And I think that’s a that’s something that they’ve not played towards in the past. But they’re certainly doing it now, which is good.

[00:16:44] But sorry, Monica, I was just going to say, I think those internal customers can be pretty rough on the software developers in that particular case, you know, from talking to the aircraft team and the electrification team that’s doing something with 3D printing, the power generation team that’s doing. Something with 3D printing, they have pretty stringent demands on the software development team, and so I think that by the time the software actually hits the broader marketplace, these early adopter customers have made it be something really useful.

[00:17:17] Yeah, sorry. I mean, I agree. I mean, I used to work for HP for many years and I worked on their embedded systems side. And, you know, we used to use HP as a as a reference customer, as an alpha customer, and they were absolutely unforgiving, writes an extremely demanding. So, you know, I know firstly how valuable they are as a reference, because if your products are good, as obviously Seamans, are they well respected in the industry, then it reflects well on your software and they can give you some very, very valuable feedback. And they have no qualms about telling you how good or bad your software is. No politics involved.

[00:17:58] Alan, if I can add one thing to it with the integration, one of the things that really did strike me, you know, all the hardest things to integrate between mechanical and electrical and software is the people, right? I mean, it’s always the carbon that causes the trouble. And and so one of the things I was really impressed with is we we’ve seen not just the integration of software, but we’re seeing real thought leaders and real strategists come in that aren’t just, you know, the old school of the people that acquired all these different companies. But we’re seeing new talent come in, take leadership roles and really set and drive new direction at Siemens as a whole. And and that kind of integration to really get the benefit of the human talent that comes in through those acquisitions. That’s hard to do. And I’ve seen some really some really impressive things that caught my eye.

[00:18:57] Yeah, definitely. I mean, you’re right. I mean, we’ve I’m sure the two of you I mean, Jim, you’ve just mentioned it yourself. I’ve seen the companies that we we work with and we’ll work with somewhat similar organisations, many of the same organisations. And they buy they perform acquisitions. They’ve got huge companies. They buy in. They’ve got small companies, they buy in. And there’s always this degree of friction with the new organisations. And it’s difficult to integrate when you got degrees of friction. I think Siemens is I suppose to their credit, when you speak to their acquisitions, the people are delighted and enthused. I mean, you don’t see the sort of, you know, mass exodus, you know, after after a year or two. I mean, we see yellow and live and, you know, was there he’s been with with Siemens for quite some time after the Annemasse acquisition. He’s just you know, he’s a delight to speak to and very enthusiastic about what they’re doing. And that shows how well they’re actually managing some of their acquisitions.

[00:20:04] I think the people being acquired, the only opportunity, they see themselves coming in from whatever software in the case of most of the Siemens PLM acquisitions, their software companies, they see themselves coming in. And this huge potential across this, what, 100 million hundred billion are companies? Huge, right. So they see where they could have impact given what they know and what their skillset.

[00:20:28] Right. So so I suppose to sort of conclude, because we’re coming to the end of our time, give us, you know, just a couple of minutes on, you know, your views about what you think is is Siemens direction forward? What are your thoughts as you’ve exited the conference? Jim, why don’t you start us off, OK?

[00:20:51] OK, I’ll try not to pick out a good point, because you’ve always got two great things to say.

[00:20:57] You know, one of the one of the things that I definitely took away is the focus on digitalisation and the digital twin and that they really want to not just pay lip service to that, as, you know, a new marketing term, but they’re really taking it seriously and looking to figure out how to get the absolute most business value for their customers out of it and their ability to create a complete digital twin, you know, not just the mechanical side, but also understanding the, you know, the electrical side, the software side, and then even simulating really up at the systems level, having that sort of functional twin to me. You know, that was that was a strategy and a direction that I was excited to hear about. And I think it has a lot of legs to it. I think there’s a lot of innovation to go in that area.

[00:21:49] And yeah, Monica, I’ve sort of got to if I may I’m the first one is that I really like the growing relationship with Bentley. I think that it allows. So what they’re doing is. They’re investing an additional 50 million euros together to advance a joint product portfolio, which integrates Bentley’s very strong infrastructure and focus with some of the technologies that Siemens brings to the market across its business. But the thing that that was announced at this event was an integration between Project Wise, which is Bentley’s drawing and project management software and team centre, which, as Jim said, is the backbone for many things that come out of the Siemens PLM Organisation. I think that’s going to be really exciting and allows both companies to address things that they currently can’t really do. So that’s one. And then sort of focussing more on the traditional PLM parts of the business. I really like the whole idea of shift left. That’s a software term that basically means do your testing as you’re developing your software product. And when Siemens talks about it, they mean that there should be generative design, which does simulation in the earliest stages of whatever it is that you’re trying to bring to market. But the idea of simulation as early as possible, no matter what kind of discipline you’re in, I think is something that’s long overdue. We need that focus and we need to start doing that as a way of creating bigger business value from these technologies.

[00:23:19] My comments just to conclude that it is firstly is the connectivity that they’ve been able to establish and continue to establish. And I think probably more importantly, is this bit about making sure that technology is invisible but augmentative. So I support what we’re doing and delivers a better result instead of getting in the way of of us mere mortals.

[00:23:46] So I think on that, let’s conclude. I’d like to thank you, Monika and Jim, for joining me today, I hope. It was interesting to those who are going to be listening to this. If you want to get in touch with any of us, we’re going to have our names, email addresses, et cetera, on the Web page that we’re going to post this video. Thanks very much for your time. And we look forward to speaking to the next conference.