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Siemens PLM Software's leadership on stage at the company's 2017 Industry Analyst Conference.
Siemens PLM Software's leadership on stage at the company's 2017 Industry Analyst Conference.

Siemens Doubles Down on Digitalization with Acquisitions

$10 Billion in 10 Years

A decade of Siemens PLM Software Acquisitions:

  • 2007: UGS
  • 2011: Vistagy
  • 2012: Perfect Costing Solutions, Kineo
  • 2013: LMS, TESIS
  • 2016: CD-adapco, Polarion
  • 2017: Mentor Graphics, TASS International, Infolytica
Many technology vendors have been working phrases like “industrial Internet of Things,” “digital twin,” “digital thread,” and “digital disruption” into their presentations for years now. It can be tough to know which are paying lip service to buzzwords and which are truly committed to the ideas of connecting digital designs and physical products up and down the lifecycle. One way to separate the hype from reality is to follow the money.

At the Siemens Industry Analyst Conference in Boston earlier this month, Siemens PLM Software President and CEO Tony Hemmelgarn said the company had invested $10 billion in digitalization efforts over the past 10 years. A big chunk of that change came from its acquisition of Mentor Graphics that closed this year, for what amounted to an enterprise value of roughly $4.5 billion. That was after last year’s acquisition of CD-adacpo for $970 million. Just before the conference, Siemens announced it is acquiring TASS International, which will boost its autonomous driving simulation and test capabilities, and just last week announced it is acquiring Infolytica, expanding its simulation suite into electromagnetics.

"Our biggest challenge is customer inertia," said Siemens President and CEO Tony Hemmelgarn.

“Our biggest challenge is customer inertia,” said Siemens President and CEO Tony Hemmelgarn.

“The integrations are going extremely well,” said Hemmelgarn. “CD-adapco, for example, has just been a great merger, bringing the team together to serve our customer base.”

One result of that teamwork is Siemens PLM Software’s Simcenter portfolio that was announced last summer. It combines system simulation, 3D CAE and test applications. CD-adapco products are part of the Siemens Simcenter Portfolio, which a company blog post called “a suite of simulation and test solutions for predictive engineering analytics (PEA). PEA is the application of multidisciplinary simulation and test, combined with design exploration and data analytics, to create a true-to-life digital twin of products.”

The Siemens Simcenter Portfolio combines the company's simulation software.

The Siemens Simcenter portfolio combines the company’s simulation and test software.

The Race for a More Identical Digital Twin

The “digital twin” term is still fairly new. It’s been around in the aerospace industry since at least 2012, but gained steam when it took center stage at PTC and Dassault Systèmes conferences in 2015. Siemens, PTC and Dassault Systèmes all have different approaches to the digital twin and everything the term entails. From Siemens’ viewpoint, simulating an entire system, all along the product lifecycle, enhances the value of a virtual representation of a physical product.

“We’re going to beat to death this idea of the digital twin until we get it across properly,” said Hemmelgarn at the conference. “Electrical, mechanical, software—you’ve got to be able to represent all of those areas to get the true value out of the digital twin.”

Hence the acquisition of Mentor, which expands Siemens’ digital product design portfolio into integrated circuits (ICs) and embedded software. At the conference, Hemmelgarn admitted fully integrating Mentor’s solutions would take time because of the company’s size. Mentor, which was founded in 1981 by former Tektronix employees, now has about 5,700 employees. Hemmelgarn said the companies have similar cultures. “We think alike,” he said “and there’s a lot of good progress we’re making together.”

Siemens breaks down the value chain into five parts.

Siemens breaks down the value chain into five parts.

Jan Mrosik, CEO of the Digital Factory Division, Siemens AG, provided some insight into that thinking when he took the stage to share how the digital twin fits into the company’s Vision 2020 plan for the digital enterprise. The vision draws from the parent company’s experience with factory automation. It takes the entire value chain into account, digitizing design, production planning, detailed production engineering, production automation and services.

That may seem like an ambitious vision, but Mentor’s CEO Wally Rhines has seen the same type of automation take hold before. “When I began in the semiconductor industry, design was all manual, and electronic design automation evolved in the same pattern with a virtual twin,” he said at the conference. “Today, every integrated circuit is totally designed virtually and verified virtually, and EDA (electronic design automation) takes a role as well in the manufacturing of those products.”

Executing the Vision

"Those who master and apply virtual design, simulation, and validation and verification will be the winners," said Mentor CEO Wally Whines.

“Those who master and apply virtual design, simulation, and validation and verification will be the winners,” said Mentor CEO Wally Whines.

Reading the digitalization writing on the wall isn’t difficult now that computing power has become more accessible, connected products have become ubiquitous and manufacturing continues to be more automated. The merger of those mega-trends is a foregone conclusion that is driving everything from the artificial intelligence that enables autonomous vehicles, to the connected robotics that the factories of the future are being built upon, to the integration of sensors and augmented reality that will revolutionize the maintenance of the products that comprise the Internet of Things.

But the devil’s in the details, and many of those details are the domain of design engineering teams. How can design engineers take on some of the simulation tasks currently burying specialized analysts? How does data from the factory floor and the field get back into the design cycle to improve future iterations? How can a design engineering team access all of the software and computing power at their disposal in an efficient and cost-effective way? After all, a digital twin is only as good as the simulations that virtualize it, and product lifecycle management only works if people make use of it.

“Accurate modeling of components and connectivity is required to optimize system performance, cost and other capabilities,” said Rhines in his keynote address at Mentor’s Integrated Electrical Solutions Forum for the automotive industry that took place near Detroit two weeks after the Siemens Industry Analyst Conference. “Those who master and apply virtual design, simulation, and validation and verification will be the winners.”

Simulating early and often helps Fiat/Chrysler Automotive resolve issues earlier in the cycle, when it's more efficient and cost-effective to fix them.

One company embracing Siemens’ vision for digitalization is Fiat/Chrysler Automotive (FCA). Gilberto Ceresa, chief information officer of Europe, the Middle East and Africa (EMEA) and Latin America for the company, took the stage at the Siemens Industry Analyst Conference to share the company’s experience with Teamcenter. Simulating early and often helps FCA resolve issues earlier in the cycle, when it’s more efficient and cost-effective to fix them.

Winning will require software vendors to make the vision for the digital twin easier to implement with integrated, open packages that have entry points for one-man design firms and global enterprises. At the same time, end users need to be willing to break away from the design-test-repeat status quo, preferably before they’re forced to respond to competitors.

“Our biggest challenge is customer inertia,” Hemmelgarn said. “Getting them to embrace all the technology we’re talking about. There’s a lot here. There’s a fear of change. What we’re finding is, the ones that really embrace it and take it seriously are able to take insight and turn it into action to provide value for their companies.”

For an overview of Siemens’  Vision 2020 initiative, watch the presentation Siemens’ Mrosik gave at the recent B20 Summit 2017:

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About Jamie Gooch

Jamie Gooch is editorial director of Digital Engineering magazine.

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