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Siemens + SAP = Teamcenter Squared?

Siemens + SAP = Teamcenter Squared?

Jul 20, 2020 | Hot Topics

Last week Siemens and SAP announced that they would be connecting Siemens’ Teamcenter with SAP’s supply chain and asset management solutions to, as they said, deliver integrated end-to-end software solutions across product lifecycle, supply chain and asset management. But this, further down in the press release, is the real kicker:

SAP will offer Siemens’ Teamcenter software as the core foundation for product lifecycle collaboration and product data management. Siemens will offer SAP Intelligent Asset Management solutions and SAP Portfolio and Project Management applications to maximize business value for customers over the entire product and service lifecycle and enable new collaborative processes between manufacturers and operators.

So many questions — and a few answers after a briefing from SAP and Siemens to the media, and some follow-up questions via email. There’s a lot we don’t know yet, and in part, it’s because the partners don’t know. As with all of these loose associations, the parties want to take baby steps, see how that goes, and then decide what to do next. If all goes well, the relationship may expand; if not, well … So, what do we know?

Why now?

It doesn’t sound like there was a single motivating factor, but the culmination of 10 years of talking about it, checking out the scene in a general way. Often, these relationships come about at the request of a specific customer or to meet a competitive situation — that doesn’t seem to have happened here. Instead, it appears that late last Fall, SAP contacted Siemens with more serious intent than had been shown before, the companies entered into non-disclosure agreements and stated doing due diligence. From what company representatives said during the briefing, it appears that this partnership has visibility at the Board level of both companies and that both see this as a strategic necessity. So no specific reason for “now”, other than “the time is right”.2. What happens to SAP’s PLM solution?

What happens to SAP’s existing PLM solution?

And to all of the partners who have built businesses around it? And to all of the customizations clients have built over the years? It’s not 100% clear — SAP says it will continue to support and enhance the product but that it will actively encourage its PLM users to consider Teamcenter. SAP also said that the customers and partners who were contacted about this plan reacted positively — but the hedging seems smart to me. You don’t want to kill, by press release, a pretty big revenue source or destabilize a solid partner network and sales channel. Just in case the Siemens partnership doesn’t pan out (very, very low odds on that, IMHO), you want to keep this in your back pocket.

What are the plans for the first joint solutions?

The first priority, naturally enough, is joint customers — auto and aero accounts that use Siemens in the design/manufacturing parts of the business and SAP in the manufacturing/office parts. For them, the logic of this combination makes a great deal of sense. As they said in the press release,

SAP and Siemens will … combine their technologies … incorporating customer insights into product development through a comprehensive solution, from product design to service and asset management. As a first step in the partnership, SAP will offer Siemens’ Teamcenter software as the core foundation for product lifecycle collaboration and data management and Siemens will offer SAP Intelligent Asset Management and SAP Portfolio and Project Management software.

Just making those integrations easier and more standardized is a clear win — rather than each customer (or consultant) building the bridges, SAP and Siemens will do it, removing headaches and expense.

How is this going to work?

From the sales end, SAP will sell Teamcenter and Siemens will sell SAP’s asset management and project management solutions. But to be clear: the companies DO compete in some areas and will continue to do so where that makes the most sense. In other cases, say where both Teamcenter and SAP are installed, they’ll be co-selling.

I’m more interested in the R&D behind all of this. Siemens’ Joe Bohman on the analyst call said that there are already 5 to 10 teams working to address the first points of integration — and he mentioned as an example the fact that both Siemens and SAP offer configuration management solutions that aren’t consistent with one another. One early priority, he said, is that these solve the same way. SAP’s Keith Zobott added that the first set of projects focus on foundational items — like managing the bill of materials lifecycle, change processes, product structures, and so on. In subsequent waves, teams will look at more areas where they can add to the ultimate goal of creating and managing the digital thread of any particular product or asset. And, of course, he added, after that foundation is solid, they’ll ask customers what they want to see, next.

So, is this real?

Yes. From what I know of the Siemens/Bentley partnership, this is very real. There’s money committed to these projects (though we don’t know how much) — to R&D, to go-to-market, to ensuring that this whole thing results in products that make customers’ journey to digitalization go more smoothly.

But there are still many things to work out. What happens to older SAP installation? To companies that want to try Teamcenter X (in the cloud) but use SAP on-prem? Will the SAP+ANSYS partnership fall apart, given that SIemens also has a significant simulation portfolio?

There are also significant competitive questions. For example, what happens to the Teamcenter integrations with other ERP systems? Say, Oracle, for example — I’ve asked if Siemens’ arrangement with SAP is exclusive and will update if I hear back — or SAP with Hexagon’s SmartPlant/SDx, as just one example, in the process industries. But given the timing of the discussions, it’s clear that Siemens knew that it was going to announce this partnership when it buddied up with IBM’s Maximo for asset lifecycle management. All of the hype around digital twins, digital threads, applicability across many industries, and domains means, I think, that we’ll seeing more of these announcements.

Does this make sense? Is this a good idea?

Oh yes. If we look at the cumulative spend by joint customers to connect Teamcenter and SAP, and then to manage those connections — yikes. That alone makes this worthwhile. But this is about the advantages customers can reap when they better connect the enterprise to product-related processes. Better, smarter supply chain management. Everyone working from the same BOM but tailored to their specific needs. Consistent configuration management. It all sounds easy — but it’s not. These are silos built in many organizations, often over decades, that need this outside push to digitalize what they do. But, as usual, we’ll need proof: many eyes are on the first joint releases. Stay tuned!

Title image is from https://www.pxfuel.com/. And requires a note/question: why do all of the images I could find to represent a business partnership depict men shaking hands? Women (and people of color and disabled people) enter into partnerships, too! Ugh.

Super-quick: Siemens acquires Avatar Integrated Systems to add to Mentor portfolio Here we go: MuM starts PLMish earnings, Q2 revenue down 9% y/y
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