Siemens weighs in on 2020 and 2021 — and is optimistic
Last month, I was fortunate enough to speak with Tony Hemmelgarn, CEO Siemens’ Digital Industries Software division. Mr. Hemmelgarn oversees much of what we think of as Siemens’ PLM business, with brands such as Teamcenter, NX, Simcenter, Tecnomatix, and Mentor (now rebranded as Siemens EDA), but also other offerings such as MindSphere and Mendix.
We hear so much from Siemens’ PLMish competitors during earnings season that I wanted to get Mr. Hemmelgarn’s take on the same topics, starting with what happened in 2020. Mr. Hemmelgarn told me that Siemens Digital Industries Software had a good 2020, that the business grew, even in a very tough year. He said that “Electronic Design Automation (EDA) grew substantially. Integrated circuits were a big part of that growth, but electrical systems, printed circuit boards (PCBs) all contributed. We did fairly well in automotive and aerospace, even in the slowdown, in part because of our abilities in electrical systems and wire harnesses”. (See here for my recap of what the parent Siemens AG recently said about how important the EDA business is in the overall picture.)
Mr. Hemmelgarn said several of the largest auto companies are developing their own integrated circuits and circuit boards (ICs & PCBs) as part of their push into autonomous operations — this lets them protect their intellectual property and certify safety. He explained that Siemens EDA’s “Pave 360 is a shift left in IC verification for autonomous. OEMs are using TASS with IC design to prove out the whole system before going to silicon.” TASS makes both advanced simulation software and has testing and certification facilities that let companies working in autonomous vehicles test out components, concepts, and complete designs.
Not surprisingly, said Mr. Hemmelgarn, this contributed to a solid year for its CAE offerings, jointly under the Simcenter umbrella. CAE, especially CFD, continues to grow. I asked about where and how; Mr. Hemmelgard said that 2020 saw both expansions in existing accounts and the addition of new users: “COVID led to more people using CFD in new ways. We saw people simulate air purification to eliminate 99% of viruses, and Airbus using STAR CCM+ to understand particle droplets. The US Air Force is researching contamination hotspots, and AEC firms use CFD to reduce airborne transmission” — as just a few examples. Some, like Airbus, are long-term customers who are using CFD in new ways, moving from simulating the flow of air over a place to the air inside. But many are new.
Success in CAE wasn’t limited to CFD. Mr. Hemmelgarn said that noise vibration and harshness (NVH) simulation is seeing new interest as battery-operated vehicles expose sounds that weren’t audible over combustion engines. Other Simcenter applications, like Amesim (the 0D/1D engine), continued to grow their user bases “because people were working remotely, having to do their jobs digitally” without access to labs and test benches.
But it’s not all CAE, either. Mr. Hemmelgarn said that Teamcenter, the PLM brand, continues to do very well and is now the US Air Force standard. The partnership with SAP around Teamcenter also continues to evolve as the companies co-develop solutions. As of our conversation, SAP has Teamcenter in its price book; Teamcenter X [the cloud offering] will be there soon. Next will be integrating more SAP and Teamcenter capabilities. As Mr. Hemmelgarn said, “so far, so good. We’re meeting with customers now and are excited about the prospects.”
What about 2021? Mr. Hemmelgarn said that many trends would continue: EDA won’t slow down; it will continue to expand as more and more objects are electrified and as products become increasingly complex. He believes PLM will see a pickup towards the end of the year, as the manufacturing industry overall ramps up. In general, Siemens Digital Industries Software is “planning on good growth,” partly driven by more interest in cloud solutions over the next 18 to 24 months.
That, of course, led to further exploration of customers’ interest in the cloud. Mr. Hemmelgarn said that it’s been slow in the “PLM space, but [we’re] getting a lot of interest in Teamcenter in the cloud for collaborations — authoring still slow.” Companies tell us that having Siemens manage Teamcenter is interesting and could be another route to greater adoption. Mr. Hemmelgarn said that the next 12 to 18 months would be critical as Siemens tweaks its business model to reach more SMB companies with Teamcenter X. “If we take it over for them, they get the full benefit … the cloud/SaaS model makes it easier for us to reach these customers. And the way we support SaaS customers is very different, and we’ve invested a lot in making that happen.”
And 2021 will also see even more expansion in CAE. Mr. Hemmelgarn sees companies engaging in “new thought processes for CAE on edge devices, such as executable digital twins, where a simulation model may be made of a robot that’s linked to the physical world via an edge device. The edge device then controls and operates the robot based on digital twins .” That’s exciting — we’ve had the pieces to do this for a while, but stripping down a CAE model to solve quickly enough to affect real-time operations could change how production lines are operated and maintained.
In fact, Mr. Hemmelgarn sees 2021 as a year in which Siemens will “bring operating technology (OT) and information technology (IT) together. We have lots of IT with all of the PLM applications and OT with all of Siemens’ automation capabilities. We can connect them with Mendix (Siemens’ rapid application development and integration platform) to bring it all together. Mendix’s low-code has been big with traditional customers for a while but is opening up in new companies as well. What’s interesting is when a CIO talks to us from the industrial side as well as looking at the business system — we can do both in Mendix”. But the convergence of IT and OT, for Siemens, is not limited to edge devices. Siemens is planning more integration across its automation business with PLM — and they’re already doing this with virtual commissioning.
Mr. Hemmelgarn believes that 2020 accelerated the move to greater digitalization. “Working remotely and keeping safe is hard to do if there aren’t a lot of digital processes. A comprehensive digital twin is essential if working from home. Larger companies are pretty much there already; SMBs are trying to ramp this up — they’re cautious with respect to what the next 12 months could bring, but the debate about digital couldn’t be more relevant.”
My take? Siemens’ huge software/hardware portfolio, combined with business model tweaks geared to simplifying how buyers transact with Siemens, will lead to growth among new types of customers and in new markets. Add in the big and important partnerships with SAP and IBM — 2021 is going to be fascinating. As Mr. Hemmelgarn said, the goal is exploring “how [we] leverage the things we’ve done well into more areas.”