Mark Johnston spoke with Angus Marshall, CEO and MD, Siemens PLM Software (ASEAN & ANZ) on the digital enterprise.
Q: What is the digital enterprise and define the benefits for the customer?
Angus Marshall (AM): Siemens view of the digital enterprise is an organisation that is digitalising all aspects of its business. Our view is that it is an organisation that is ceasing the opportunity to change its business model. It is not just about designing its products digitally or designing its engineering processes digitally or maybe interfacing with customers in a more online connected way.
Businesses are seeing opportunities through digitalisation to change their business models. To reinvent themselves. Fundamentally we see that there is a value chain that goes through five stages. There is the product engineering (creating the product, defining the product, simulating the product, making sure that it functions as per the requirements), then there is the design of the production facility where the manufacturing takes place, then there is the production planning, which is working out how the product will go through the machines, through the equipment, then there is production execution, which is the manufacturing, and then there is the in service lifecycle support, the digital services we would call it. Those are the 5 elements of the value chain. I think companies that digitalise are looking at all of those aspects through that value chain to work out how can they optimise their business.
In terms of what Siemens can offer we have three pieces that cover that. We have the Product Lifecycle Management (PLM), we have Simcentre, which is the new CAE simulation capability that we have, we have MOM, which is the Manufacturing Operations Management part of that portfolio, and then we have all of the automation products, so TIA, Totally Integrated Automation. These three pieces together help to digitalise that value chain.
The next step is to connect out into the industrial Internet of Things (IIoT) world. The world of your ‘fleet’, whatever that might be, it might be your machines, it might be your products out in the field. Companies like Rolls Royce are instrumenting their jet engines with thousands of sensors and then in real time monitoring the performance of those things, and then, of course, aggregating that data back through a platform like MindSphere, for example, from Siemens, and then analysing that data in real time to try and work out what is happening with the factory or the products in service so that then we can predict failure or surface insights in that data. So I think it is all of those things together, it is the value chain, which we addressed with the three parts of the portfolio that have and then it is this kind of extended connected out into the real world, into the customer experience I think that is really the definition of the digital enterprise for us.
Q: What is wrong with the digital enterprise?
AM: The view I would have is there are not many digital enterprises today. That is what is wrong. The fact that this is new. The view we have is that the disruption is only just starting. We have this vision. The vendors are ahead of the commercial businesses out there. I think what is wrong with it is there are not enough companies getting into this and seeing the power that we spoke about and accelerating their investment plans to get involved and make this happen.
Q: How are business models changing?
AM: We use this example of GM. They made an investment in lyft because they see that making cars and selling cars was the historic business model but now connected cars, connected network of transportation available to customers to hire by the minute or by the hour is the new model that is going to happen, autonomous vehicles, etc. These companies are seeing and they are using digitalisation and investment models to start or at least open up new entrepreneurial aspects to their business and hedge themselves against this change.
Q: Why are customers slow to adopt the digital enterprise?
AM: Generally it is a lack of awareness. We have got to educate senior executives to understand the value of what we are talking about. There is a natural scepticism towards new technology. I think that is something we have to overcome by using good quality case studies. There are new models, particularly around software where companies can use subscription and pay by the month, quarter, etc. They can switch it on, switch it off.
From a financial perspective, it is easier to get into the game now more than ever. Before you had to put in significant investments and now you can scale your investments. As such, I do not think it is a financial thing, it is more an appreciation of the power of this and a lot of that is down to the responsibility of the vendors and organisations such as Siemens to engage with clients and really sell the benefits that we have here.
The other thing is that in the past big organisations that had the finances to engage in this kind of technology. Nowadays because of the way you can scale this, there are much more opportunities for SMEs to get involved in the game and start to digitalise themselves, particularly in the ASEAN region, which is classically an SME region.
Q: Could you provide a business with three tips to avoid failure in making that leap to a digital enterprise?
AM: One is to take a holistic view. Even in an SME, if you are smart, you are looking at the overall picture and saying how does this enable me to change the business model potentially or to open up new ways to access the customer intelligence or gain flexibility in response to market or specific customer requirements. It is kind of taking a business first view, a holistic view and then using the technology as the enabler for that rather than the other way around I think.
The second thing is to choose the right partner because there is a myriad of players in the technology space. Siemens has been around a long time, we can support the whole value chain, we have got the industrial Internet of Things piece, we just closed the acquisition of mentor graphics. Almost every product nowadays has got a mechanical element to it, like the housing and the packaging, it has got the software and it has got the electronics. Siemens is the only vendor in this space that can now support a digital twin, a digital virtual model of all of those three pieces.
The third thing is this needs to be led at the highest level of the organisation. This is not something where it can succeed bottom up. I think this is so transformative for the business and the opportunities are so big that it needs to come from the top down. These are initiatives that need to be driven by the CEO and the CIO of an organisation for them to be successful.