Is Siemens Ignoring a Very Important Marketplace -- Its Own Divisions?

Figure 1- Siemens PLM acquired CD-adapco and LMS over the last few years, but that does not mean the software from those companies becomes an instant company  standard.

Dr Horst J Kayser, Siemens chief strategy officer, is onstage at the Siemens PLM analyst conference and we are finding out how big and how great Siemens is.

Siemens, a German conglomerate, best known to engineering software users for NX, Teamcenter and Solid Edge, provided to us by their PLM division, used to be known for executives in black suits. The Men in Black.  The behemoth that makes all things of all scales from giant wind turbines to trains to medical devices to factory controls, and more, has, almost as a sidelight, a $3.1 billion operation as a software company. That by itself would make it the 12 biggest software company in the world.

This puts just the PLM division of Siemens up there with those for whom engineering software is a primary occupation, such as Dassault and PTC. Siemens PLM may have jumped a few slots the last few years with 2 big software acquisitions, CD-adapco and LMS. Both were acquired from between a half and $ 1 billion.

Siemens PLM makes a business out of selling its software applications to everyone, in and out of its doors. One would think selling its software to its own divisions would be reason enough for existence. Why not make it mandatory for all Siemens employees to use NX, for example, for everything that they design?

Maybe a little heavy handed parenthood but after a while all adopted children should settle down. However, Siemens is playing the nicer, kinder father. Companies acquired by Siemens have come crying that the toys they have played with so long are embedded. Ripping out a design tool and installing NX, for example, would be akin to childhood trauma, resisted and unpopular. Too bad. Siemens PLM would get a lot of mileage out of “eating their own dog food,” as software companies who do the opposite are fond of saying. Wouldn’t it be better than having to explain why a Siemens division uses SOLIDWORKS, or example?

With a software acquisition by the Siemens family being insufficient for it to be accepted as a company standard, the software is in an awkward position of having to compete with entrenched applications within a Siemens division.

This was downplayed by one executive.

Getting acquired helps get our foot in the door, says a VP who has come over in the last couple of years.

But is Siemens ignoring a sure-fire captive market by not selling to its own division? Worse, is it being damaged by retaining competitor software, like enemies in its ranks? Reply in your comments below.

Comments

[Stan Przybylinski]

Hi Roopinder,

One of the first things UGS did after get acquired was to replace a lot of competitive systems across their business units. They did not get them all, obviously, but it was a stated strategy at the time.

Stan Przybylinski
VP of Research
CIMdata, Inc.

[D]

Roopinder,
You mention that Siemens is a massive company with many different divisions and execute many M&As. Siemens PLM as a software division that books $3.1B is a provider of core CAD software components. These components are licensed to many of their competitors. I'll use the same example you provided- SolidWorks (SW) owned by Dassault Systems. SW licenses several Siemens PLM components like Parasolid and D-Cubed. These are critical and core components for a CAD system. So, technically we could flip the argument and say that "the enemy is already in the camp." That is Siemens is already inside competitor software. This means Siemens PLM is making royalties for every license of software that competitors sell. If you lose the CAD business you still win with royalties. Not a bad position to be in.

As will all M&A activities changing business systems is only done when it makes business sense (effects bottom line) or if there is a much large business strategy in play. As with any mega-corporation many different tools are implemented across the divisions just because of the nature of mergers and acquisitions. It's just the nature of the business beast.

Siemens does use its own tools throughout its business and one could argue that they "do eat their own dog food". After all they are a multi-CAD environment with PLM. A second example would be Siemens plants that currently setup as an example of Industry 4.0 in use.
As for a captured market inside all the other business units..well..change happens slowly (especially for a company the size of Siemens) and only when required for strategic or bottom line effects.