Siemens’ Media and Analyst Conference Highlights and Key Takeaways: Digital Twin, SaaS, and Sustainability

Siemens’ 2022 Media and Analyst Conference, held at the start of April in Detroit, provided a state of the union on digital transformation in manufacturing and opportunity for a deeper dive on key focus areas including digital twin, Software-as-a-Service (SaaS), and sustainability. Siemens also highlighted how a range of companies are using Siemens’ software to create and leverage new innovative solutions; announced the expansion of Xcelerator as a Service with the addition of NX X (cloud-based Computer Aided Design (CAD) software); and emphasized its ongoing and accelerated transition to SaaS with more than US$200 million in cloud-related Annual Recurring Revenue (ARR) as of the end of Q1 FY2022, equaling 6% of total ARR.

Siemens began its transition to a SaaS-led business and introduced Xcelerator-as-a-Service (XaaS) last year (see Siemens Xcelerator Portfolio Graduates to Software-as-a-Service). Xcelerator is Siemens’ integrated portfolio of software, services, and an application development platform, designed to help companies create and leverage digital twins. XaaS makes the Xcelerator portfolio more accessible, scalable, and flexible by leveraging the cloud in combination with a subscription offering.

At the 2022 MAC, Siemens highlighted how Italian agriculture startup, Nemo’s Garden, and autonomous ocean data collection specialists, Saildrone, are taking advantage of the accessibility of XaaS to improve their development efforts and to innovative more quickly. These two companies are small and in their early stages and would not have access to the depth and capability of Siemens’ enterprise-grade manufacturing and development software without SaaS, which requires no installation or on-site maintenance and gives all users access to the latest available tools.

Global automotive Original Equipment Manufacturers (OEMs) such as Hyundai, Kia, and Daimler Truck are at the other end of the spectrum from Nemo’s Garden and Saildrone in terms of size and scale yet have also chosen to standardize on Xcelerator. Hyundai and Kia are collaborating with Siemens to establish design methods and develop custom solutions that consider the entire lifecycle of automobiles and associated processes and activities (e.g., sustainability and the supply chain). Daimler Truck plans to use Siemens’ Simcenter STAR-CCM+ simulation software to develop next-generation, CO2-neutral vehicles. The software will be used to improve aerodynamic performance, explore/optimize new e-mobility propulsion and energy management systems, and reduce emissions from legacy combustion engine and exhaust system designs.

Siemens is transitioning to a technology company and software is core to this transition. The company made an advance in this direction several years ago by acquiring Mendix (low/no code app development) and changing the name of Siemens PLM Software to Siemens Digital Industries, but now the strategy is more pronounced with investment in assets like Xcelerator and XaaS. These offerings are well suited to address megatrends that Siemens and its peers are looking to capitalize on, including electrification, sustainability, and digital transformation more broadly.

Cloud-based software and SaaS are good for these markets/megatrends because upgrade cycles can happen more rapidly in response to changing market conditions and new tools can be made immediately available without much setup. Ultimately, manufacturers want solutions that work, meaning fully developed and ready to deploy, and both cloud and SaaS as a delivery mechanism make fully integrated solutions much more available to companies of all sizes.

For SaaS to work well for the Small-and-Medium sized Enterprise (SME) audience, it needs to be a low-touch sales motion (e.g., automated value assessments that justify the investment prior to renewal). Currently, the Mendix sales funnel included 9,000 prospects that signed up for a free trial. Of the 9,000 trials, 300 customers bought the software. Of the 300 who bought the software, 21 purchased without any human intervention. This is a typical picture for the SaaS sales funnel in manufacturing today and is a decent conversion for the current process. However, this too will improve over time as software automation and self-service tools come to the fore (e.g., industry-specific adaptive templates as a starting point for personalization). The goal is to get the 21 figure closer to 300, meaning more new customers are subscribing and getting up and running on their own. Siemens is looking to automate the sales process, much like it automates other processes such as CAD, Product Lifecycle Management (PLM), and manufacturing operations as a whole.