Siemens and SAP Join Forces to Accelerate Industrial Transformation, bringing together the best of their complementary offerings for product lifecycle, supply chain, and asset management to accelerate the digital transformation of the manufacturing industry.

Siemens and SAP sign strategic partnership deal bridging the gap between engineering and supply chain

Yesterday Siemens and SAP announced a new strategic partnership bringing together the best of their complementary offerings for product lifecycle, supply chain, and asset management to accelerate the digital transformation of the manufacturing industry.

This new partnership is meant to help customers to enable collaboration across manufacturers, product design teams, and service managers to quickly create and manage customer-centric product and service offerings.

The COVID-19 pandemic spotlights the need for flexible production and vulnerabilities of global supply chains.

Manufacturers are looking at the introduction of new models structured around production adaptability to market conditions, near-shoring, and shorter and flexible regional supply chains closer to key end-users.

This has been the wake-up call the manufacturing sector needed to stop talking about Industry 4.0, Digital Twin or Smart factory, and start acting. Digital transformation has always made sense, but adoption has been slowed as manufacturing companies deal with overwhelming technological concepts.

Now the two tech giants are combining their industry expertise to help the manufacturing ecosystem to enable collaboration across product design, product engineering, manufacturing, logistics and service to quickly create and manage customer-centric product and service offerings in the" new normal".

A bit of history

Since the first introduction of Industry 4.Now from SAP, in January, from Thomas Saueressig, a member of the Executive Board at SAP SE and head of SAP product engineering, it was clear that the companies focus was on end-to-end business processes to support manufacturers in designing and manufacturing sustainable products. The further evolution of the strategy, referring to partner integrations for industry-leading engineering software, and yesterday's announcement is in line with this strategy.

Siemens, over the past ten years, has continued to review how to position its portfolio to best complement the SAP offering in Engineer-to-Order and Configure-to-Order driven manufacturers.

Key milestones: the acquisition of TESIS PLMware in 2013, at that time a leading company in PLM/ERP interoperability, and they then focus on the closed-loop manufacturing initiative addressing cross-discipline processes across the triangle: PLM, ERP, and MOM.

Low hanging fruit of the partnership 

As a first step of the combined offering, the SAP team will offer Siemens' Teamcenter software as the foundation for product lifecycle collaboration and product data management. Siemens will offer SAP Intelligent Asset Management solutions and SAP Portfolio and Project Management applications.

Siemens and SAP sales teams used to regularly in the industrial domain, but with limited overlap in the core product offerings. If the combined sales force is properly trained and incentivized, such an initial step already opens up-selling and cross-selling opportunities.

Handling complex end-to-end business processes across the business and value chain would require strong support from service and consulting companies. This is the reason why at Omdia we perceived extremely positive feedbacks about the partnership from almost all the major consulting firms.

Strategic next steps

How does this cooperation create real customer value, and what are the concrete actions we can expect?

Going forward, both SAP and Siemens are planning to collaborate to develop applications from an end-to-end lifecycle perspective to help customers achieve a seamless digital thread that improves overall business performance.

At Omdia, we believe this would translate into a cross-company, customer-centric engagement model supported by end-to-end manufacturing practices available to IT consulting and service teams to support digital transformation initiatives through their lifecycle.

A  significant potential advantage will be the ability to leverage the combined portfolio adapted to a common semantic information model.

The definition of a common semantic information model as a baseline for the digital thread should help manufacturers to develop collaborative digital twin strategies.

Conclusions

Such a new partnership confirms how industrial solution vendors are moving into camps of ecosystems.

It follows the successful alliance developed in the last couple of years by Rockwell Automation, PTC and Microsoft where the three companies already released cross-company solutions to enable end-to-end business and manufacturing processes.

It is going to be exciting to monitor in the next couple of years the evolution of the different strategic alliances and how their impact will distribute across the different continents.

This is in line with what we understood by manufacturing leaders last year in our Digital Innovation in Manufacturing report.

"Industrial software companies must feel and breathe the industry they serve; they must have a deep understanding of the ultimate business goals of the manufacturers and effectively position themselves to support in achieving these goals. Such an approach will empower any software company to leave their siloed comfort zone and to shape innovative digital building blocks to support end-to-end business processes across the entire value network. This will increase the opportunities derived from collaboration with other industrial software players that have historically been perceived as competitors."

Over time, we believe the partnership will expand to include additional pieces of the combined portfolio not yet mentioned, e.g. Siemens Mindsphere as the IoT operating system and other modules from SAP like Supply Chain Logistics Management.

Mendix, the low code platform bought by Siemens in 2018 was in the SAP portfolio before the Siemens acquisition and is expected to be the tool creating a customer-specific user experience, gluing together the different product elements.

The two companies should also help the ecosystem involved in the engagement process on how to handle still competing products in the area of Manufacturing Execution and Quality Planning and Control.