On June 8, 2022, Siemens Digital Industries announced that, as of June 1, it had acquired Senseye, which becomes a wholly owned subsidiary of Siemens Holdings plc in the UK and sits within Siemens Digital Industries’ Customer Services Business Unit.

Omdia view

On June 8, 2022, Siemens Digital Industries announced that, as of June 1, it had acquired Senseye, which becomes a wholly owned subsidiary of Siemens Holdings plc in the UK and sits within Siemens Digital Industries’ Customer Services Business Unit.

The acquisition follows a four-year partnership with Senseye; its software was available on Siemens’ MindSphere Industrial Internet of Things (IIoT)-as-a-service solution.

Some background on Senseye:

  • Headquartered in Southampton, the UK, with offices in France, Germany, Japan, and the US.
  • The company offers a software-as-a-service (SaaS)-based approach to its cloud-hosted predictive maintenance solutions.
  • The company had a primary focus on discrete industry sectors. Its leading customers included Alcoa, Nissan, and Smurfit Kappa.
  • In January, Senseye launched ROI Lock, a scheme whereby the company would reimburse customers’ subscription costs if agreed downtime reductions were not met. This was launched in partnership with SCOR, a leading reinsurer.

According to Margherita Adragna, CEO of Siemens AG’s Customer Services for Digital Industries:

Senseye’s AI-based solutions complement our digital services portfolio, driving efficient and scalable predictive maintenance. This will allow us to offer highly flexible solutions to help our customers across many industries to determine the future condition of their machinery and hence, increase their overall equipment effectiveness.

Omdia estimates that the market for asset health analytics, considered low-hanging fruit for IIoT applications, will exceed $300m this year. Predictive maintenance solutions account for almost a quarter of this amount (Figure 1).

Figure 1: The global market for asset health analytics by solution Figure 1: The global market for asset health analytics by solution

Notes: Data issued in August 2021

Source: Omdia

Asset monitoring acquisitions are aplenty

This continues the AI predictive maintenance startup acquisitions spree. In its “Industrial APM and Predictive Maintenance - 2021 analysis”, Omdia identified over 50 acquisitions over the past three years and expects more to come.

Leading industrial equipment vendors were at the forefront of this activity as they continue to evolve into more software-centric organizations and leverage these capabilities to transition to a solutions and services-based business rather than industrial hardware. These companies have struggled to develop the necessary capabilities in-house, hindered by legacy business models, organizational inflexibility, and competition for talent.

Figure 2: Competitive analysis of vendors that address asset health monitoring Figure 2: Competitive analysis of vendors that address asset health monitoring Source: Omdia

Senseye’s integration into Siemens Digital Industries’ Customer Services Business Unit reflects the difficulty many equipment vendors have had in moving their customers from hardware to an equipment-as-a-service (EaaS) model.

There are significant total cost of ownership (TCO) advantages in monitoring the health of critical assets, including minimizing loss of production and reduced waste through quality defects. Unplanned asset failures are estimated to cost 10 times more to fix than planned repairs, which can be coordinated with improved asset health monitoring.

In spite of this, it can be a challenge to include the predictive maintenance solutions as part of a package with the sale of industrial assets. With procurement teams often more focused on minimizing upfront cost, vendors such as Siemens are finding more success integrating such solutions as part of their services business.

What does the acquisition mean for both Siemens and Senseye?

How these acquisitions are integrated with existing activities is always difficult—notably, how Siemens integrates Senseye with its other solutions, such as SIDRIVE IQ Fleet.

Even so, it was still a great win for Siemens, landing what Omdia estimated in 2021 as one of the top five standalone predictive maintenance companies, and the associated solutions, people, and skillsets.

The former Senseye business will, in turn, benefit from the new scale through Siemens’ gargantuan global sales and services network, as well as its industry expertise. Senseye will also have access to the vast installed base of Siemens equipment.

Accessing the installed base

Globally, Omdia estimates that out of the current installed base of approximately 1 billion motors and motor-driven equipment (excluding fans), a quarter of these can be considered Tier 1 or Tier 2 criticality assets. While current solutions primarily focus on high cost or high criticality assets such as generators, there is an increasing focus on “secondary” assets that may indirectly impact uptime, such as a pump downstream of the main process.

Figure 3: Installed base of Tier 1 and 2 criticality assets Figure 3: Installed base of Tier 1 and 2 criticality assets Source: Omdia

Appendix

Author

Alex West, Senior Principal Analyst, Industrial IoT

askananalyst@omdia.com