Is Industry 4.0 Realistic? Face to Face with Siemens CEO Tony Hemmelgarn – TV Report
Verdi Ogewell posted on April 27, 2017 | 9639 views

Who is the leading player in product development and realization software?

One point of view sees Siemens as a good candidate. But what is it that puts Siemens’ Digital Factory division–of which Siemens PLM Software is a unit–in this position? There are many contributing factors, including the broad PLM portfolio Teamcenter, the availability of automation solutions such as Simatic (MES) and the Totally Integrated Automation (TIA) Portal.

There is also the fact that Siemens manufactures things.

“That’s a tremendous advantage. We build things and learn a lot from that; for instance, what it takes to have an entirely digitized factory,” said Siemens PLM Software’s new CEO and president, Tony Hemmelgarn, in today’s PLM TV News report. He is referring to the company’s famous electronic factory in Amberg, Germany.

But nothing in this world comes for free. “We’ve worked hard to get to the present point,” Hemmelgarn added. It took a lot of perspiration andto quote American inventor, Thomas Edison “a ten percent dose of inspiration.”

By collaborating and breaking down the departmental silos between PLM Software and Automation, Siemens has come further in its ambitious Industry 4.0 journey than most of the competition. Unlike some competitors, the German giant is more engineering-centric and the team is more practically oriented than visionary.

“We realize that openness is key,” asserted Hemmelgarn. “We can’t expect our customers to use only our software. Product development and manufacturing has always been about managing diversified IT environments, and nobody does that better than Siemens.”

He didn’t say it outright, but the implication of his argument is that tough competitor Dassault Systèmes represents just that kind of visionary overload.

So, prepare to meet Tony Hemmelgarn, a confident leader whose favorite word is “integration,” which is a good characteristic for a company moving fast towards an Industry 4.0 platform. So far, the move into Industry 4.0 has been supported with several acquisitions, including:

 Still, he is humble enough to admit that there is still some ways to go before digitized factory concepts and Industry 4.0 become everyday realities.

In this TV report, you will also hear the views of analysts Peter Bilello of CIMdata and Marc Halpern of Gartner Group. You will also hear from a couple of strategically important Siemens PLM customers, who have started on the path towards Industry 4.0:

  • Aero structures developer Sonacas’ director of development, Hugues Langer. This Belgian Tier 1 and Tier 2 supplier to large aircraft manufacturers such as Airbus and Embraer started their digitization voyage in 2013 by replacing their Dassault VPM product data system with Teamcenter.
  • Automotive company Geely Group’s Swedish vehicle platform developer, CEVT’s PLM director, Erik Gräns. In 2013, they succeeded in implementing a complex Teamcenter PLM backbone in just six weeks. 

“It’s Not Good Enough to Digitize the Existing Processes”

Is Industry 4.0 realistic? Or rather, how far away is it?

As always, when it comes to disruptive innovative ideas, the time factor is essential. No matter how brilliant an idea is, the industrial impact from the initial idea and hype, to productive installed applications and processes, often takes longer than expected.

“It is not good enough to say, ‘I just want to take my existing processes and put them against a digital process.’ While that’s important, I don’t believe that is going to be satisfactory to where customers really want to be in the future.

Of course, the existing processes must be digitized, but it is equally important to look at processes from new angles inspired by new technologies. “A good example is around one of our customers, FMC, designing a choke for a pressure drop in their undersea piping equipment,” said Hemmelgarn.

“They had to make a trade off about the flow rate versus the pressure drop in this choke. It’s a very difficult process, because you have to go through many simulation iterations. Using our tool HEED, which is an optimization tool that came through our acquisition of CD-adapco, they were able to do 300 iterations of that design in five days. Previously, they would have done 3 iterations in ten days.”


PROFITABLE NEW PROCESSES AT FMC. Siemens PLM customer FMC designs, manufactures and services technologically sophisticated systems and products, such as subsea production and processing systems (above). With the help of Siemens simulation optimization tool, HEEDS — which was a part of the German PLM company’s CD-adapco purchase — they were able to perform 300 iterations of an undersea choke design in five days. Previously, they would have done three iterations in ten days.
PROFITABLE NEW PROCESSES AT FMC. Siemens PLM customer FMC designs, manufactures and services technologically sophisticated systems and products, such as subsea production and processing systems (above). With the help of Siemens simulation optimization tool, HEEDS — which was a part of the German PLM company’s CD-adapco purchase — they were able to perform 300 iterations of an undersea choke design in five days. Previously, they would have done three iterations in ten days.


“Think about that differential. If all you did was say, ‘I’m going to keep using my existing process,’ and you didn’t use something like a design optimization tool that optimizes against many variables whether it’s the design, the flow rate or the structural strength. Think about the differential there, that’s what we’re talking about: the game changers that can change the process and make you more effective,” said Hemmelgarn.


Access Information, Rather Than an Application with Information

CIMdata analyst Peter Bilello is on the same track. It’s not just about digitizing the existing processes; instead, it is a good idea to seek both processes that are more efficient than the old ones, and also entirely new processes.

“If you look at the last 20 to 30 years, people have focused on the idea that they have saved in a file. Unfortunately, files are artificial constructs around information that many times lock information away in forms that not everyone can access,” said Bilello.

“But if you really want to create digital information, zeros and ones, that can be assembled as needed, dis-assembled as needed or dynamically processed, you must change the tools you work with, as well as how you view and manage the information, as well as the process in which the data is used. You must become data-centric versus file-centric. It’s a simple way to look at it, but if you look at the social savvy worker and the role of social media, environments that today’s youth have grown up in, they are used to accessing information–not necessarily an application which accesses information–so, there must be changes in the way we think about information, create, access and manage it. And this in turn has to do with the processes and environments we create for it.”

 

GERMAN CHANCELLOR ANGELA MERKEL WAS IMPRESSED in 2015 by Siemens’ famous Amberg factory. It is a great example of what Siemens can produce in terms of practical, well-functioning Industry 4.0 concepts according to what is possible with today’s best-in-class tools. NX CAD, the Teamcenter PLM suite, and the Simatic MES solutions play key roles in this facility.
GERMAN CHANCELLOR ANGELA MERKEL WAS IMPRESSED in 2015 by Siemens’ famous Amberg factory. It is a great example of what Siemens can produce in terms of practical, well-functioning Industry 4.0 concepts according to what is possible with today’s best-in-class tools. NX CAD, the Teamcenter PLM suite, and the Simatic MES solutions play key roles in this facility.

 

What is the Industry 4.0 Vision?

The idea of a digital factory is one of the cornerstones of the Industry 4.0 vision. As mentioned above, Siemens has already come a long way toward this goal at their Amberg, Germany facility. They have implemented their own digital factory concept to manufacture a range of high tech products. While this facility is not large, it produces more than 1,300 different, complex products at a rate of over a million per month. All these products are designed in CAD with NX, managed in PLM with Teamcenter, and produced with Simatic on the factory floor.

How does it work? The key is to produce a digital twin of the entire value chain. This enables designers, engineers and operators to collaborate within a completely virtual world where they can design, simulate and iterate on the product without creating physical prototypes.

However, the digital twin idea comprises not only the product but also the factory, the equipment and the logistics systems; they can even simulate the people who work there.

The result is that the products and their digital twins communicate about how they should be produced, assembled and what resources are required. All this information is contained within the program code of the digital twin, and can directly communicate specific production requirements to the machinery in the digital factory.

This is the ideal picture, but how far has it advanced in terms of a ready to use platform? We spoke to Gartner analyst Marc Halpern:

“It’s still a work in progress,” he noted, explaining that, “Siemens has a very extensive PLM environment within Teamcenter and a very broad portfolio of technologies, but they also have a strong environment in manufacturing in two ways: the Simatic IT portfolio for manufacturing operations and manufacturing execution systems.”

Halpern also pointed at the hardware side and concluded that Siemens has been fairly innovative with some Industry 4.0 capabilities, such as virtual commissioning.

“For example, the idea that you can take a PLC and literally program it with a virtual model of the factory, then go through iterations of adapting the program to avoid machinery collisions and other automation mistakes before actually going out onto the factory. And vice versa: if you’re designing a piece of machinery, you can have what’s called hardware in the loop, meaning that you can integrate behavior of actual hardware with virtual models and try to use those seamlessly.”

 

“THE EASY THINGS HAVE BEEN DONE IN THIS BUSINESS,” said Siemens PLM’s CEO, Tony Hemmelgarn, in today’s PLM TV News, pointing at things the company has already done with 3D modeling, CAD and all the things that are out there today. “Most people are doing those things now. But the real return on investment is when you integrate these pieces together.”
“THE EASY THINGS HAVE BEEN DONE IN THIS BUSINESS,” said Siemens PLM’s CEO, Tony Hemmelgarn, in today’s PLM TV News, pointing at things the company has already done with 3D modeling, CAD and all the things that are out there today. “Most people are doing those things now. But the real return on investment is when you integrate these pieces together.”

 

“It’s Going to Take Some Time, But We Will See Progress Year Over Year”

So, how far away is the dream of Industry 4.0? Marc Halpern believes in the Industry 4.0 vision, while stressing that the development of digitized plant concepts has just started.

“I would say that the media is promoting it more heavily than companies actually are adopting it. And the vendors are also promoting it more heavily than customers are adopting it,” Halpern said.

“Why? Because the more they can sell the concept of Industry 4.0, the more software they’re going to sell.  Industry 4.0 has some excellent concepts and potential value. But it’s going to take a long time. Right now, I’m seeing senior executives buying into this concept. However, when you consider the cultural change, the KPI’s (Key Performance Indicators), job performance metrics roles, and educating the work force about the principals of Industry 4.0 — as well as the idea itself being a relatively new concept — they’re cautious of approaching it. It’s going to take some time, but I think we’re going to see progress year over year.”

Tony Hemmelgarn shares Halpern’s views, and shows no signs of long-term hesitation; Industry 4.0 will become a reality, the only question is when. There’s still a long way to go, Hemmelgarn explained, claiming that the secret of success is about integration between what you have and what you want.

“The easy things have been done in this business. When I say ‘easy,’ they weren’t easy at the time, but they’re easier now. If you look at what we’ve done with 3D modeling, CAD and all the things that are out there today, most people are doing those things. But the real return on investment is when you integrate these pieces together. Then you’re able to get true productivity gains, and I think that we at Siemens do that better than anyone else in the world.”

In this context, Hemmelgarn points to the three phases of ideation, utilization and realization. Companies that can put that all together can reach unexpectedly high productivity wins, versus just looking at components. The key is platform thinking, openness, and accessible file formats.

“We integrate, yes, but we also still have to be open,” Hemmelgarn explained, “We can’t come in and say, ‘You have to do everything with us.’”

That’s not realistic, he added, “But if you use a lot of our software, maybe it works better in an integrated mode. Still, we have to be open.”

 

A GROWING MARKET. According to analyst CIMdata, the market investment in PLM increased with 5.2 percent up to $40.7 billion dollars. Tools, such as CAD and CAE applications, and cPDm represent the largest portions of these investments; while digital manufacturing solutions, such as Siemens Tecnomatix and Dassault’s Delmia, still have a much smaller share. In terms of revenues, Siemens does not reveal breakout numbers for departments such as its PLM software division, said Tony Hemmelgarn. However, CIMdata calculates that they reached the neighborhood of $2.0 billion in direct software revenues during 2016. In reality, however, the numbers are significantly higher because Siemens' revenues only included some of CD-adapco's 2016 numbers since the acquisition didn't finalize until later in the year. Also, their numbers don't include any 2016 Mentor Graphics revenue. These will make a huge impact on CIMdata's Siemens PLM revenue estimates for 2017. To find out how these solutions will generally impact Siemens’ market offerings, watch the TV report above.

A GROWING MARKET. According to analyst CIMdata, the market investment in PLM increased with 5.2 percent up to $40.7 billion dollars. Tools, such as CAD and CAE applications, and cPDm represent the largest portions of these investments; while digital manufacturing solutions, such as Siemens Tecnomatix and Dassault’s Delmia, still have a much smaller share. 

In terms of revenues, Siemens does not reveal breakout numbers for departments such as its PLM software division, said Tony Hemmelgarn. However, CIMdata in their preliminary numbers calculates that Siemens PLM reached more than $2.0 billion in direct software revenues during 2016. In reality, the numbers are significantly higher because Siemens' revenues only included some of CD-adapco's 2016 numbers since the acquisition didn't finalize until later in the year. Also, their numbers don't include any 2016 Mentor Graphics revenue. These will make a huge impact on CIMdata's Siemens PLM revenue estimates for 2017. To find out how these solutions will generally impact Siemens’ market offerings, watch the TV report above.


Sales Development is Tony Hemmelgarn’s Wheelhouse

Negotiating with customers is Tony Hemmelgarn’s wheelhouse. Before he took the positions of CEO and president, he was responsible for Siemens PLM’s global sales. He’s also been an account manager, and for a while he had sales leadership in Europe. How will his extensive sales experiences affect Siemens PLM? 

Hemmelgarn noteded. “Our customers are extremely important to us.” Not only in their capacity as buyers of Siemens software, but also as technology drivers.

Hemmelgarn continued,“We have customers that are very advanced in using the tools we’ve had for years and truly creating that digital twin. Where we are advancing is looking at what do you do with software, what do you do with the systems approach, at multiphysics problems where we talk about the complexity of products with the rise of software with mechanical and electrical all coming together. And the customers follow and push us in this. The ideas we are getting from speaking with our customers and seeing what they are seeing pushes us as well.”

“Sometimes the challenge with a customer is that it’s not so easy just to cut over to the new thing. You’ve got legacy systems to deal with, so usually what holds us back is not the desire to go. It’s just that they’ve got existing processes we have to work around. Sometimes you have startup companies; with new companies it’s easier since they don’t have legacy systems, and that makes a big difference. It allows them to run fast. Large, established companies can create special teams to go and do this. But at the end of the day, they’ve still got existing processes and you still need to integrate into that,” Hemmelgarn said.


IS MENTOR WORTH 4.5 BILLION? “Absolutely,” said Tony Hemmelgarn. It’s about much more than just IC and PCB design. “For instance, this idea of bringing together electrical, software and mechanical, whether it’s in integrated circuits (IC) or in printed circuit boards (PCB).” But there are other parts of Mentor that are interesting, as well. “We do a lot of work today in systems engineering; how we manage the requirements, whether they are functional, physical or whatever it is to drive the product definition.”

IS MENTOR WORTH 4.5 BILLION? “Absolutely,” said Tony Hemmelgarn. It’s about much more than just IC and PCB design. “For instance, this idea of bringing together electrical, software and mechanical, whether it’s in integrated circuits (IC) or in printed circuit boards (PCB).” 

But there are other parts of Mentor that are interesting, as well. “We do a lot of work today in systems engineering; how we manage the requirements, whether they are functional, physical or whatever it is to drive the product definition.”


Is Mentor Graphics Worth the $4.5 Billion Dollars Siemens Paid?

One thing that strikes me while speaking with Tony Hemmelgarn is his emphasis on the big picture. The world of product development and manufacturing is getting more and more complex. Industry 4.0, digitized factory concepts, IoT, digital twins and virtual reality – there’s a lot going on. Plus, the landscape of disruptive IT solutions is growing to an extent where it is getting hard to grasp the whole.

Some would say this makes for a stormy, almost chaotic, development climate. Others refer to it as “the perfect storm.”  Siemens PLM’s new CEO belongs to the latter group, and sees very few limits to what can be done.

Siemens isn’t buying Polarion simply to get hold of a software applications tool. They are acquiring it to become a part of the Teamcenter platform and extend their general ability to handle the entire product realization process. The same goes for LMS, CD-adapco and most certainly for Mentor Graphics.

“We’re talking about how everything can come together,” said Hemmelgarn.

Is Mentor worth the $4.5 billion Siemens paid? “You can always debate the price,” Hemmelgarn continued, explaining that it boils down to the question of what can be done with it, and how Mentor fits into Teamcenter’s platform structure.

I think we really have something unique here. We’re the first company that brought together the idea of mechanical / electrical / software in one environment. When you think about what Mentor brings to the table, this idea of bringing together electrical, software and mechanical, whether it’s in integrated circuits (IC) or in printed circuit boards (PCB), there are other parts of Mentor that are really interesting as well. For example, we do a lot of work today in systems engineering; how we manage the requirements, whether they are functional, physical or whatever it is to drive the product definition,” Hemmelgarn said.

But there’s more. Embedded systems and software, for example – what does that mean?

“We think about IoT and sensors; what does it mean to manage the sensors? The relationships of those sensors back to the software, the electronics and everything driving the product development process – how do you integrate all that together? So, it’s not just IC, it’s not just PCB; it’s the systems approach.”

In this context, he points out an interesting parallel. When Siemens bought digital manufacturing platform Tecnomatix ten years ago, the same question was asked at that time: “Is it worth what you’re paying for it?”

Others asked, “What does it mean to integrate things together?”

According to Hemmelgarn, “You had the silos then, too. You designed your product, threw it over the wall and then you manufactured it. Where our customers are today, they talk about ‘process driven product design.’ In other words, you’re making changes in consideration of the processes that were used to manufacture the part. You don’t make a foolish change to a design that looks like a minor change but costs you a fortune in the plant because you did something not in line with the plan. People don’t question that today.”

“Now you can make decisions in the context of the whole product. The value we can bring with Mentor is about crossing those silos.” Hemmelgarn concluded.


DIGITAL TWINS ARE A CENTERPOINT. The idea of digital twins is a centerpoint in Siemens’ digital factory concept. The key is to produce a digital twin of the entire value chain. This enables designers, engineers and operators to collaborate within a completely virtual world where they can design, simulate and iterate on the product. The digital twin idea comprises not only the product but also the factory, the equipment and the logistics systems.
DIGITAL TWINS ARE A CENTERPOINT. The idea of digital twins is a centerpoint in Siemens’ digital factory concept. The key is to produce a digital twin of the entire value chain. This enables designers, engineers and operators to collaborate within a completely virtual world where they can design, simulate and iterate on the product. The digital twin idea comprises not only the product but also the factory, the equipment and the logistics systems.


Aiming to Provide Best in Class Tools

The secret is to understand what is going on and equip yourself with the right tools.

“The best in class tools,” clarified Hemmelgarn, pointing to Siemens’ high-end CAD solution, NX, as one such tool. In the generally slow-growing CAD market, Siemens had an amazing breakthrough when Daimler decided to swap out Dassault’s CATIA V5 in favor of NX a couple years ago. 6,500 new licenses in one deal is a unique event.

“We’ve done very well with NX,” Hemmelgarn commented. “Our implementation at Daimler has gone extremely well, and ahead of schedule. So we always look for opportunities with the other automotive companies. As a large company with an extensive production of vehicles, it’s not an easy process to make a switch. So, you look for those opportunities where there’s an inflection point. But I think you make a key statement in this, and that is the use of Teamcenter.”

“Teamcenter is used heavily in most of the automotive OEM’s and Tier 1s today. But it’s not just Teamcenter; the Tecnomatix’ solution, our digital manufacturing capabilities, are used very heavily and if you look at what we’re doing with LMS, model-based simulation, design, test and measurement capabilities for both the virtual design and physical test process, you can see that we have a very good presence with those companies as well. The same goes for our recent acquisition of CD-adapco, and also for Polarion, our ALM solution that we acquired not that long ago. We are seeing a growing uptake for this solution too.”

 

TEAMCENTER AND SIMATIC AUTOMATION PROCESS SOLUTIONS. One strength in light of Siemens’ Industry 4.0 ambitions is the close connection between its PLM suite Teamcenter and factory floor solutions such as Simatic IT, which is a portfolio for manufacturing operations and manufacturing execution systems. The combination between its extensive PLM environment and the strong environment in manufacturing contributes to the strong hand Hemmelgarn is holding.
TEAMCENTER AND SIMATIC AUTOMATION PROCESS SOLUTIONS. One strength in light of Siemens’ Industry 4.0 ambitions is the close connection between its PLM suite Teamcenter and factory floor solutions such as Simatic IT, which is a portfolio for manufacturing operations and manufacturing execution systems. The combination between its extensive PLM environment and the strong environment in manufacturing contributes to the strong hand Hemmelgarn is holding.

 

My Take: If Any Player Can Realize the Dream of Industry 4.0, Siemens is Closest

Siemens’ strategy hasn’t changed. The company is still looking at emerging trends to make sure that they have them covered in their platforms and processes. The long-term challenge is to make sure they’re integrated, and to get them through the entire work stream that they see in Industry 4.0.

However, Tony Hemmelgarn is clear that there’s still a long way to go before that dream and vision of Industry 4.0 becomes an everyday reality. If you’re going to do that effectively, you’ve got to do the whole process. This is a foundation in Siemens PLM that the new PLM leader wants to see:

“You can’t say: ‘Well, I’m going to do R&D, and I might do a feedback loop from the service group, but I won’t do anything in manufacturing. That seems foolish to me,” Hemmelgarn said.

The short-term challenge is keeping pace with the technology that’s there today. IoT is one where there’s still some work to do – although the Mindsphere solution is a great start.

As with anything offered as platform-as-a-service, however, the key with IoT is not to duplicate what you can get from the marketplace today.

“If you look at Amazon today, they have a very strong offering for a baseline of IoT. Why would we want to duplicate that? On the contrary, we’ll leverage that, take advantage of that. The key is the domain knowledge and the analytics that you can apply. For instance, our Mindsphere solution can grab that type of information, whether it’s essentials from the factory floor, from products or whatever. You will a lot more from us on Mindsphere and what we’re doing there during the coming 18 months.”


EXTREMELY LOW FAULT RATE. Siemens’ Amberg facility: Out of around one million produced products a month, the fault rate is extremely low, the entire 99.99885% right from the start.
EXTREMELY LOW FAULT RATE. Siemens’ Amberg facility: Out of around one million produced products a month, the fault rate is extremely low, the entire 99.99885% right from the start.

 

Angela Merkel Was Impressed

When German chancellor Angela Merkel visited Siemens electronic factory in Amberg back in 2015, she was impressed. The facility is among the most modern and advanced in the world, and stands as a good example of Industry 4.0 and the concept of a digital factory.

Furthermore, it represents exactly what German industrialists in general believe to be the best way to compete with the emerging Eastern countries and the low cost profile that attracted Western industrial production owners to establish plants there instead of in their home countries. This concept, translated into a practical platform, can make that stream more efficient than building trade walls.

With the Teamcenter Suite and its connection to Siemens’ manufacturing hardware and software solutions represented by Siemens Simatic, the TIA Portal and other automation solutions, Hemmelgarn holds a strong hand, which is regarded as the strongest in the market by many observers with deep industrial insights.

If anyone can produce an Industry 4.0 type of platform, it’s Siemens PLM and the Digital Factory division. Together, they are big enough in terms of resources and competence; in-house they have one of the most–if not the most–advanced PLM and MOM (Manufacturing Operations Management) software, systems and services. And with over 15 million licensed seats and more than 140,000 customers worldwide, they can reach exactly the kind of customers that would be interested in these kinds of ventures.


Recommended For You