Innovation

Why Siemens put $10 billion into digital transformation

Smart data analysis is one way that enterprises transform and embrace digitalization, as billions of connected devices and machines bridge the real and virtual worlds.

Since 2007, Siemens has invested $10 billion in US software companies to drive digital transformation in various industries including manufacturing, energy management, and transportation.

Siemens has increased its research and development spending by 30% since 2014 in a push to develop new technologies. In 2017, it will spend an additional $300 million on R&D, to reach $5.4 billion. Siemens hosted an Innovation Day on Monday to showcase new technology, including MindSphere, its cloud-based, open IoT operating system.

"Siemens is driving the digital transformation globally and in the US," said Roland Busch, CTO and member of the managing board of Siemens. "That's why we invest about $1 billion annually in research and development in the US. We offer an unmatched digital portfolio consisting of software, digital services, security, and MindSphere. This enables our customers to increase their efficiency, flexibility, quality and reduce time to market."

SEE: Digital Transformation: A CXO's Guide (ZDNet/TechRepublic special feature)

Several of the software companies that Siemens has acquired since 2007 include UGS, eMeter, Camstar, Polarion, and CD-adapco. It most recently acquired Mentor Graphics for approximately $4.5 billion. The combination of software acquisitions and technology integrations is expected to result in double-digit revenue growth for Siemens through 2020. In 2016, Siemens generated about $4.6 billion through its software and digital services businesses, a 12% increase compared to the previous year.

Making use of the data collected by devices is key for industries wanting to move forward in the digital age. Half of all the data that exists in the world was created in 2016. And less than 0.5% of all the data collected last year was analyzed and used, according to Judy Marks, CEO of Siemens, explaining that she believes MindSphere will help industrial companies in particular make better use of their data and take them to the next level of competitiveness in manufacturing.

Next47 is Siemens innovation startup unit, and as part of Siemens focus on startups, it will invest $1 billion over the next five years in startups, Busch said.

Examples of companies that have used technology from Siemens to save operating costs include the community-owned electric and water utility in Jacksonville, Florida, which upgraded its infrastructure toward advanced metering. It used EnergyIP from Siemens to collect, consolidate, and validate meter data and outage events. This has resulted in $1.5 million in savings in 1.5 years.

Another example Busch shared was Amtrak, which used Siemens' sensors for its locomotives to optimize maintenance and aim for 99% of its 70 Vectron locomotives to be available at all times.

"We're correlating all the data into predictive maintenance so we can predict when a locomotive will have a failure," he said.

And another customer, Capital One, used Siemens' Navigator to improve energy efficiency, since residential and commercial buildings account for 40% of total US energy consumption. By using Navigator on more than 20 office buildings, it's seen a 10% savings in energy based on analysis of 14 million data records per week. Busch said this can go as high as 20-30% savings based on the individual building.

Artificial intelligence was a key to one customer, where an AI brain was inserted into a turbine resulting in a 15-20% reduction in nitrogen oxide emissions. "This is how powerful artificial intelligence can be," Busch said.

He sees vast possibilities for the future, such as how MindSphere could work to reduce emissions and energy usage in cities, such as New York, which already uses many of Siemens technologies to reduce emissions and energy usage.

Three takeaways for TechRepublic readers:

  1. In the past ten years, Siemens has invested $10 billion in US software companies to drive digital transformation in various industries including manufacturing, energy management, and transportation.
  2. Half of all the data that exists in the world was created in 2016. And less than 0.5% of all the data collected last year was analyzed and used.
  3. In 2017, Siemens will spend an additional $300 million on R&D, to reach $5.4 billion.

Also see

istock-511473492.jpg
Image: istock/511473492

About Teena Maddox

Teena Maddox is a Senior Writer at TechRepublic, covering hardware devices, IoT, smart cities and wearables. She ties together the style and substance of tech. Teena has spent 20-plus years writing business and features for publications including Peo...

Editor's Picks

Free Newsletters, In your Inbox