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SAP, Siemens partner to advance digital manufacturing

A new deal between SAP and Siemens combines SAP ERP systems with Siemens Teamcenter PLM platform, enabling companies to develop an end-to-end digital thread for manufacturing.

SAP and Siemens, two heavyweights in industrial software systems, are joining forces to accelerate the digitization of manufacturing processes.

The partnership centers on integrating Siemens Teamcenter product lifecycle management (PLM) platform with SAP systems, including SAP Intelligent Asset Management and SAP Portfolio and Project Management. This will combine processes like product lifecycle, supply chain and asset management that have traditionally operated separately.

SAP and Siemens will sell each other's systems, and Siemens Teamcenter will serve as the "core foundation for product lifecycle collaboration and data management," according to the two companies.

Analysts believe the SAP-Siemens deal may be a win for both companies and their customers as the product sets are complimentary, but it remains to be seen how all the pieces will work together.

Unified platform for manufacturing processes

The intent of the partnership is to create a unified platform that enables manufacturers to digitize the processes needed to meet the demands of Industry 4.0, said Franz Hero, head of digital supply chain at SAP, referring to the fourth industrial revolution. The companies said the goal is to create a "digital thread" that ties together product design, manufacturing, operations and retirement.

Franz HeroFranz Hero

"It's about making sure that you have all the logistics around product lifecycle to bring the materials to the production line, and from the production line to the customer," Hero said.

Siemens Teamcenter PLM platform and SAP's ERP have had integrations for years, but this new integration will be deeper and potentially more beneficial for customers, said Tony Hemmelgarn, president and CEO at Siemens Digital Industries Software, a business unit within the Siemens Digital Factory Division.

Tony HemmelgarnTony Hemmelgarn

"The value of this partnership is that we can solidify those integrations to bring together a complete digital thread that allows our customers to benefit with a seamless approach," Hemmelgarn said.

Siemens Teamcenter enables industrial data management from conceptual design to manufacturing and servicing, he said. However, Siemens lacked tools for things like enterprise asset management (EAM) and service lifecycle management that could establish this end-to-end digital thread for manufacturing.

"Teamcenter brings in all the upfront R&D design, such as CAD and 3D design, but the value-add with this is the integration back to the rest of the business," Hemmelgarn said. "When you design and build something, it's not finished once you've built it. It's about how you maintain it, how you learn what's happening with the product in the field, how you continuously build a closed-loop digital twin, and how you take what you learn from the product as it's being used and feed that back into the design."

Having this end-to-end connectivity of all elements of the manufacturing process is critical now because companies need to be more responsive to requirements that change much more frequently and quickly today, Hero said.

"The COVID-19 crisis has made it very clear that digitization is necessary in order to become an agile, responsive and resilient company, specifically from a supply chain perspective," he said. "The timing is good because a lot of companies now have had a wake-up call and they know that they have to take the next steps in the digitalization processes. This can really leverage that and bring this process together."

Partnership will advance Industry 4.0 efforts

The partnership has been in the works for years, but the time is right to go forward with it now, said Bob Parker, senior vice president of industry, software and services research at IDC.

Bob ParkerBob Parker

"SAP and Siemens have a classic high-tech relationship. They're each other's customers, they're each other's suppliers, they're competitors, they're partners," Parker said. "But the real winners of this deal are the customers, because this represents an opportunity for customers to get these two key providers working together to create a standard data model for products from inception to end of life."

This is particularly important now as manufacturers are struggling to modernize systems and processes to become more flexible and responsive to changes in market demands, according to Parker.

"The cadence at which companies are trying to operate in introducing new products has stepped up, which has created a tremendous market need for a unified approach to it, which created urgency on both sides to get the deal done," he said.

Companies -- and customers -- will benefit

The deal looks like a win-win for the companies as well as their customers, said Predrag Jakovljevic, principal industry analyst at Technology Evaluation Centers, an enterprise technology analysis firm in Montreal.

Predrag JakovljevicPredrag Jakovljevic

Siemens Teamcenter has functionality that makes it more suited for large companies with complex manufacturing scenarios, while SAP PLM is lacking in functions like PDM (product data management) and CAD integration, Jakovljevic said.

"It could be beneficial for SAP to offer Teamcenter PLM to its [larger] customers and offer its own PLM where it makes more sense," he said. "Siemens benefits from new PLM customers, plus it could integrate to Qualtrics for customer sentiments about new products, which again benefits SAP."

The new partnership doesn't remove competition completely, Jakovljevic said. He noted they will continue to compete for IIoT (industrial internet of things), manufacturing execution systems and manufacturing operations management customers.

Fate of SAP PLM is unclear

However, the fate of SAP's own PLM functionality appears to be up in the air.

It's likely SAP will defer to Siemens Teamcenter for large, complex discrete manufacturing industries such as automotive, aerospace and industrial machinery, while SAP PLM will be used for less complex industries, IDC's Parker said. Siemens, on the other hand, may defer to SAP in another area.

"Siemens was investing in supply chain applications and those sorts of things as well, so they were increasingly getting into SAP's space," Parker said. "It's likely that Siemens will defer to SAP around supply chain products."

Getting the data model right and centering on Siemens Teamcenter is a good first step, Parker said, but there will still be a lot of work to do to make the partnership work.

"They need to sort out the overlaps that still remain in the product sets. For example, down the road, do they combine SAP's asset intelligence network with MindSphere? So they've got a lot of product sorting out to do," he said. "Another challenge is just getting the sales teams to work together. You've got really high performance sales organizations here that are real alpha dog types, so it's going to be interesting to see how they can get sales working together."

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