by Gary Mintchell | Jun 6, 2017 | Internet of Things, News
Digitalization is the current hot word describing the latest manufacturing strategies. The concept has morphed from Industrie 4.0, Industrial Internet of Things, and smart manufacturing. The word was all over Hannover Messe this year, and one of the more fervent advocates was Siemens.
How important is this, really?
“What’s at stake with digitalization is the future of manufacturing competitiveness,” says Dean Bartles, Founding Executive Director of the Digital Manufacturing and Design Innovation Institute. “Germany is ahead, and China is making a big move in this area. More and more countries are adopting these technologies. To remain competitive, US manufacturers are going to have to master digital technologies.”
Bartles was quoted in a report commissioned by Siemens, The race to a digital future: Assessing digital intensity in US manufacturing.
On behalf of Siemens, Longitude Research surveyed 209 senior executives and directors of large US manufacturing organizations to understand the progress of digitalization among discrete and process manufacturers. Topics include trends in digitalization, examples of successful adaptation and suggestions to overcome barriers to moving forward in the digital age.
The Webpage includes a benchmarking tool so that you can compare your efforts to those in the study.
Based upon my own conversations with a variety of suppliers and implementers, I am not surprised that the researchers show two types of adopters: the ‘Efficiency Experts’ and the ‘Revenue Re-inventors’. Both groups are deploying digital technologies to improve productivity and efficiency, but the latter is leading the way in exploring how digital can be progressed even further – to transform their business model and unlock new markets.
Firms in the Revenue Re-inventors group are more likely than Efficiency Experts to say that their financial performance is ahead of their peers. In particular, Revenue Re-inventors are more likely to create new revenue streams from the provision of digital services – as Rolls-Royce has done through its Engine Health Management service, which uses onboard sensors and live satellite feeds to track the health of thousands of engines operating worldwide.
Once again, we should not be surprised. When did anyone cut their way to prosperity? On the other hand, I’d have expected the efficiency people to show more gains than they did. Wonder what their overall programs were?
The research evaluates manufacturers’ digital capabilities across the following core dimensions, using their relative progress in each to provide an overall score out of 100.
• Data intensity: data strategy, data collection, storage and analysis, and data-driven decision-making.
• Connectivity: sensor usage in production and output, and networking of production equipment and plants.
• Adaptability: customization capability, design and modeling, and robotics.
• Integration: enterprise and supply-chain data integration.
• Security: strategy and systems implementation.
• People: leadership, skills and training.
Does implementing a strategy show results, or is it more important as to how you implement a strategy? Research reveals that increased adoption rates do not necessarily translate into better results. Rather, the most successful manufacturers are those which take a bold and strategic approach to deploying the digital technologies they do invest in, and use this to predict trends and identify new opportunities to delight customers.
Here is a finding that is surprising—while 69% of the Revenue Re-inventers use predictive analytics, only 44% of the Efficiency Experts do. I’d figure that predictive analytics for such things as predictive maintenance would be enticing for the efficiency people.
Another finding that seems a little weird—the study sorted out the top five digital technologies. First off, this is definitely a Power Law curve, and secondly these don’t seem to fit together.
Cloud computing is almost universally adopted, a fact which should be no longer surprising. Drop some and then you have connected sensors—but we’ve been connecting sensors for years. Then a considerable drop off to 3D printing. The last is advanced data analytics—the one of all of these that seems to get the most media coverage.
This entire area has received at least four years of intense media coverage. Analyst firms have begun reformatting practices to specifically call out these strategies. Are we beyond the hype curve, yet? Or is it still in the smoke and mirrors stage?
by Gary Mintchell | Apr 4, 2017 | Automation, News
Wow, this one surprised me, although I’ve been pondering the automation landscape for a long time. There are two things. One is that you never know when the owners of a “mittlestand” type of company are ready to sell. The other is that ABB has been aggressively divesting rather than acquiring.
The telling comment in the press release, though, goes to the heart of what I’ve been saying about fellow European electrical and automation giant, Schneider Electric. Both have their sites set on Siemens.
Now the problem is the typical one–and a huge one. How do they integrate the companies? All three of the large European companies have had problems integrating acquisitions. We’ll look for things such as executive flight and sales growth. Will customers flock to rival Beckhoff Automation for a pure automation play. The larger pure automation play–Rockwell Automation–seems to have conceded Europe–at least for the time being.
I don’t like just republishing press releases, but in this case (since I woke up three hours after the live press conference was held), you have my analysis. Here is what ABB says:
ABB to acquire B&R
Shaping leadership in industrial automation
- Acquisition of B&R (Bernecker + Rainer Industrie-Elektronik GmbH) will close ABB’s historic gap in machine and factory automation
- Creating a uniquely comprehensive automation portfolio for customers globally
- B&R is a proven innovation leader in Programmable Logic Controllers (PLC), Industrial PCs (IPC) and servo motion-based machine and factory automation
- B&R delivered a revenue CAGR of 11% over last two decades and annual sales of >$600 million in the highly attractive $20 billion machine and factory automation market segment
- B&R’s software and Internet of Things (IoT) solutions further strengthen ABB’s digital offering, ABB Ability™
- Clear commitment to B&R’s growth strategy, mid-term sales ambition of >$1 billion
- Continuity of B&R’s management, founders support integration phase as advisors
- B&R’s headquarters in Eggelsberg, Austria, to become ABB’s global center for machine and factory automation
- Transaction funded in cash, operational EPS accretive in year one, closing expected in summer 2017
- Purchase price not disclosed, multiple in line with peer valuations
ABB announced on April 4, 2017 the acquisition of B&R, the largest independent provider focused on product- and software-based, open-architecture solutions for machine and factory automation worldwide. B&R, founded in 1979 by Erwin Bernecker and Josef Rainer is headquartered in Eggelsberg, Austria, employs more than 3,000 people, including about 1,000 R&D and application engineers. It operates across 70 countries, generating sales of more than $600 million (2015/16) in the $20 billion machine and factory automation market segment. The combination will result in an unmatched, comprehensive offering for customers of industrial automation, by pairing B&R’s innovative products, software and solutions for modern machine and factory automation with ABB’s world-leading offering in robotics, process automation, digitalization and electrification.
Through the acquisition, ABB expands its leadership in industrial automation and will be uniquely positioned to seize growth opportunities resulting from the Fourth Industrial Revolution. In addition, ABB takes a major step in expanding its digital offering by combining its industry-leading portfolio of digital solutions, ABB Ability, with B&R’s strong application and software platforms, its large installed base, customer access and tailored automation solutions.
“B&R is a gem in the world of machine and factory automation and this combination is a once-in-a-lifetime opportunity. This transaction marks a true milestone for ABB, as B&R will close the historic gap within ABB’s automation offering. This is a perfect fit and will make us the only industrial automation provider offering customers the entire spectrum of technology and software solutions around measurement, control, actuation, robotics, digitalization and electrification,” said ABB CEO Ulrich Spiesshofer. “This acquisition perfectly delivers on our Next Level strategy. With our unique digital offering and our installed base of more than 70 million connected devices, 70,000 control systems and now more than 3 million automated machines and 27,000 factory installations around the world, we enable our combined global customer base to seize the huge opportunities of the Fourth Industrial Revolution.”
“This combination offers fantastic opportunities for B&R, its customers and employees. We are convinced that ABB offers the best platform for the next chapter of our growth story. ABB’s global presence, digital offering and complementary portfolio will be key for us to further accelerate our pace of innovation and growth,” said Josef Rainer, co-founder of B&R.
“This is a strong signal for our employees as our operations in Eggelsberg will become ABB’s global center for machine and factory automation,” said Erwin Bernecker, co-founder of B&R. “The most important thing to me is that the companies and their people fit so well together and that our founding location will play such a key role.”
Complementary strengths
With the acquisition, ABB will expand its industrial automation offering by integrating B&R’s innovative products in PLC, Industrial PCs and servo motion as well as its software and solution suite. ABB will offer its customers a uniquely comprehensive, open-architecture automation portfolio.
B&R has grown successfully with a revenue CAGR of 11 % over the last two decades. Revenues more than quintupled since 2000 to more than $600 million (2015/16). The company has a rapidly growing global customer base of more than 4,000 machine manufacturers, a proven track record in automation software and solutions and unrivaled application expertise for customers in the machine and factory automation market segment.
Both companies have complementary portfolios. ABB is a leading provider of solutions serving customers in utilities, industry and transport & infrastructure. B&R is a leading solution provider in the automation of machines and factories for industries such as plastics, packaging, food and beverage. The joint commitment to open architecture increases customer choice and flexibility facilitating connectivity in increasingly digitalized industries.
Substantial investments in innovation
Innovation is at the heart of both companies. B&R invests more than 10 percent of its sales in R&D and employs more than 1,000 people in R&D and application engineering. ABB spends $1.5 billion annually on R&D and employs some 30,000 technologists and engineering specialists. Going forward, ABB and B&R will continue to invest considerably in R&D.
Automation of machines and factories is a key driver of the Fourth Industrial Revolution and the IoT. ABB will continue B&R’s strong solution-based business model and build on its deep domain expertise to develop new software-based services and solutions for end-to-end digitalization. ABB’s industry-leading digital offering, ABB Ability, will now capitalize on the large installed base, application and solution know-how, simulation software expertise and advanced engineering tools of B&R.
Proven integration approach
On closing of the transaction, B&R will become part of ABB’s Industrial Automation division as a new global business unit – Machine & Factory Automation – headed by the current Managing Director, Hans Wimmer. Both companies consider B&R’s management and employees as a key driver of future growth and the business integration together with their counterparts from ABB. The co-founders of B&R, Erwin Bernecker and Josef Rainer, will act as advisors during the integration phase to ensure continuity.
The integration will be growth-focused and live by the “best-of-both-worlds” principle, with ABB adding its own PLC and servo drive activities to the offering of the new business unit in a phased approach. ABB underlines its clear commitment to continuing the B&R growth story by articulating a mid-term sales ambition to exceed $1 billion.
ABB is committed to further investing in the expansion of B&R’s operations and to building on the company’s successful business model and brand. B&R’s headquarters in Eggelsberg will become ABB’s global center for machine and factory automation.
Austria benefits as technology and business hub
With this acquisition, ABB becomes the largest industrial automation player in Austria. ABB has operated in Austria for more than 100 years. With the strong future role, B&R and its headquarters in Austria will play as part of ABB, Austria, particularly Upper Austria, will benefit. The planned expansion of the R&D and production activities in Eggelsberg and Gilgenberg will strengthen Austria’s high-tech industrial landscape.
Transaction financials
The transaction multiple is in line with peer valuations. The parties agreed not to disclose the purchase price. ABB will finance the acquisition in cash. The transaction is expected to be operationally EPS accretive in the first year, and is expected to add significant synergies of about 8% of B&R’s stand-alone revenue in year four. The transaction is expected to close in summer 2017, subject to customary regulatory clearances.
by Gary Mintchell | Mar 28, 2017 | Automation, Education, Leadership, Technology
Manufacturing in America—an event bringing together vendors, academia, end users of controls and automation. Siemens Industry, collaborating with its local distributor Electro-Matic, held a trade show/seminar series/thought leadership summit at the Marriott Renaissance Center Detroit March 22-23. The show has a distinct automotive industry feel, as you might expect, even though Detroit, and indeed all of Michigan, is reforming itself along high tech lines with less reliance on traditional automotive.
There was certainly a lot of thought leadership opportunity at the event. There was the Siemens Industry President of Digital Factory. There was the Governor of the State of Michigan.
And then, there was the group of high school students competing in the FIRST Robotics competition known as the ThunderChickens—Engineering A Better Way To Cross The Road. The picture shows a model of their robot. Such passion. Such creativity. The mechanical guy pointed to the control module. “It limits me to 6 motors,” he said. “Last year we only had one, but this year I could have used many more.”
Six motors!! What I’d have given as a kid building stuff to have one! Oh well, they were great.
Raj Batra, President of Digital Factory for Siemens, said the focus is on digitalization. Digital Twin is a piece of digitalization. This is the digital representation of a physical thing—product, machine, or component. Siemens brought all this together through the 2007 investment in acquiring UGS to form Siemens PLM. “Companies thought it was hype back then, now we know it drives value,” said Batra. “If you are a pure automation company how do you accomplish all this without a design component? You can’t have the digital twin. Meanwhile, a CAE company that doesn’t have automation and control do manufacturing—what do you get?” Batra added challenging the competition.
Batra continued, “We are close to a new era of autonomous manufacturing. And there is the growth of IIoT, we call Mindsphere. This all means manufacturing is no longer a black box to the enterprise. Indeed, it is strategic to the enterprise.”
Paul Maloche, vp sales and marketing Fori Automation, manufacturers of automated guided vehicles, discussed the methods by which collaboration with suppliers (in this case with Siemens) leads to innovation. Fori was diversifying from reliance on building machines for automotive applications, and evaluated the aerospace industry. The Siemens rep came in and said they could help get them into that market. But Fori would have to convert to Siemens control. The Fori team replied, “OK.” This led to development of automated guided vehicle technology and products. The partnership opened doors. Fori won several orders in aerospace market for the new AGVs with Siemens control.
Alistair Orchard, Siemens PLM, riffing off a space movie, began his talk, “Detroit, we have a problem.” All the old business models of trying to ship jobs overseas has not worked. We need to make stuff to be successful as a society. “So much of what we do has not changed in 50 years in manufacturing,” he noted, “but digitalization can change everything. Additive manufacturing can lead to mass customization due to 3D printing using the digital twin. You can try things out, find problems in design or manufacturing. You can use predictive analytics at design stage. Digital enterprise is about manufacturing close to the customer.”
Governor Rick Snyder, Michigan, touted his manufacturing background as former operations head at Gateway Computers. “As governor,” he said, “it’s about how you can build an ecosystem and platform for success. Long term, success needs talent. His philosophy contains the idea that we shouldn’t tell students what they should study, but let them know where opportunities are and how to prepare for them. The private sector needs to tell government what they need in the way of talent.”
Michigan has grown more manufacturing jobs than anywhere else in the country. Not only manufacturing, though, Michigan is also a center of industrial design. But the economy not only needs designers and engineers, but also people in skilled trades. “We need to promote that as a profession. We must break the silos that said your opportunities are limited to your initial career choice.”
Michigan has invested a lot in students, especially in FIRST Robotics, where Michigan teams have risen to the top. The state has also started a computer science competition in cyber security.
How are you innovating and making the world better?
Josh Linkner, CEO Detroit Venture Partners, gave the keynote address on innovation. I’ll leave you with his Five Obsessions of Innovators.
1. Curiosity—ask open ended questions
2. Crave what’s next—future orientation
3. Defy tradition—use Judo flip to turn idea on its head
4. Get scrappy—grit, determination, tenacity
5. Adapt fast
by Gary Mintchell | Sep 6, 2016 | News, Security
Siemens invited a couple of writers to the Cincinnati area headquarters of PLM and a Cyber Security Center of Excellence to witness an internal presentation to Siemens employees. The presentation included both an overview of cyber security and the Siemens response plus Siemens’ plans to build a sizable business in the area. I was there along with safety and security writer Greg Hale.
Eric Spiegel, President and CEO, Siemens USA, kicked off the day with a presentation on the importance of cyber security and Siemens’ intent to build the business. In fact, Spiegel noted, “We want to grow the cyber security services in the US at 2x market speed. Cyber was a small part of our business, but we see much potential for growth.”
Spiegel related, “I was at a White House meeting in the situation room, had a chance to meet the President. He talked to me directly about the need to protect critical infrastructure.” Spiegel continued that hacking is top of mind in this area. Recognizing Siemens’ own strategies in the area, he continued, “If digitalization is important for the future of manufacturing, then cyber security is also important. Attacks on critical manufacturing are becoming more frequent and intense. Two-thirds of CEOs rank cyber security as one of the top two things on their agenda. In response, we have 50 differentiated service offerings in cyber today.”
Cyber Security Golden Nuggets
Joanna Burkey, U.S. CISO, moderated the first panel discussion which was more technical in nature. She suggested to look for what she called “Golden Nuggets”, that is, places where a risk-based approach suggests vulnerabilities. For example, she noted, one is source code.
Siemens began the effort to uncover these golden nuggets and then decided to take what it learned to its customers. When Siemens goes out to a customer to consult on cyber risks, it follows a process that includes mapping IT assets (for example, SAP, end points, encryption), developing an asset classification system, designing an holistic protection process coordinating with business, IT, and vendors.
Siemens has identified about 700 of these golden nuggets and is in the process of mitigating 121 of them. It expects the number to grow to about 1,000.
Rolf Reinema, Head of Technology Field, added that protecting Intellectual Property goes beyond hardware and software, but it also includes algorithms. In process industries, these might be called recipes residing in a processor. “OT attacks are complex. Having so much legacy equipment creates vulnerabilities.” Then he left us with this sobering thought, “If a hacker shows they can attack, they’ll ask for a substantial deposit of bitcoins so that they won’t carry out the attack.” Think of the blackmail you could be open to.
Udo Wirtz, Head of Technology Field, calls the Internet the new company Intranet. “We are shining a light in a cave, we now can see some of the problems where five years ago not so much.” Wirtz also addressed phishing attacks. These attacks are still an important problem tricking people into clicking on what looks like a legitimate link which instead gives the hacker access to user accounts and even administrative rights. “So they are phishing all of us,” he concluded.
In March the FBI came to Siemens and GE and said that both had been contacted by Facebook. It seems that someone was “friending” employees on Facebook and building an innocuous relationship. Then they sent a link that turned out to be malicious. “It used to be stupid to click on a link. But today the messages are so sophisticated that it is hard to tell legitimate from phishing.”
Growing Cyber Security as a Business
The next session was a Marketing Panel addressing how Siemens will move cyber from internal to a customer service. Rajiv Sivaraman, VP and Head of Plant Security Services, said that given the development of digital manufacturing, cyber is high on the enterprise list. Siemens is laying foundations for taking customers on a journey to awareness. Answering the question about scaling the business, Sivaraman noted a progression of going from consulting and “hand-holding” to ultimately scaling to managed services. Siemens is also checking out partners for both C-Level and operations level consulting.
Ken Geisler, VP of Strategy & Markets, Energy Management Digital Grid, reported grid suppliers do have compliance requirements. As they grow many more points of access, e.g., smart meters on homes, there is growing concern for cyber security. Cyber is a huge potential market with many competitors.
Judy Marks, Executive Vice President, Global Solutions, Dresser-Rand, A Siemens Business, says that with the oil & gas market it’s all about business and enterprise risk. Especially with the exposure of offshore facilities. They also have the challenge of operating in a heterogeneous environment. Siemens, through acquisitions, is now a leading service provider to O&G and plans to leverage that into growing the cyber business.
In his first year at Siemens, Leo Simonovich, Director, Global Cyber Strategy, said operations is the new frontier for attacks. Of all attacks, 30% are targeting of coming from OT. Customers are turning to Siemens “because we understand that environment. We can secure the technology stack.” Another sobering thought, your chances of an attack? 100%.
Jeremy Bryant, Head of PD PA secure networking solution business, added that customers (and Siemens) need to be worried about inside-out attacks as well as outside-in.
Overall, a profitable day in Cincinnati to learn what Siemens was up to. Several of the majors have some type of cyber division or initiative. Siemens appears to be ahead of that pack right now. As a user, you should be happy that suppliers are developing solutions to help in the battle.
by Gary Mintchell | Apr 28, 2016 | Automation, News, Operations Management
Echos of Industrie 4.0 were present around the Hannover Messe 2016, but times have moved on since 2013. The word of the week was digital–in many forms, such as digitalization, digital enterprise, digital factory.
Chancellor Merkel and President Obama (two friends says the headline) were not digital, however, as they made a grand tour through parts of the trade fair highlighting the latest manufacturing technologies. And when the US President appears, the rest of the world stops. There were a reported 10,000 police in Hannover. The building I was in during the tour was surrounded by police, we could see snipers on the buildings around us, and we were locked in from 9 am until 1 pm. Fortunately, we had food.
Fortunately also for Siemens, they had a “captive” audience for their press conference for an extra couple of hours.
Siemens captured a large chunk of my time in Hannover. (Disclaimer, two divisions of the company paid some of my expenses.) Because I had some good contacts, I was able to get many interviews and looks behind the scenes. But the main reason I spent much time there was that Siemens had much to show.
Digital Manufacturing Vision
The digital manufacturing vision that Anton Huber laid out for me at the ARC Forum in Orlando in 2006 has progressed considerably. With a backbone of Internet of Things technologies and adding in digital everywhere, Siemens revealed the benefits of bringing everything together.
Take a tour through automobile production, for example. Sebastian Israel took me through the process from designing in Siemens CAD solution (NX), to production planning and engineering (TeamCenter, both from Siemens (PLM). The process continues through designing and engineering the line–digitally of course. Because it is digital first, engineers can simulate the line removing constraints and interferences before any steel is cut.
Integrating the automation and controls to the process is the hardest part of the system. Siemens has begun this process. It does acknowledge much work remains in this area. Mechatronics integration is well along. Things do not stop here, though. TeamCenter helps with change management. TiA Portal enables control engineering collaboration. The process feed the execution level (MES) for production scheduling and other functions including feeding the resource manager of CNC tools to help select the proper next tool to use. This integrates into services–data is usable for such analyses as predictive maintenance.
So far as I can tell, no other company comes close to the ability to do all this within its own umbrella. Although remarkable for what I’d call the “old” Siemens, the “new” Siemens actually uses partnerships to fill the gaps in the system. This is not the same company I met 15 years ago.
I congratulate Mr. Huber for the vision and seeing it through to its current state.
Other Siemens News
Rihab Ehms led a personal tour on TIA Portal Engineering Software. This product continues to develop and flesh out gaps. The first glimpse from a few years ago was pretty much that of an Integrated Development Environment for programming control. Slowly, the Siemens team added drives, HMI, and now motion control and motor management. Also included is energy management. It is a multiuser environment enabling broad collaboration among engineers using a “smart library” concept and common data management.
Ulli Klenk, next on my list, discussed Industrial Additive Manufacturing. I mentioned some interviews I’ve had on additive manufacturing research at North Carolina State. A Duke grad, he was a bit disappointed. His passion showed on the ways Siemens is helping customers with additive manufacturing (also known as 3D printing). Leveraging expertise from Siemens PLM and working with partner machine builders, the company has systems working in a number of application.
Not part of this exhibit but thoroughly fascinating as well, Local Motors sent an engineer to participate in the Siemens booth showing how the company is building a complete car (and now a minibus) using additive manufacturing methods.
The paper industry faces challenges as we all reduce the amount of paper we use. It is searching for alternatives to its product lines. Therefore the broadening of the industry term to “fiber.” Siemens is there, of course, to blend its process control, drive systems, simulation, and predictive maintenance capabilities. Dr. Hermann Schwarz explained the technologies and then said these technologies will help the paper industry broaden into the fiber industry.
One last technology that I didn’t tour but heard much about is MindSphere. Partnering with SAP HANA, this is an industrial cloud providing data driven services and eventually an App Store so that customers can wring the most value possible from their own data.
Not a Chance
When this vision was explained in 2006 and 2007, I didn’t think there was any chance Siemens could pull it off. The pieces are coming together well. They still have much work to do, but customers can certainly benefit right now with increased manufacturing flexibility, product quality, and efficiency.
