Siemens and SAP Partner to Co-Develop and Co-Deliver Integrated Solutions for Digital Industries

Siemens and SAP are partnering to deliver integrated End-to-End (E2E) software solutions across product lifecycle management (PLM), supply chain, and asset management. As part of this arrangement, SAP will offer Siemens’ Teamcenter software as the core foundation for product lifecycle collaboration and product data management, and Siemens will offer SAP Intelligent Asset Management solutions and SAP Project Management applications. The expectation is that the partnership will not only drive additional cross selling opportunities, but also allow customers to form a true, comprehensive digital thread of the entire product lifecycle with the co-development of future solutions. This is the first in a series of announcements from the German duo.

Most will view Siemens/SAP as a dream team partnership between two industry leaders, and they won’t be wrong. SAP’s Enterprise Resource Planning (ERP) applications touch 77% of global transaction revenue and Siemens is the largest power base in terms of product development and factory (process) automation. Furthermore, manufacturers have endured unruly integration and customization of their respective systems for decades and there has been a general realization that joint development will bring down these costs. The question is, “why now?” The tipping point for this partnership relates to the maturation of industry logic around the benefits of Industry 4.0 and, importantly, elevation of the partner conversation to the C-level (starting December 2019).

The Siemens/SAP partnership is deeper than the Siemens/IBM partnership[1] and potentially more along the lines of PTC/Rockwell/Microsoft, as explained in the ABI Insight A US$1 Billion Industrial IoT Partnership: Who Wins? (IN-5175), but with a different business structure. For example, there is a deeper organizational element of process integration—identifying and standardizing best practices between the firms—that will not be as overtly seen, and, unlike IBM, Siemens will resell SAP software and vice versa. The similarity across these deals is that eventually, and soon, we expect to see new joint offerings that leverage a combined suite of capabilities to speed Time to Market (TTM) and, therefore, value. While the initial industry focus is discrete manufacturing industries like aerospace, automotive, and electronics, this purview will expand quickly as SAP’s massive userbase—including its strong process—comes to the table.

Benefits for industrial and manufacturing end users include the ability to design products with real-time supply chain information, as mentioned in the ABI Insight The Impact of COVID-19 on Manufacturing Technology Adoption (IN-5813), develop sustainably and with sustainability as a priority (an increasingly important point of differentiation), and improve real-time decision making with a unified PLM/ERP digital thread backbone.

[1] https://newsroom.ibm.com/2020-06-17-Siemens-and-IBM-Deliver-Service-Lifecycle-Management-Solution

For Siemens, the benefit is access to SAP’s customer base and the ability to position Teamcenter as the new modus operandi for PLM. The benefit to SAP is the ability to dedicate more resource to its core business—SAP HANA and S4/HANA—and further its strategy of supporting real-time decision making throughout the product and supply chain lifecycles. A joint Siemens/SAP Go-to-Market (GTM) motion also substantially alleviates the onus of customizing and integrating manufacturing operations software, so it will generally be viewed as a net positive for industry. But, comparatively, who wins?

Siemens gets the better end of this deal due to the sheer value of SAP’s customer base and the sales engine behind it. ABI Research also anticipates that supply chain integration will greatly enhance the potential of the Siemens product portfolio, especially for future Internet of Things (IoT) modalities that leverage Artificial Intelligence (AI) and Machine Learning (ML), such as generative design and simulation software for both product and process engineering. There is also potential for enhancements in the areas of data analytics, customer-driver product improvement (e.g., via SAP’s 2019 acquisition of customer experience data company Qualtrics), and edge-cloud workload distribution. It would be surprising if Mendix didn’t also come into the mix at some point, given Siemens’ interest in implementing low-code/no-code workflows across its portfolio.

Companies like Dassault Systèmes, PTC, Autodesk, and IBM have strong offerings in the same arena Siemens and SAP play in individually, and now combined. These companies and their peers must identify the parts of their technology portfolio most open to cloud-based supply chain integration and evaluate the business levers to be a partner of choice. Systems Integrators (SIs) should also be concerned given the impact of joint development on the need for third party integration work. While there will always be instances when competition or customers dictate radical change, this partnership hits on both.