Siemens: From a Hardware Giant to a Software Leader
In the current wave of technological advancement, Siemens is no longer simply the commercial behemoth built solely on hardware in people's perception. In fact, it has quietly joined the ranks of top - tier European software providers on par with SAP and holds a leading position in the global software market. The industrial software system owned by Siemens boasts the most comprehensive category coverage worldwide, and its strong comprehensive competitiveness is truly remarkable. Its software system is like a precisely - operating industrial empire, permeating every aspect of industrial production and providing powerful support for the global industrial digital transformation.
MES (MOM): The Key Piece in Siemens' Industrial Software Empire
MES (MOM) plays a crucial role in Siemens' industrial software empire. It is like the intelligent brain of industrial production, coordinating all aspects of the production process. Generally speaking, MES (MOM) mainly consists of four core parts.
Production Operations Management is one of the core components of the entire Manufacturing Execution System (MES, also known as Manufacturing Operations Management - MOM). It is responsible for real - time monitoring and scheduling of the production process to ensure that production activities are carried out efficiently and orderly in accordance with the predetermined plan. From the input of raw materials to the output of finished products, every production step is under its precise control. It can promptly identify and solve problems that arise during the production process, thereby improving production efficiency and product quality.
Laboratory (Quality) Operations Management focuses on controlling product quality. During the production process, strict testing and analysis are carried out on raw materials, semi - finished products, and finished products to ensure that the products meet the quality standards. It utilizes advanced testing technologies and data analysis methods to conduct real - time monitoring and early warning of quality data, providing a scientific basis for the enterprise's quality decision - making.
Maintenance Operations Management is dedicated to ensuring the normal operation of production equipment. It formulates reasonable equipment maintenance plans, conducts regular maintenance and inspections on equipment, promptly detects and eliminates equipment faults, reduces equipment downtime, and improves the reliability and service life of equipment. At the same time, it can also effectively control equipment maintenance costs and enhance the economic benefits of enterprises.
Inventory Operations Management is responsible for the refined management of a company's inventory. It keeps track of the quantity, location, and status of inventory in real - time, optimizes the inventory layout, and reduces the occurrence of inventory overstock and stock - outs. Through reasonable inventory control strategies, it helps the enterprise reduce inventory costs and improve the capital turnover rate.
In addition, MES (MOM) also includes a series of other support projects, such as safety management, information management, document management, legal compliance management, etc. Although these support projects do not directly participate in the production process, they provide necessary guarantees and support for production activities, ensuring that the enterprise's production activities are carried out in a safe and compliant environment.
The Acquisition Path of Siemens Industrial Software
Looking back at the development history of Siemens Industrial Software, acquisitions are undoubtedly an important means for its rapid expansion. Over the 15 - year period from 2001 to 2016, Siemens spared no expense and spent $11 billion to acquire about 20 software companies one after another. Among them, 8 companies were related to MES.
In 2001, Siemens acquired ORSI in Italy. ORSI, established in 1982, was a professional MES manufacturer with 360 employees and an annual sales volume of approximately 28 million euros. This acquisition laid the foundation for Siemens' development in the MES field.
In 2003, Siemens acquired Compex in Belgium. Compex had 108 employees and an annual sales volume of approximately 10 million euros, focusing on MES solutions for the food industry. This acquisition further expanded Siemens' presence in the MES market of the food industry.
In 2006, Berwanger in the United States became a target for acquisition by Siemens. Founded in 1993, Berwanger had 185 employees at the time of the acquisition and was a manufacturer of Manufacturing Execution Systems (MES) in the petrochemical industry. This acquisition enabled Siemens to gain a foothold in the MES field of the petrochemical industry.
In 2009, Elan Software Systems, a French company, was acquired by Siemens. This company had 60 employees and was specialized in MES solutions for the biotechnology and pharmaceutical industries. This acquisition further enriched Siemens' MES product line in the biotechnology and pharmaceutical sectors.
In 2011, Active Tecnologia em Sistemas de Automação, a Brazilian company, became another acquisition target of Siemens. This company also focuses on MES solutions for the biotechnology and pharmaceutical industries, providing strong support for Siemens' market share in this sector.
In 2012, IBS AG in Germany was successfully acquired by Siemens. Founded in 1982, IBS AG had 200 employees and was mainly engaged in the development of quality management software. Quality management is one of the important functions of MES. This acquisition injected strong technical strength into Siemens' quality management module.
In 2013, Preactor, an APS manufacturer in the UK, was acquired by Siemens. Preactor was founded in 1992 and had 70 employees. Its advanced scheduling software is one of the most important functions of MES. This acquisition significantly improved Siemens' technological level in the field of production scheduling.
In 2014, Camstar, a company from the United States, was acquired by Siemens. Founded in 1984, Camstar was a professional MES manufacturer with 250 employees. This acquisition further enhanced Siemens' competitiveness in the MES market.
The underlying logic behind Siemens' acquisition of IBS
Quality management is a crucial module in MES. Before acquiring the IBS company (a provider of quality management software), Siemens had already acquired five MES enterprises, and each MES system included a quality module. However, why did Siemens still acquire the quality management software company IBS?
The reason is actually quite simple. The quality modules in these MES systems cannot meet the needs of certain specific customers. Take Berwanger in the United States, which was acquired in 2006, and IBS AG in Germany, which was acquired in 2012, as examples. Berwanger was founded in 1993 and had 185 employees at the time of acquisition. It was an MES manufacturer in the petrochemical industry. IBS AG was founded in 1982 and had 170 employees in 2006, mainly engaged in the development of quality management systems. In terms of the founding time, IBS has a history 11 years longer than Berwanger. In 2006, the number of employees in the two companies was roughly the same. However, Berwanger has more functional modules than IBS, which means that Berwanger must have far fewer industry experts and developers assigned to each module than IBS.
Simply from the perspective of development time and human - resource investment, the quality module of IBS is obviously much more complex than that of Berwanger. Moreover, the two companies focus on different industries. Berwanger mainly targets the petrochemical industry and cannot meet the needs of the discrete manufacturing industry at all. Siemens hopes to meet the quality - management needs of customers in certain specific industries, but finds that none of the MES systems it has acquired can meet the requirements of these customers.
In this situation, Siemens is faced with two options: self - development or acquisition. Although the cost is not relatively the biggest problem for self - development, the time cost poses a huge challenge. Developing a new quality management software requires a large amount of time, which will affect market opportunities. More importantly, no one can guarantee the success of product development. Just like the failed case of SAP Anywhere, even a giant like SAP may encounter setbacks when developing software independently.
After weighing the pros and cons, Siemens finally chose to make an acquisition. This fully reflects the principle of "specialization in one's field". Even Siemens, a company with abundant funds and a large pool of talents, is well - aware of the power of professionalism when it comes to such an important quality management module. In fact, as early as 2007, Siemens hoped to acquire the IBS quality management software company, but the deal didn't succeed. After five years of unremitting efforts, in 2012, Siemens finally acquired IBS.
The modularization and verticalization trends of industrial software
Nowadays, the ERP systems of enterprises are undergoing a decoupling process. Functions such as supply chain management, warehousing, logistics and distribution, customer service, sales channel management, order management, after - sales management, project management, and human resources management are gradually being split from the ERP system and handled by more specialized independent software. Currently, the classic ERP mainly retains only the financial module. This trend indicates that enterprises are paying more and more attention to the professional and refined management of software.
The MES system also shows a similar development trend. Siemens has started to sell its quality module separately, and even the sub - modules within the quality module. For example, the gauge management module can also be sold independently. Although Siemens' products, as always, maintain a relatively high price, with just this module costing hundreds of thousands of RMB, it also reflects that the products are developing towards verticalization and modularization. This development trend enables enterprises to flexibly select software modules that suit their own needs, thereby improving the software's usage efficiency and return on investment.
The dilemma of the breadth and depth of abilities
In the business and professional fields, there is a phenomenon where enterprises or individuals pursue the "big and comprehensive" approach, attempting to be involved in every aspect. However, this practice often leads to an embarrassing situation: it seems that they are involved in everything, but in fact, it is difficult to excel in each area. When faced with practical problems, they are unable to provide high - quality and feasible solutions for all the issues. It's like a person trying to master all eighteen martial arts but only learning the superficial skills of each. When actually going to the battlefield, they find that none of them can play a crucial role.For enterprises, spreading their energy to develop a variety of businesses and products leads to the over - dispersion of resources. As a result, it is difficult for them to dig deep into a particular field, and thus hard to form a strong core competitiveness.
Inspirations from the Choices of Industry Giants
Take Siemens, a global giant, as an example. In its development process, it deeply understands the importance of focus and specialization. Even though it has strong capabilities, a large - scale business system, and abundant resources, it still chooses to acquire products from specialized companies. There are profound strategic considerations behind this move.Specialized companies often have in - depth research and unique technological advantages in specific fields. Their products have been refined and optimized over a long period, showing obvious competitiveness in terms of professionalism and performance. By acquiring these specialized products, Siemens can quickly obtain advanced technologies and mature solutions in relevant fields and integrate them into its own business system, thereby enhancing its overall market competitiveness.In contrast, if ordinary - sized software companies blindly pursue product diversification and try to develop every type of product, the quality and performance of their systems can be easily imagined. It's as obvious as can be that products lacking professional depth and focus can hardly compete with specialized products that focus on a particular area in the market.
The acquisition path of software giants
Now, let's take a look at another software giant, SAP. From 1996 to 2017, over these 21 years, SAP acquired approximately 56 software companies. This series of acquisition behaviors is not accidental but an important decision based on SAP's own development strategy. In the rapidly developing software industry, technology is updated rapidly, and market demand is also constantly changing. By acquiring different software companies, SAP can quickly obtain new technologies, talents, and market shares, fill the gaps in its own business, and expand its business scope.Meanwhile, acquisitions also help SAP integrate industry resources, optimize its own product and service systems, and enhance its competitiveness in the global software market. This also shows from the side that even industry giants need to continuously integrate professional resources to maintain their leading position, rather than trying to be the best in all fields by themselves.