siemens in the age of digitalization in the age of digitalization ... siemens schneider electric dax...

Siemens in the age of

Digitalization Dr. Horst J. Kayser | Chief Strategy Officer

Boston, September 6, 2016

Unrestricted © Siemens AG 2016

© Siemens AG 2016. All rights reserved.

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We are a global powerhouse in electronics

and electrical engineering

Energy

Supply

Industrial

manu-

facturing

Health-

care

Mobility and

Building

Infrastructure

Intelligent

infrastructure

automation

Resource saving

power generation

& transmission

Boosting

industrial

productivity

The enabler for

healthcare providers

worldwide


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Over the past 17 years Siemens has outperformed

the market and major competitors

Source: Thomson Reuters Datastream; as of June 6, 2016

Index

+269%

+20%

-42%

+177%

+46%

+142%

Development of share performance

Siemens Schneider Electric DAX ABB GE Toshiba


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Siemens Vision 2020

Making real what matters

Setting the bar in the digital

transformation market by leveraging our

unique know-how

Inspiring a Genuine Ownership Culture that Drives Ingenuity and Good Decision Making

Achieving sustainable growth

by putting customers first, seizing opportunities and exploiting our

capabilities / capacity

Siemens Vision 2020 Making real what matters

Implementing a new

operating model as efficient as our solutions and as

dynamic as our markets Digitalization

Automation

Electrification

Expected market growth

~7-9%

~4-6%

~2-3%


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Siemens Vision 2020 – Stringent execution delivers results

2015 2016 2017 2018 2019 2020

Ownership culture drives high performance team

Value

Operational

consolidation

Strategic

direction Optimization

Accelerated growth

and outperformance

Drive performance • Cost reduction support functions (€1bn)

• Global footprint optimization

• Fix underperforming businesses

Strengthen core • Stringent capital allocation

Scale up • Innovation initiative

• Customer and market focus

• Digitalization at work


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Demographic change

Urbanization

Climate change

Globalization

Five Megatrends shaping our world of tomorrow –

Changes in the markets are accelerating

Digital transformation

Trend to increase

investment abroad

Growing and ageing

population

Cities as main driver

of GDP growth

Global warming and

weather extremes

Contribution to global GDP growth,

2007-20253, in %

World population1, in bn Annual mean temperature

variations 1950-20142 (in °C)

Connected devices5, in bn

-0,3

0

0,3

1950 1970 1990 2010

0.3

-0.3

Other cities

and rural areas 38%

Cities >10mn

5mn – 10mn

2mn – 5mn

150k – 2mn

50

23

9

2012 2020 2016

Exponential

growth of

connected

devices ...

… and

digital data6

2.8 ZB 40.0

ZB ZB = Zettabytes = 109 Terabytes

9.00

0.16 1.92 0.83

6.10

0.12

2015

1.25 -0.01 0.00 1.36

2050

Developing

countries

Industrial

countries 15-65

65+

0-14

2015 2009 2013 2011

-19%

+14%

Imports vs. GDP4)

FDIs total5)

1) UN World Population Prospects (2012) | 2) Met Office Hadley Centre observations (2014) | 3) McKinsey Global Institute Cityscope (2011) | 4) UNCTAD: Import Flow merchandise: Total trade and share / GDP

| 5) 2008-2014: UN Conference on Trade and Development: FDI inward flow ; 2015: UNCTAD Global Investment Trends Monitor No.22

| 6) Cisco: The Internet of Everything (2013) | 7) IDC: The Digital Universe (2012)


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Global trends

Siemens Vision 2020 – leading position in Electrification, Automation,

Digitalization

Market development (illustrative)

Digital

transformation Networked world of complex

and heterogeneous systems

Globalization Global competition driving

productivity and localization

Urbanization Infrastructure investment needs

of urban agglomerations

Demographic

change Decentralized demand of a

growing and aging population

Climate change Higher resource efficiency

in an all-electric world Efficient Energy Application

Power Transmission, Distribution & Smart Grid

Power Generation

Imaging & In-Vitro Diagnostics

Today Mid term – 2020

Electrification ~2–3%1

Market growth

Automation

Digitalization ~4–6%1

Market growth

~7–9%1 Market growth

Innovating along the electrical value chain

1 Est. market growth (CAGR) over cycle


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Executing Vision 2020 –

Capital allocation along strategic imperatives continues

Closing of acquisition of CD-adapco for

$970m to pursue industrial software

strategy

5| Paradigm shifts?

3| Why Siemens?

4| Synergetic value?

2| Potential profit pool?

1| Areas of growth?

Strategic asset combination

Joint venture to

become leader in

both on-shore and

off-shore Wind

Jan 2016

Sept 2014

Jan 2016

Closing of LMS for €680m as a first

major simulation software company

enhancing Digital Twin capability

Nov 2012

July 2013

Closing divestment of remaining

assets to EQT for €300m

Divesting joint venture equity to Bosch

for €3.25bn

Divestment via flotation of Osram on

stock exchange


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Q3 FY 2016 – Strong momentum despite continuing market uncertainty

• Further portfolio optimization and cost savings acceleration

• Clear order increase excl. FX of 10% to €21.1bn

• All-time high backlog of €116bn, book-to-bill at 1.06x

• Clear revenue growth excl. FX of +9% to €19.8bn

• Industrial Business margin expansion to 10.8% (up 130bps)

• 8 out of 9 Divisions in the target margin range

• Net income of €1.4bn; earnings per share of €1.64

• Strong free cash flow of €1.8bn


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Siemens Digitalization

Digitalization at Siemens is about improving our customer value chains

by generating powerful data models and comparing these to the real world

Connectivity and

internet of things

Collaboration

and mobile

Big data and

analytics

Cloud

technologies

Cyber-Security

Maintenance &

services

Automation &

operation

Design &

engineering

Improved productivity &

time-to-market

Higher flexibility &

resilience

Increased availability &

efficiency

Combining the virtual & physical world …

… across entire customer value chains

Closed-loop Data Lifecycle / Digital Twin


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Siemens Digitalization – strategic expansion of scope now reaching data

business platforms

2007

Predictive maintenance

Digital Services

Data Business Platforms

Vertical Software

Digitally enhanced

E & A 1847: Telegraph …

• Reducing lifecycle

maintenance cost

• Revenue & profit driver

1847 Today

…1994: Simatic S7…

…2009: World-record GT…

Future

• Leading in vertical SW

• Differentiator Simulation

• Driving the B2B

network-effect

• Leading in automation

• Managing commodi- tization

…fully automated metros

MindSphere

Power System Simulator

(PSS®)


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Digitalization leadership and scale

Digital Services

Vertical Software

Digitally enhanced

E & A

#12 largest software provider globally

€3.1B revenue FY15

+16% growth

#1 Automation player in industry, buildings, grids,

power plants and rail

€0.6B revenue FY15

+15% growth

>350k connected devices

Pioneering vertical platforms driven by divisions

• Availability guarantees

• Prescriptive services

• Energy efficiency, …

teamplay MindSphere Data

Business Platforms

Power System Simulator (PSS)

Rail Smart Guidance,

monitoring & analytics


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(PSS®)


business platforms


Digital Services


Vertical Software

Digitally enhanced



maintenance cost


1847 Today



Future



• Driving the B2B

network-effect




MindSphere

2007


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Vertical software –

CD-Adapco simulates complex fluid dynamics for shipping applications

Digital twins

Process-oriented

computational fluid

dynamics (CFD) software

calculates the forces

acting on the body used in

everything from engine

design to ship hull design


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Factory Automation developed immersive Virtual Reality technology

Simulation and

visualization of

industrial plants for

customers

A complicated stamping-

press was visualized in

VR together with a

console gaming developer

from London


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Lifecycle plant engineering with COMOS

Planning, simulation

and visualization of

industrial process

plants

By assimilating planning

and operational data,

customers reach higher

productivity and quality


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Vertical software - Power System Simulator (PSS®)

Modelling, simulation and analytics help keep the lights

Simulation of power

flow for utility

planning

Power System Simulation

(PSS) software from

Siemens PTI used in 115

countries


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Siemens Building Technologies simulates crowds for hazard scenarios

Simulation of building

usage improves

safety and comfort

“Crowd Control” inside

Building Information

Modeling (BIM) for

Hazard Simulation


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business platforms


Digital Services


Vertical Software

Digitally enhanced



maintenance cost


1847 Today



Future



• Driving the B2B

network-effect




MindSphere

2007


(PSS®)


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Profertil is a major fertilizer

manufacturer in Argentina

Ordered a new SGT-600 gas

turbine for fertilizer plant,

used for all energy needs with

potential to sell excess

Profertil only has plant

overhauls every three years,

aligned with their plant

overhauls

Siemens FlexLTP with

Performance pricing balances

production value with overall

maintenance risk

Digital Services –

FlexLTP aligns risk and customer value for Profertil in Argentina

Flex-

Scope

Flex-

Interval

Flex-

Performance

8k

Combustor

Inspection

16k

Combustor

Inspection

25k

Hot Gas Path

Combustor

Inspection Hot Gas

Path

8k 16k 25k

8k 20k 33k

Baseload Over-fire

Part-load

8k 12k 33k

MW

Optimized

OPEX

Optimized

Operations

Increased

Power Plant

Revenue

X X

X X

X X X

50%

80% 20%

40% 75%

% of parts replaced

Combustor

Inspection


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– Jeffrey’s Bay Wind Farm

Remote Monitoring via

Brande, Denmark.

– 24/7 Monitoring of operation

of the 60 Siemens turbines.

– Real time troubleshooting

and error correction to

ensure maximum availability

of the turbines.

– Other applications: Sere,

Noupoort, Loeriesfontein and

Khobab Wind Farms.

Digital Services –

Remote Monitoring Wind Turbines – Jeffreys Bay, South Africa


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Confidential © Siemens AG 2016. All rights reserved

• Increased equipment availability

through aligned maintenance

• Data transparency and fleet

management capabilities

• Enhanced transparency on

system performance

• Increased efficiency through

better staff planning

• Availability guarantees for 26

high-speed trains

• On-time rate of 99.9%

• Flexible maintenance intervals

Digital Factory:

Asset performance management

Mobility:

Performance-based Maintenance

Siemens offers a wide range of Digital Services

with significant value-add for our customers

Sample Digital Service offerings and customer value-add

Building Technologies:

Energy Efficient Buildings

• Improved energy efficiency

through constant real-time

monitoring

• Comparison of building fleets

enable energy benchmarking

Healthineers:

Siemens Utilization Management


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business platforms


Digital Services


Vertical Software

Digitally enhanced



maintenance cost


1847 Today



Future



• Driving the B2B

network-effect




MindSphere

2007


(PSS®)


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Many new data platforms are emerging yet the winner will be the company

which can best turn the insight into customer productivity and efficiency

1) Offering discontinued in 2015; OS: Operating System

2) http://www.siemens.com/investor/pool/en/investor_relations/financial_publications/speeches_and_presentations/cmd_industry_2013/130411_cmd_industry_huber.pdf

2016 2015 1956–2012

Logistics

platform for

management of

delivery chain

Mar 2015

Cloud platform

for "the

industrial

internet"

Aug 2015

Industrial biz.

platform for

entire value

chains

Oct 2015

Platform to

develop

solutions for

the IoT

Dec 2013

Cloud-based

network for

healthcare

professionals

Nov 2014

MindSphere

Siemens cloud for Industry

Nov 2015

Open platform

for management

of residential

applications

Mar 2015

Smart Home

Platform for

building

performance

2012 1)

Platform to

manage and

analyze health-

care data

Dec 2015

Health Cloud

Platform for

patients and

health

professionals

Sep 2015

…

Android

follow-on for

wearables,

Nest, …

Connyun 2016 tbd

IoT platform to

connect devices

and build

applications

June 2016

Watson IoT

Founded by:

2012-2014

SIMATIC Automation family

(S5/S7) reaches >1 billion

installations with >20bn EUR in

cumulated revenue

Nov 2011

SIMATIC G patented as the first

Distributed Control System as

electronic basis for remotely

controlled and monitored devices

April 1956

Siemens big data

analytics engine

founded - Sinalytics

Oct 2014


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MindSphere with “MindApps powered by Sinalytics” offers our

customers a strong foundation for new, data-based business models

MindSphere – Siemens Cloud for Industry

10 01 01 11

01 00 11 00

10 01 01 11

01 00 11 00

10 01 01 11

01 00 11 00

10 01 01 11

01 00 11 00

by Siemens by OEMs by end-customers

MindApps

Optimize the performance of assets, energy and resource consumption,

maintenance, services …

Data analytics

Data visualization

MindSphere –

Siemens Cloud for Industry

Data management

Data storage

Connectivity


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Breadth of Siemens approach gives us the competitive edge!

Customer specific

applications

Platform

Automation

Installed base

350,000 systems

connected

Industry

automation …

Energy

automation

Rail

automation

Building

automation

MindSphere – Siemens Cloud for Industry Industry grade ‘Platform-as-a-Service’ for connectivity, security and analytics

Industry-specific business platform & applications

MindApps

for performance, efficiency, analysis

MindApps

Digital Services leveraging large Siemens installed base

… Performance-

based Services

(e.g., flexible

long-term

programs)

Outcome-

oriented

Services

(e.g., availability

guarantees)

Teamcenter

Collaboration

Digital Enterprise

…

Pro-

duct

design

(NX)

Simu-

lation

(LMS;

CD

Adapco


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Driving key

technologies

Scale and speed from cross-

divisional technology investments

− Smart data analytics

− Cloud

− Cyber security

Expanding

powerful IT

partner

ecosystem

Strategic alliance

JV for smart grids

Industrial cyber security

Alliance for Healthcare IT

Partnership for analytics

Integration partner

− Strong IT partner ecosystem

− Complementary strengths

Investing in

innovation

•€800 million

invested in 180

start-ups

•€1 billion

allocated to

Next47

− Good capital allocation

− Start up inclubation

What’s next at Siemens?

3D printing industrialization

Mindsphere cloud platform

• Artificial Intelligence

• Autonomous Machines

• Connected (E-)Mobility

• Distributed Electrification

• Block Chain


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We are now beginning the next chapter in our partnership with start-ups:

the establishment of “next47”

• Artificial Intelligence

• Autonomous Machines

• Connected (E-)Mobility

• Distributed Electrification

• Block Chain


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Thank you! Questions?

Werner von Siemens called it

'Erfindergeist‚

Today we call it

„Ingenuity for life”.

siemens in the age of digitalization in the age of digitalization ... siemens schneider electric dax...

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