Siemens AG is bullish on its digital business and expects it to grow at a better pace in India than its global average. India would also play a key role in the German conglomerate's digital business expansion with the company employing 6,000 software engineers at its development centres in the country that will be at the core of its global services portfolio, Peter Körte, Chief Technology Officer and Strategy Officer, Siemens AG, told Moneycontrol.
Körte was in Mumbai for the company’s annual flagship event ‘India Innovation Day 2022’ where he launched a new digital platform ‘Siemens Xcelerator’ in the country. Körte, along with India arm Siemens Ltd’s Managing Director and Chief Executive Officer Sunil Mathur, sat down for an exclusive interview with Moneycontrol’s Rachita Prasad. Edited excerpts follow:
In 2018, Siemens launched MindSphere application centres in India for digital solutions. Now you have launched an open digital business platform Siemens Xcelerator in the country. How is it different?
Peter Körte: What we've done with MindSphere is to collect data in a very standardised format through digital application, which is a good start because it was all about predictive maintenance and preventative maintenance of machinery. This is how the whole digitalisation game started in production. Now, we really have taken this to the next level; we're talking about design and engineering. This is where production and engineering can grow together. It can significantly accelerate the process. Customers are no longer interested in just the manufacturing, they are asking for digital transformation that will bring all the data together from different silos– from manufacturing, service, design– in order to make it seamless. With Xcelerator, we're going to take on this challenge to make data flow through all the different applications seamlessly.
Until a few years ago, companies like Siemens had to make a pitch to convince customers to go digital. Has that changed post-COVID?
Sunil Mathur: A couple of years ago, we were chasing customers to say why don't you move from automation to digitalisation, and now it is the other way around. The pandemic has only accelerated it a little bit, but it started a couple of years prior to the pandemic. We began to see the benefits that come out of it. And I think now we are at a stage to take it to the next level; in fact, all our businesses are doing digitalisation to some extent already.
What is the global plan for this platform and what is India's role going to be in that?
Peter Körte: It's a global platform. We are building partners to develop the ecosystem. India is playing a huge role in the development of all the solutions that go on Xcelerator. We launched a software called Building X that has been developed by engineers in Bangalore. I dare to say that almost any solution that we are going to develop in the future will be touched somehow by software engineers in India. We have around 6,000 software engineers in India who work with us for our global product development.
As more companies look at digitisation, another interesting development is some of the early starters, big conglomerates have not just implemented it but are now also looking to offer services. Indian conglomerates like Reliance Industries, Adani Group and Larsen & Toubro are looking at this space too. How competitive is this space and who are the customers you are targeting?
Sunil Mathur: There are platforms and there are platforms. The platform that L&T or Adani or the others do is very different from what we're doing. We understand the processes from mobility, trade, manufacturing, to food and beverages, to farming, etcetera. That is not the ecosystem that the others are working in. We are able to start from design right through to post-manufacturing performance, and help the customer be effective there. There are big customers who can afford to take those major steps, and then there are small, and medium enterprises who cannot afford to and are nervous about spending money upfront because they don't know what the outcome will be. That is where a platform like this adds an even greater benefit to them. Because we've got standardised solutions which don’t require major capex.
Peter Körte: For SMEs, it is important because it's SaaS, no capex, and is very easy to deploy, because we don't have to put it on their servers. As for the customer base, the first segment we're looking at is commercial real estate. The next one is grid software.
At the beginning of the financial year 2021-22 (October-September), Siemens was very optimistic about the digital business. We are nearing the end of the year, how has it been globally and in India?
Peter Körte: We haven’t disclosed the last financial numbers yet but it's going in the right direction. Digital revenue base was €5.6 billion in FY21 and we had commitment that we will be growing it by 10 percent on an annual basis. We are very happy with the growth and will disclose the numbers in November.
Sunil Mathur: We are in the silent period too. There is growth in the digital business, let me just add a rider to that. We have got different legal entities in India and not everything is under Siemens Limited legal entity.
Is the Indian digital business matching the global average of 10 percent growth that Siemens is targeting?
Sunil Mathur: We are growing more than that. But we are starting with a very low base.
Siemens has been acquiring software and technology companies globally. Will that continue? Are there any gaps you would like to fill?
Peter Körte: In terms of the mergers and acquisitions, we are going to strengthen our digital footprint. We just acquired a company called Brightly Software. In terms of specific search fields, I will not give you any specific one, but suffice it to say, on the digital side, we have a decent list of ideas of what to do. And you can see more of that in the future.
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