5 billion euros for R&D
Siemens aims for double-digit growth in digital business
Software, digital services and platforms should bring Siemens double-digit growth per year in future. The integration of IBM Watson Analytics into MindSphere should also contribute to this.
Siemens wants to further strengthen its position as a digital company and achieve double-digit annual growth in software, digital services and cloud platforms by 2020. In fiscal year 2016, Siemens generated revenue of more than one billion euros with digital services and around 3.3 billion euros with software solutions. This corresponds to an increase of around twelve percent compared to the previous year. This puts Siemens well above the annual market growth rate of around eight percent.
One of the growth drivers will be the new MindSphere cloud platform, which Siemens is now rolling out company-wide. For the first time, the company is offering customers from industry to railroad operators a cloud-based, open operating system for the Internet of Things. Apps and digital services can be developed and operated on MindSphere. For example, the immense amounts of data generated in a plant or company can be collected, evaluated and used quickly and efficiently - for example to improve the performance and availability of systems. The new technology also supports customers in evaluating and using their data to gain new insights. This enables them to develop completely new business models, such as the sale of machine hours. "The MindSphere digitalization platform is an important element of our innovation strategy as part of Vision 2020 and will help us to shape digitalization at our customers and also in our own plants - across all industries and businesses," says Joe Kaeser, CEO of Siemens.
Siemens is working with IBM to further simplify Mindsphere's data analysis functions for customers. The companies are planning to integrate the data analysis service "IBM Watson Analytics" and other analysis tools into Mindsphere. This will give business customers access to visualization functions and dashboards, while app developers and data analysts will be able to use analytics technologies via interfaces. IBM is also planning to develop apps for Mindsphere - for example in the area of predictive maintenance. IBM and Siemens want to bundle their respective competencies - in the area of powerful analytics technologies as well as in the automation and digitalization of industry. In this way, the companies want to support customers on their path to digitalization.
To further strengthen its innovative power, Siemens plans to increase its investments in research and development (R&D) by around 300 million euros to around five billion euros in fiscal year 2017. Since fiscal year 2014, investments in R&D have thus increased by around 25 percent. A large proportion of the additional funds will be invested in the areas of automation, digitalization and decentralized energy systems as well as in the new start-up unit next47. The research intensity, which is the ratio of R&D expenditure to sales, was 5.9% in fiscal year 2016 - and will continue to rise in fiscal year 2017.
Siemens also improved in terms of patents: As of September 30, 2016, Siemens held around 59,800 patents worldwide in its continuing operations. At the end of fiscal year 2015, the figure was 56,200. Siemens employees reported around 7,500 inventions in the year under review - equivalent to 30 per working day. In addition, the company employed an average of 33,000 R&D employees in the prior-year period - around 800 more than in the previous year.
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