Siemens Industry Analyst Briefing Call Siemens Digitalization Strategy & Sinalytics Platform
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1 Siemens Industry Analyst Briefing Call Siemens Digitalization Strategy & Sinalytics Platform Dr. Horst J. Kayser, Chief Strategy Officer Siemens AG Dr. Norbert Gaus, Head of Siemens Research and Technology Center Munich, January 20, 2016 siemens.com
2 26 high-speed trains at Renfe Spanish Rail Company (Madrid- Barcelona-Malaga) Performance contract with availability guarantee Passengers are reimbursed for delays >15 mins On-time rate of 99.9% 60% passengers switched from aircraft to train Page 2
3 Five Megatrends shaping our world of tomorrow changes in the markets are accelerating Demographic change World population 1, in bn Developing countries Urbanization Contribution to global GDP growth, , in % Cities >10mn 5mn 10mn 2mn 5mn % Other cities and rural areas 150k 2mn Age Industrial 65+ countries Growing and ageing population Exponential growth of connected devices... and digital data 6 Digital transformation Cities as main driver of GDP growth Connected devices 5, in bn 9 Global warming and weather extremes ZB ZB = Zettabytes = 10 9 Terabytes 40.0 ZB Trend to increase investment abroad Climate change Annual mean temperature variations (in C) 0, , Globalization Foreign direct investment vs. global GDP, in % UN World Population Prospects (2015) 2 Met Office Hadley Centre observations (2014) Page 3 3 McKinsey Global Institute Cityscope (2011) 4 UNCTAD (2013) 5 Cisco: The Internet of Everything (2013) 6 IDC: The Digital Universe (2012)
4 Siemens strategy Ingenuity for Life Global trends Digital transformation Networked world of complex and heterogeneous systems Globalization Global competition driving productivity and localization Market development (illustrative) Digitalization Automation ~7 9% 1 Market growth ~4 6% 1 Market growth 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 Electrification ~2 3% 1 Today Mid term 2020 Innovating along the electrical value chain Power Generation Power Transmission, Distribution & Smart Grid Efficient Energy Application Market growth Imaging & In-Vitro Diagnostics 1 Est. market growth (CAGR) over cycle Page 4
5 Siemens Digitalization Leveraging digital technology trends for concrete customer benefits Collaboration and mobile Smart data and analytics Cloud technologies Siemens Digitalization Improved productivity & time-to-market Design & engineering Higher flexibility & resilience Automation & operation Increased availability & efficiency Maintenance & services Connectivity and Web-of-systems Cyber-Security Combining the virtual & physical world across entire customer value chains Page 5
6 Customer benefit translates to substantial revenue growth for Siemens Siemens Digitalization Digital services 0.6 billion revenue in FY15 +15% yoy growth FY15 Vertical software 3.1 billion revenue in FY15 +16% yoy growth FY15 >300k devices Remotely monitored and administered Data driven Analytics enabled Leading provider across verticals XHQ Digitally enhanced electrification and automation #1 automation player in industry, buildings, grids, power plants, and rail Page 6
7 Customer benefit translates to substantial revenue growth for Siemens Digital services 0.6 billion revenue in FY15 +15% yoy growth FY15 Vertical software 3.1 billion revenue in FY15 +16% yoy growth FY15 >300k devices Remotely monitored and administered Data driven Analytics enabled Leading provider across verticals XHQ Digitally enhanced electrification and automation #1 automation player in industry, buildings, grids, power plants, and rail Page 7
8 Sinalytics Platform powers Siemens Digital Services Connectivity 300,000+ connected devices including wind turbines, buildings, trains Advanced analytics Creating new insights from smart data by leveraging world-class technologies Know-how Product, domain and data science know-how Overall IT know-how with about 17,500 software engineers 160 Data Scientists Customer outcomes Higher availability Lower costs Increased performance More security Page 8
9 The Digital Transformation of Services Classical Time & Material Maintenance Performance & Outcome based Contracting Network Platforms Improving efficiency of classical services E.g. Digital diagnostics E.g. digitally optimised work scheduling E.g. Augmented Reality for training and Maintenance Repair and Overhaul Page 9
10 The Digital Transformation of Services Classical Time & Material Maintenance Performance & Outcome based Contracting Network Platforms 1. Predictive Maintenance 2. Performance-based contracts 3. Outcome-oriented contracts E.g. Healthcare E.g. Mobility E.g. Power Services Objectives Objectives Objectives Power Services Prevent unplanned downtime of CT scanners caused by tube failures Increase availability and reliability of trains Improve customer ROI through flexible service in any market condition Reactive Maintenance Preventive Maintenance Condition-based Maintenance Predictive Maintenance Prescriptive Maintenance Page 10
11 Siemens Digital Services Portfolio Overview Digital Service Remote services based on device connectivity Data generated by connected devices and transferred for evaluation Data analyticsenabled services Value added by additional insights generated from available data Network Platforms Generation of additional value by bringing together relevant experts and data Division view (examples) Power generation, transmission & distribution PG WP PS EM Power Plant optimization, remote support/-operation Flex LTP, data-driven upgrades of turbines Fleet statistics of power plants and wind farms Wind farm optimisation Performance contracts / consulting SCADA, WTC3 and vibration diagnostics Remote Monitoring (Switchgear and Transformers) Smart Grid Asset performance management / security services Smart Grid Asset operation services Building Technologies BT System performance services Building performance / energy optimisation services Mobility MO Smart Guidance Smart Monitoring Smart Data Analysts 3D printing for optimised parts logistics Digital Factory & Process and Drives DF PD Master Asset Uptime Optimise energy performance Maximise process efficiency Enhance Industrial Cyber security Healthcare HC Predictive maintenance Network platform for diagnostic exchange Page 11
12 Digital Services Example Digital Factory Master asset uptime Optimize Energy Performance Enhance Industrial Cyber-Security Machine tool analytics Energy analytics Security Assessments and Implementation Drive train analytics Maximize process efficiency Control performance analytics Security Managed Services Process event analytics Industrial Network Analytics Dynamic process optimization Page 12
13 Siemens Digital Services demonstrate proven success in diverse industries Cement Minerals Glass Chemical Antea Cement (ALB) Asset Analytics EU Manufacturer of asphalt Energy Analytics Pilkington (UK) Energy Analytics Int. Oil & Gas company Security Services No unplanned system downtimes 147% RoI Over 1 million energy cost savings 0% incidents within 18 months Automotive Pharma Food and Beverages EU car manufacturer Asset Analytics US car manufacturer Energy Analytics Global pharma company Energy Analytics EU Coffee Producer Energy Analytics Higher plant availability Higher resource efficiency 12% energy cost savings Target 5% energy cost savings Page 13
14 The Digital Transformation of Services Classical Time & Material Maintenance Performance & Outcome based Contracting Network Platforms Benefit Network Platform Focus Teamplay connect, compare, collaborate Increased utilization Improved dose quality Enhanced fleet management & standardization Clinical collaboration Mindsphere Cloud for Industry Optimized energy performance Increased asset up-time Maximized process efficiency Enhanced cyber-security MindApps Field level Usage, dose, protocol, image data Industrial equipment data Page 14
15 Availability guarantee and shared risk is only possible with highly advanced analytics Trains are fitted with hundreds of sensors to monitor critical parameters Siemens Sinalytics provides the data basis to ensure very high availability and reliability Page 15
16 Siemens Digital Services powered by Sinalytics Combining technology with domain and context know-how for customer value Context of data from installed basis = Digital Services powered by Sinalytics Installed products, systems, processes and sensors Domain know-how + Context know-how + Analytics know-how Improved performance Energy savings Cost reductions Risk minimization Quality improvement Data Data analysis Information Options for action Customer value Page 16
17 Siemens Digital Services powered by Sinalytics Example: Predictive maintenance of trains and locomotives Results Improved asset availability Rail Transport Market drivers Rail operator challenges Rail user demands Trains/Locomotives Rail vehicle engineering Mechanical vibrations Sensor properties Maintenance operations Data Science Pattern identification Machine learning Automated alert generation Avoidance of unnecessary maintenance Reduction of maintenance costs Domain know-how Context know-how Analytics know-how Customer value Siemens Page 17
18 Siemens Digital Services powered by Sinalytics Example: Optimization of gas turbine operations Results Reduced NOx Emissions Extension of service intervals Energy System Market drivers Customer needs Product cycles Gas Turbines Mechanical Engineering Thermodynamics Combustion chemistry Sensor properties Autonomous Learning Neural Networks Smart Data Architecture processes data from 5,000 sensors per second Domain know-how Context know-how Analytics know-how Customer value Siemens Page 18
19 Sinalytics: Our new platform architecture for data-based services Productivity Energy efficiency We build on common technology platforms Energy Management Wind Power + Latest technology for all Siemens businesses + Reduction of technical complexity in the company Digital Factory Data analytics Sinalytics Data visualization Power and Gas, Power Generation Services + Leveraging synergies through scaling + Faster development Process Industries & Drives Healthcare Availability Modeling/Analysis Data management Data integration Cloud/Connectivity Cyber Security Mobility Building Technologies Security and use the customer proximity of our operating units to develop applications + Know-how regarding large installed bases of products and systems + Deep know-how of customer processes and challenges + Many existing applications that already generate value for our customers Page 19
20 Sinalytics builds on a strong technology stack for connectivity, data analytics supported by state-of-the-art cyber security DF PD PG PS WP EM MO BT HC Siemens Digital Services Mindsphere EnergyIP Industry specific Applications/Platforms Use case 1 Use case 2 On premise Variety of data sources and types Customizable analytics solution packages Data presentation Data analysis Data management Data integration ~300,000 devices crsp, ISB... Cloud Use case n Sinalytics BU specific use case implementations Common data analytics set-up Modular analytics solution packages Common industrial data analytics platform Several off-the-shelf tools are available in each layer Tools are integrated with each other through glue code On-premise and cloud deployment possible Connectivity Build on reliable and secure solutions e.g. common Remote Service Platform Cyber security solutions Page 20
21 We continue developing data analytics capabilities of Sinalytics: From predictive to prescriptive analytics Wave 1 Wave 2 Wave 3 Predictive analytics for service Streaming analytics and distributed analytics for decision support Using Web of Systems technologies Operational prescriptive analytics On-premise and in the cloud On-premise, in the cloud and in the field On-premise, in the cloud and in the field Data and models at rest Data and models in motion Automated data analytics Same functional architecture Page 21
22 Siemens leverages the Internet of Things to the needs of our customers in industry and infrastructure Energy Management Wind Power + The Web of Systems puts devices, machines and their interactions in the center of digitallynetworked industries + Devices process data locally and make decisions Digital Factory Web of Systems Power and Gas, Power Generation Services + Owners decide what happens with their data + Devices organize themselves and communicate with each other Process Industries & Drives Mobility + New functionalities can be installed as with apps on smartphones + The installed base can be digitalized with the Web of Systems Healthcare Building Technologies + Siemens delivers infrastructure and industry solutions characterized by: Reliability Durability Data security Page 22
23 Web of Systems technologies already work Example: The Intelligent Secondary Substation in a Smart Grid Page 23
24 Sinalytics brings together the technologies needed in an increasingly digitalized world Sinalytics Data analytics Connectivity On-premise, in the cloud and soon in-the-field leveraging Web of Systems technologies Secure and proven technologies connecting already ~300k devices Cyber security Protecting customer data in open, interconnected industrial IT systems IQ IQ Power generation Energy management IQ IQ IQ Energy consumers IQ Smart networked devices & systems System-aware, autonomous and app-enabled to meet industry and infrastructure needs Page 24
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