Whitepaper. Integrated Manufacturing. Optimizing production processes for more transparency & flexibility

Whitepaper Integrated Manufacturing Optimizing production processes for more transparency & flexibility May 2011

Table of Contents 1. Management Summary...4 2. Increasing Transparency and Flexibility through Integrated Manufacturing...5 2.1. Modern Day Business Challenges for Manufacturers...5 2.2. Increasing Transparency and Flexibility through Process Integration...6 2.3. Integrated Manufacturing: Interoperable IT Solutions for End-to-End Process Integration...6 3. Integrated Manufacturing The Concept and the Road Ahead...8 3.1. Integration of Product Development...9 3.2. Integration of Production...9 3.3. Integration of After-Sales Business...10 3.4. Integration of Flexibility...11 4. Major Benefits of Integrated Manufacturing...13 5. Major Challenges of Integrated Manufacturing...15 6. Requirements for IT Services Providers...17 7. Interview with Siemens IT Solutions and Services...20 8. PACʼs Summary...23 9. About Siemens IT Solutions and Services...25

Graphs Graph 1: Todayʼs Customer and Market-related Business Challenges for Manufacturers...5 Graph 2: Integrated PLM-ERP-MES Solutions...7 Graph 3: PACʼs Requirements for IT Services Providers...19

4 1. MANAGEMENT SUMMARY In a highly competitive and globalized business environment, manufacturers need to continuously gain competitive advantage while increasing the efficiency of their processes in order to reduce costs. In this whitepaper, PAC describes the concept of integrated manufacturing, aimed at gaining competitive advantage through increasing overall transparency and flexibility by integrating processes from the top-floor level to the shop-floor level, supported by appropriate IT solutions (e.g. ERP, PLM, MES). PAC also describes the major challenges for manufacturers on the road towards a fully integrated manufacturing environment, relating mainly to the complexity of end-to-end process integration and the existing heterogeneous application landscape and IT infrastructures with complex interfaces. PAC therefore recommends a step-by-step approach, beginning with the integration of specific processes and IT solutions, such as product development, production and after-sales. This should be followed by the integration of flexibility, which basically means the planning and implementation of flexible business processes and IT architectures, to support manufacturersʼ need to quickly adapt to the ever-changing global business environment. This whitepaper also includes the requirements, which PAC views as vital, for IT service providers themselves in order to help manufacturers transform their business into an integrated manufacturing environment. In this context, this whitepaper also includes an interview with Siemens IT Solutions and Services about how Siemens IT Solutions and Services can support manufacturers in achieving integrated manufacturing with its recently launched same-named offering for manufacturers.

5 2. INCREASING TRANSPARENCY AND FLEXIBILITY THROUGH INTEGRATED MANUFACTURING 2.1. Modern Day Business Challenges for Manufacturers In todayʼs highly competitive and globalized economy, manufacturers need to work on every possible level to gain competitive advantage in order to increase revenues. They need to develop new, better quality products faster and at more competitive prices than their rivals. They need to work at the global level as their consumers, suppliers and partners, all are global. The manufacturers need to ensure that they can change their existing manufacturing and supply chain processes and products fast enough to meet the rapidly evolving business environments and customer demands. All this can only happen by having processes in place to reduce costs and to improve overall efficiency. Graph 1: Todayʼs Customer and Market-related Business Challenges for Manufacturers What should business and production processes look like in order to meet todayʼs challenges?

2.2. Increasing Transparency and Flexibility through Process Integration 6 The challenge for manufacturers will be to align their core processes all along the value chain, from product design, through supplies and production, to support and after-sales, in a way that increases transparency and flexibility, in order to stay in tune with the rapidly-changing customer expectations and business environment. The manufacturers should move towards an end-to-end integration of all core processes from top-floor to shop-floor including interoperable IT solutions which support this integration through seamless data and information flow. This end-to-end integration ideally also includes the process integration with all relevant suppliers and external partners in a way that also supports flexibility and reactivity. 2.3. Integrated Manufacturing: Interoperable IT Solutions for End-to-End Process Integration Based on end-to-end integrated processes, a major prerequisite for a fully Integrated Manufacturing environment is the interoperability of the core IT solutions of manufacturers. These typically are: ERP/MRP-Systems for commercial processes involving financials, resources and goods. PLM-Solutions to support product development in various stages, from product design (e.g. CAD) to product data management (PDM) and master data management (MDM). ME-Systems, which allow data/information transfer from shop-floor to top-floor, including machine data acquisition and production data acquisition. After Sales Service and Maintenance Solutions such as MRO-Solutions or those targeting spare parts sales and logistics (e.g. CRM and Warehouse Management Solutions).

7 Graph 2: Integrated PLM-ERP-MES Solutions But, what should the manufacturers do to achieve the long-term goal of a fully integrated manufacturing environment?

8 3. INTEGRATED MANUFACTURING THE CONCEPT AND THE ROAD AHEAD A fully integrated environment for manufacturers is an environment which overcomes the technology-disconnect between the core IT systems and which is best achieved by a complete process integration, and the corresponding integration of the commercial IT systems down to the machine level. And, in order to meet the challenges of changing business environments and customer demands, these environments need to be dynamic and flexible in their operations. A full integration of all core processes and IT solutions of a manufacturer (e.g. ME, ERP, PLM solutions) certainly will be much easier when planning an IT landscape on a green field, such as in new production facilities in emerging markets (e.g. the automotive vehicle production in China or India, due to fewer product variants). Packaged solutions can be used, as well as best practice processes which make integration much easier than in the mature markets, where the integration of IT-solutions, like PLM-ERP-MES, has to follow a step-by-step approach, due to the existing and very complex IT application landscapes as well as a huge number of isolated processes. The step-by-step approach can also be described as a road-map towards a fully integrated and flexible manufacturing environment. Major milestones in this road map can be grouped into the following areas of integration: Integration of Product Development Integration of Production Integration of After-Sales Business Integration of Flexibility

3.1. Integration of Product Development 9 Major Goals are: Converting customer requirements into successful products Accelerate time to manufacturing Manufacturers are not only faced with rapidly changing business environment and customer demands, but also with an increasing number of product variants and increasing product complexity due to increasing customer requirements. And, in order to gain competitive advantage, manufacturers constantly need to shorten the time-to-market for product innovations. But, how can manufacturers transform customer requirements into successful products in a cost efficient way? How can manufacturers support their product development activities, which are also often distributed globally with external research partners? And how can manufacturers reduce the time between product development and manufacturing? An important step is to align and integrate the processes from product design, production through to customer service and support. With an integration of all the processes that relate to and support product development, overall transparency and flexibility will increase and will help to realize new product ideas faster. Based on integrated processes, appropriate IT solutions need to be implemented, solutions that support seamless and bi-directional data and information flow from design (e.g. CAx/PLM)/PDM solutions) to supply (e.g. ERP/MRP) to production (e.g. MES) and also to/from service and support. And, in order to implement solutions that support safe and transparent data flows from design to production and which also support collaboration with external suppliers, appropriate IT security concepts are crucial in order to plan and implement a secure IT architecture (e.g. Identity and Access Management). Major Goals are: Increase flexibility and transparency of production Support secure and networked production Optimize global supply chains 3.2. Integration of Production Manufacturers are also faced with the need to increase flexibility and reactivity from top-floor to shop-floor level to meet increasing customer requirements and to be able to react quickly to the rapidly changing business environments. But, how can manufacturers increase flexibility and transparency of production without increasing costs? And how can manufacturers support

secure and increasingly networked production, which also is dependent upon complex global supply chains? 10 An important first step is the alignment and integration of all production processes on the shop-floor and also the commercial processes in the area of supply and logistics. As production today has become a highly networked activity, with a number of (globally) distributed suppliers, processes do not only have to be aligned internally but also with external suppliers. To implement these integrated processes, appropriate IT solutions need to be implemented, solutions that support secure, seamless and bi-directional data and information flow within all relevant processes on the shop-floor (e.g. MES) but which also support integration with commercial processes in the area of component and parts supply (e.g. ERP, SCM, APS) and logistics of parts and components (e.g. Warehouse Management Solutions). Furthermore, IT solutions that support traceability for the entire production value chain in a complex supplier network gain major importance, for instance in highly compliance-oriented and regulated industries like pharmaceuticals. 3.3. Integration of After-Sales Business Major Goals are: Increasing revenues Differentiating customer experience Leveraging Service and Support as a vital source of customer requirements Manufacturers are faced with a highly competitive environment and continuous price pressure, making it difficult for them to constantly increase revenues and to achieve satisfactory margins. The need to increase customer intimacy to retain them and to grow business with existing customers is ever increasing. One business area which, therefore, has become increasingly important for manufacturers is the after-sales business. Reasons for this, among others, are that the after-sales business has major potential to generate additional cross- and upselling revenues (e.g. through additional services, products or spare parts), the after-sales business generates better margins than the product business and most importantly, the after-sales business has tremendous potential to differentiate from the competition through special customer experience. But how can manufacturers realize this additional revenue potential efficiently? How can manufacturers use their after-sales business to increase customer satisfaction and retention? And finally, how can

11 manufacturers use their after-sales business additionally as a vital source of customer requirements and market demand in order to feed its product innovation cycles? In order to leverage this additional revenue potential, processes from aftersales (such as sales, services and support as well as spare parts logistics) need to be integrated and supported with appropriate IT solutions (e.g. analytical and operational CRM, BI, MRO solutions). Ways to increase customer satisfaction and retention in the after-sales area start with increasing service and support quality, which often relates to integrating services and support processes with appropriate IT solutions. Quality, as well as efficiency, of maintenance and repair processes can, for example, be increased by making repair procedures digitally available (e.g. through document management solutions), through remote diagnostic and maintenance services and generally through MRO solutions. Spare parts logistics can be optimized through appropriate warehouse management as well as supply chain management solutions. Moreover, as service and support today is not only considered as a source of additional revenues but also as a differentiating customer experience as well as a vital source of customer and market knowledge, IT solutions that support a seamless data and information flow from service and support (e.g. MRO, CRM) back to product development (e.g. PLM) will therefore gain increasing importance. 3.4. Integration of Flexibility Major Goals are: Supporting business growth through flexible information platforms Supporting changing business environments and market conditions through flexible IT infrastructures Manufacturers today, with their major goal to achieve revenue and business growth (e.g. through product innovations or mergers & acquisitions), not only need to anticipate changing business environments, but they also need to react and respond dynamically to changing market conditions or customer requirements. But how can manufacturers support this need for flexibility with appropriate IT solutions? In order to leverage the full benefits from an Integrated Manufacturing environment, the manufacturers have to integrate all their core processes from shop-floor to top-floor, and to support their processes with appropriate

and interoperable IT solutions on top of those processes. They also need a flexible and scalable IT architecture and platform. 12 These flexible and scalable IT architectures and platforms need to support the quick absorption of business changes to the technology level (e.g. the integration of acquisitions). Additionally, the manufacturers also need flexibility in all the outsourced solutions and services which they use.

13 4. MAJOR BENEFITS OF INTEGRATED MANUFACTURING Each of the process integration milestones brings its own advantage for the manufacturers, but the benefits of a fully integrated manufacturing environment are more than the sum of each milestone. Basically these stem from an increased transparency and flexibility of the manufacturers from shop-floor to top-floor. Some key examples are: Example: A leading European textile manufacturer and retailer today leads in time to market, because they only need about 2 weeks from the first concept of the product to the time that it is produced and available for sale in the market. Increased time-to-market for product innovations: The product development process becomes more efficient and faster if component and parts supply gets involved (e.g. ERP, SCM) in the product design phase in an earlier stage (e.g. through PLM solutions). The time to market also gets increased, if production planning (e.g. APS) also gets involved early, so that production planning can, at an early stage, decide which production environment is required. Do the existing production environments need some simple adaptation or are new production environments necessary? Example: For a High-Tech Manufacturer, who is able to answer a customer request within 30 minutes by promising a fixed delivery-date, the price does not matter for the customer. Quick adaptation of changed product configurations: Changed product configurations due to changed parts or components impact production and production planning due to different lead times of different suppliers, which is especially important in just-in-sequence or just-in-time production environments. Furthermore, changed product configurations impact existing customer orders and production status on shop-floor level. An integration of corresponding solutions from PDM, PLM to ERP, SCM and MES supports the quick adaptation of changed product configurations in the top-floor and shop-floor IT solutions. Efficient management of complex customer requirements and customer orders: With increased transparency from shop-floor to top-floor, manufacturers have better visibility of the status of existing customer orders on shop-floor level and can answer customer requests regarding lead times

more quickly and easily. Further, due to increased transparency on the shopfloor, customer orders can be handled more flexibly with different priorities. 14 Efficient service and support processes which increase customer satisfaction and support product development: The quality of service can be increased if service and support gets access to all the relevant information related to a product (e.g. technical documentation, parts lists, repair instructions etc.), through role-based access to one single PDM/PLM system. Further, the perceived overall quality of products and therefore overall customer satisfaction can be increased, if service and support gets involved into the product development processes in an early stage in order to improve the "serviceability" of (new) products.

15 5. MAJOR CHALLENGES OF INTEGRATED MANUFACTURING The major challenges facing Integrated Manufacturing currently relate to Complexity of end-to-end process integration Existing heterogeneous application landscape and IT infrastructures with complex interfaces. Complex investment decisions Investment decisions for end-to-end process integration including the corresponding IT solutions are quite complex. This is due to the fact that not only the IT department is involved in decision-making but also the management of the production sites or shop-floors, as well as the product development engineers. Due to the huge financial impact, the CxO level is of course also involved. As these projects are quite complex, the total ROI is quite difficult to measure upfront. User acceptance and change management Due to the fact that different disciplines and cultures are involved, comprehensive change management concepts are a key success factor: Top management (focused on value growth and ROI), development engineers (focused on efficient product development), shop-floor engineers (focused on efficient production and efficient capacity usage of production facilities) etc. It is also difficult to define which domain will own and control information and processes. Finally, the more global a manufacturer is, the more regional and cultural differences need to be overcome. Existing heterogeneous application landscapes and complex interfaces While standardization at an ERP level is quite mature in select manufacturing industries (e.g. the automotive OEM segment, where the dominant software is SAP), there exists a very heterogeneous CAx/PDM/PLM landscape in the manufacturing industry, stemming part due to mergers & acquisitions. This heterogeneous CAx landscape will remain but there definitely is a need to harmonize the PDM/PLM landscape, in order to manage the global and complex product development processes more efficiently.

16 Even in respect of MES systems, the manufacturing industry is highly diversified. Whereas the automotive OEMs have their own legacy MES systems in place, the small-and medium-sized mechanical and plant engineering segment still quite often prefers simple individualized Excel as their preferred MES solutions. Generally, PAC considers both the harmonization of the PDM/PLM as well as the MES landscape as pre-requisites for further integration projects in order to keep application maintenance costs as low as possible, and to also support long-term flexibility and growth. The challenge will also be to use solutions that offer appropriate interfaces (e.g. SAP), that allow an easier integration and maintenance. Implementation of appropriate security and availability concepts Security plays a major role in the context of integration projects. Appropriate firewalls are needed, as well as access solutions that prevent illegal access or espionage, for example, in cases where machines at shop-floor level are maintained remotely by external service technicians. Furthermore, availability concepts are needed to ensure that automation and control systems at shop-floor level, MES, ERP and PLM solutions can also run separately in case individual solutions fail. Green-Field versus Stepby-Step approach A full integration of all core IT solution of a manufacturer such as PLM- ERP-MES solutions, certainly will be much easier when planning an IT landscape on a green field, such as in new production facilities in emerging markets. For instance, due to fewer product variants and smaller volumes, manufacturing processes for automobiles in China or India today are less complex than in Europe. Packaged solutions, along with best practice processes, can be used, making integration much easier than in mature countries, where the integration of PLM-ERP-MES has to follow a step-bystep approach, due to already existing and very complex IT application landscapes as well as a huge number of isolated processes.

17 6. REQUIREMENTS FOR IT SERVICES PROVIDERS Following the road-map towards a fully Integrated Manufacturing approach, IT service providers have to meet a comprehensive set of requirements, which are necessary to help manufacturers transform their business. Strong industry-specific business process consulting know-how IT service providers need to have deep understanding of both business and production processes to help manufacturers to transform towards an end-toend integration of processes from top-floor to shop-floor. Therefore IT service providers additionally need to have strong industry-specific business process consulting know-how, as these differ sharply depending on whether you look at manufacturers of chemicals or food (which have to deal with additional requirements around safety, security and traceability) or whether you look at automotive manufacturers or aerospace manufacturers. Another difference is whether the manufacturer is building a new plant (say in emerging countries) or simply optimizing existing sites (e.g. mature countries.) Also in each case, the scope and depth of integration needs to be defined. The amount of data and information that needs to be taken from each system needs to be analyzed and defined while also determining whether integration should support bi-directional data-flow or only one-way transfer of product data. As not every manufacturer needs the same scope and depth of integration, it is necessary for an IT service provider to understand fully the individual business processes and needs in order to also optimize and integrate processes. Strong IT consulting and system integration competences Besides strong application know-how and implementation competence in the area of ERP (especially SAP), it is absolutely necessary for IT service providers to have a deep understanding of the challenges of integrating ERP with PLM and MES solutions in order to design and build business process-driven end-to-end solutions including the consolidation and harmonization of processes and applications. As the overall goal of a PLM- ERP-MES integration is to increase the transparency and flexibility of end-to-

18 Completeness of customer solution portfolio and service value chain Global delivery capabilities end processes, which also involve the better integration of suppliers, knowhow in SCM is also vital, as the ability of a supplier to deliver a certain product or component potentially affects the whole process. Also, know-how in the area of service and support management is crucial to leverage the full potential of the after-sales business for manufacturers. Know-how in the area of integrating IT solutions for CRM, BI, MRO, or spare parts logistics is vital. Furthermore, as security plays a major role when integrating external product development partners or integrating external suppliers into the global supply chain, the design and implementation of security concepts, including access and identity management, are key in the overall integration concept. And, ideally, in order to help transform manufacturers towards an integrated manufacturing environment, they do cover all steps towards a flexible endto-end integration from top-floor to shop-floor. IT services provider should also not only be able to plan and integrate processes and corresponding IT solutions, but also run and manage these IT solutions in terms of a complete plan-build-run approach. From planning the enterprise architecture and the end-to-end process integration, including the implementation of corresponding IT solutions, to managing the entire solutions (e.g. application management, solution and infrastructure outsourcing) Finally, as the manufacturing industry has become a global industry with a globally networked production, it is essential for an IT services provider to offer global delivery capabilities (e.g. German automotive OEMs increasingly investing in production sites in BRIC countries or in North America to reduce dollar dependency). The transformation towards integrated manufacturing is very complex and involves a lot of change management. IT services suppliers therefore also need to have comprehensive project management competence and need to make sure that the coaching of management, engineering and shop-floor staff is considered a key success factor when conducting end-to-end process and IT solution integration projects.

19 Graph 3: PACʼs Requirements for IT Services Providers

20 7. INTERVIEW WITH SIEMENS IT SOLUTIONS AND SERVICES Siemens IT Solutions and Services, which is a leading European IT service provider, has recently launched a set of ʻStrategic Offersʼ based on global business trends and strategic customer needs and which also address major IT challenges. One ʻ Strategic Offerʼ addresses the specific needs of manufacturers, and aims at helping manufacturers optimize their product development and production processes by increasing flexibility and transparency from shop-floor to top-floor. Pierre Audoin Consultants (PAC) talked to Alois Süssenbacher, Global Head of Solutions Industry from Siemens IT Solutions and Services, about Siemens IT Solutions and Servicesʼ specific know-how and capabilities in the area of integrated manufacturing, and how Siemens IT Solutions and Services can help manufacturers to transform into a flexible, customercentric and integrated manufacturing environment that also supports global operations. Pierre Audoin Consultants (PAC): An end-to-end integration of processes from top-floor to shop-floor will become ever important for manufacturers in the long term. How can Siemens IT Solutions and Services support manufacturers with comprehensive, deep and industryspecific business process know-how from the business level to the production level, in order to transform all core processes of manufacturers towards an end-to-end integration? We are unique among IT partners for our heritage within global manufacturing footprints. We understand the core challenge of manufacturers to synchronize processes, information and physical assets. We deploy unique skills in integrating Product Development, Production Planning & Execution and Service & Support and we can bring accumulated project insights in discrete and process industries. For example, one area where we could prove our specific business process know-how combined with the strength of a global IT service provider, is a major project for our customer EADS. For EADS, as a leading player in the aerospace industry, it

21 is absolutely essential to develop products more quickly within an international collaboration, cutting development costs at the same time. For EADS, we have jointly developed a PLM solution, which contributed significantly to these goals. PAC: Which major technological IT and application competences can Siemens IT Solutions and Services offer its customers to help to transform into a flexible, customer-centric and integrated manufacturing environment? In the area of integrated manufacturing we offer complex application and integration skills from BI and ERP to PLM, MES and the machine/sensor level. We can support customers in standardizing and consolidating their applications & IT infrastructure to achieve a truly harmonized IT-landscape. Additionally, we can bring together the after-sales and service world to extend product profit and to generate more loyal customers. For our customer Siemens Healthcare, we supported a smooth and cost effective migration to a central remote services infrastructure, which today allows faster reaction times and higher availability and which has led to increased customer satisfaction. Finally, we are singularly equipped to cover virtual and physical infrastructures and to deliver information security beyond the narrow limits of simple IT security. We understand the new threat scenarios and can protect individual products as well as customersʼ production operations. PAC: Ideally, an IT service provider is able to offer manufacturers the complete range of services, starting from business and IT consulting, over to system integration and finally also the operation of a fully integrated PLM-ERP-MES application landscape. How can Siemens IT Solutions and Services help manufacturers to not only build such integrated manufacturing environments, but also to run and operate such IT landscapes in a way that manufacturers are also supported in their demand for highest flexibility?

22 Siemens IT Solutions and Services combines objective consulting, complex integration skills and dynamic operation options for our customers. We can either operate complete shop-floor services processes or support in industrialization of the shop-floor IT application management of our customers. Our unique skills in Factory Strategy consulting support the organizational design and setup of the information processes in production and logistics as well as the design of the governance model and the IT service management processes. For example, since a couple of years we have been operating the Manufacturing Execution (ME)-systems for the Mondi Group, a leading paper and packaging manufacturer. In its plant in Frantschach (Austria) we operate Mondiʼs ME-system 24 hours a day, 7 days a week. PAC: As the manufacturing industry has become a global industry with a globally networked production, it is essential for an IT services provider to offer global delivery capabilities. What global delivery capabilities can Siemens IT Solutions and Services offer to manufacturers? Siemens IT Solutions and Services integrates and operates core areas of the worldʼs fifth largest IT infrastructure at Siemens AG. We understand the challenges of globally- operating manufacturers and offer a flexible sales and delivery model supporting global customers with global account teams, project and service delivery teams that are organized in Global Competence Centers and Global Production Centers all around the world. Nevertheless, with presence in over 40 countries, we can still act and support our customers locally. This combination of local and global service elements results in a global harmonized setup according to specific customer-needs. For example, a globally leading supplier of plants and services for the hydropower, pulp and paper, metals, and other specialized industries, with more than 120 production and service sites worldwide, comments on Siemens IT Solutions and Services, that Siemens IT Solutions and Services is a service provider of Siemens and Siemens is a major industrial company. We donʼt need to tell Siemens IT Solutions and Services the specific needs of a global manufacturing company.

8. PACʼS SUMMARY 23 Optimizing and aligning processes from top-floor to shop-floor in order to increase flexibility and transparency is a major challenge for manufacturers today. And, in order to move towards an end-to-end integration of all core processes, interoperable IT solutions are needed, which support this integration through a secure and seamless data and information flow. In an ideal world, the manufacturing environment would be fully integrated, which means, processes are all integrated and aligned as well as supported with the appropriate IT solutions (e.g. MES, PLM) that allow a seamless data flow from shop-floor to top-floor (e.g. ERP). But, as always, there is no such thing as an ideal world. Due to the existing and very complex IT application landscapes, as well as a huge number of isolated processes, manufacturers face the challenge of following a step-by-step approach, addressing one business issue and IT challenge after the other. Major challenges for IT service providers in this context, therefore, relate to the complexity of end-to-end process integration as well as the existing heterogeneous application landscape and IT infrastructures with complex interfaces. PAC believes that a step-by-step approach, comprising the integration of specific processes, such as product development, production and aftersales, as well as the integration with the manufacturersʼ commercial IT solutions, is the road to go. Additionally, PAC sees it as essential to incorporate flexibility into the planning of business and IT architectures of manufacturers in an ever-changing global business environment. With its new strategic offering for manufacturers, Siemens IT Solutions and Services, delivers exactly what PAC describes as a step-by-step approach towards an integrated manufacturing environment. Additionally, PAC sees certain capabilities and assets within Siemens IT Solutions and Services, which are beneficial for manufacturers when working with an IT service provider on the transformation towards an integrated manufacturing environment: Firstly, Siemens IT Solutions and Services has a strong presence in the manufacturing area through its high ʻIndustry DNAʼ as part of the Siemens

group, as well as vast experience from projects with a number of global manufacturing companies, including Siemens, of course. 24 Secondly, Siemens IT Solutions and Services has a close relationship with Siemens software assets, which are relevant to the manufacturing industry, namely Siemens PLM, which is among the worldʼs leading PLM solutions, and SIMATIC IT, the manufacturing execution solutions from Siemens. These close relationships, resulting from a number of customer references from joint projects with Siemens, are quite beneficial for manufacturers with regards to a ʻone-stop-shopʼ for the end-to-end integration of all processes including the respective integration of these IT solutions (e.g. PLM, MES). Additionally, PAC considers strong SAP know-how to be vital for the end-toend integration of shop-floor IT solutions (MES) and solutions for product development (PLM) with the IT-solutions from the top-floor, and hence PAC finds Siemens IT Solutions and Services very well positioned in the area to support manufacturers accordingly. Generally, the road ahead for manufacturers moving towards a fully integrated manufacturing environment is a road full of challenges, with a load of milestones. But, for manufacturers to set the basis for continuously gaining competitive advantage, the optimization and integration of all processes including its supporting IT solutions needs to be tackled. Not all at once, but ʻstep-by-stepʼ.

25 9. ABOUT SIEMENS IT SOLUTIONS AND SERVICES Siemens IT Solutions and Services is a European based premium player providing state-of-the-art IT solutions and delivering outsourcing services with global reach. Within the IT service chain, the portfolio of Siemens IT Solutions and Services ranges from consulting, software deployment and system integration to the comprehensive management of IT infrastructures. Through profound industry know-how and beneficial innovations, the business technologists at Siemens IT Solutions and Services enable customers to transform their business processes on an ongoing basis. With a workforce of more than 32,000 employees Siemens IT Solutions and Services achieved revenues of some 4.2 billion euro in fiscal 2010, which ended on September 30, over 75 percent of these revenues came from outside of Siemens. Further information at: www.siemens.com/it-solutions.

26 CONTACT Author: Stefanie Naujoks Consultant +49 (0)89 23 23 68-22 s.naujoks@pac-online.com Published by: Pierre Audoin Consultants (PAC) GmbH Holzstrasse 26 D-80469 Munich Tel: +49 (0) 89 232 368-0 Fax: +49 (0) 89 719 62-65 E-mail: info-germany@pac-online.com ABOUT PIERRE AUDOIN CONSULTANTS Pierre Audoin Consultants (PAC) is a global market research and strategic consulting firm for the Software and IT Services Industry. PAC helps IT vendors, CIOs, consultancies and investment firms by delivering analysis and advice to address a range of growth, technology, financial, and operational issues. Our 30+-year heritage in Europe - combined with our US presence and worldwide resources - forms the foundation of our ability to deliver in-depth knowledge of local IT markets, anywhere. We employ structured methodologies - undertaking thousands of annual face-to-face interviews on both the buy and sell side of the market, as well as a bottom-up, top-down approach - to leverage our research effectively. PAC publishes a wide range of off-the-shelf and customized market reports - including our best-selling SITSI program - in addition to our suite of strategic consulting and market planning services. With 16 offices across all continents, we deliver the insight that can make a difference to your business. For more information, please visit our website at www.pac-online.de. OUR LOCATIONS PARIS Pierre Audoin Consultants (PAC) 92, Avenue de Wagram, 75017 Paris, France Tel: +33(0) 1 56 56 63 33 Fax: +33(0) 1 48 28 41 06 info-france@pac-online.com MUNICH Pierre Audoin Consultants (PAC) Holzstrasse 26, 80469 Munich, Germany Tel: +49(0) 89 23 23 68 0 Fax: +49(0) 89 719 62 65 info-germany@pac-online.com BERLIN Pierre Audoin Consultants (PAC) Am Kupfergraben 6A, 10117 Berlin, Germany Tel: +49(0) 30 28 52 96 0 Fax: +49(0) 30 28 52 96 29 info-germany@pac-online.com LONDON Pierre Audoin Consultants (PAC) 2nd Floor, 15 Bowling Green Lane, London EC1R 0BD, UK Tel: +44 (0) 207 251 2810 Fax: +44 (0) 207 490 7335 info-uk@pac-online.com BUCHAREST Pierre Audoin Consultants (PAC) Louis Pasteur 40, 050536 Bucharest-5, Romania Tel: +40 (0) 21 410 75 80 Fax: +40 (0) 21 410 75 81 info-romania@pac-online.com NEW YORK Pierre Audoin Consultants (PAC) 192 Lexington Avenue - Suite 1101, New York, NY 10016, USA Tel: +1(646) 277 7255 Fax: +1(646) 607 1716 info-us@pac-online.com SAO PAULO Pierre Audoin Consultants (PAC) Rua Pedro de Toledo, 130, Office 61, Vila Clementino, Sao Paulo, 04039-030 Brazil Tel.: +55 (11) 5539 0280 Fax: +55 (11) 5539 0280 info-latam@pac-online.com PAC 2011 www.pac-online.de