Roland Busch, Chief Operating Officer, Chief Technology Officer and Member of the Managing Board of Siemens AG, was in Mumbai recently as Chief Guest at the company’s annual India Innovation Day event. Sarwant Singh, Head of Frost & Sullivan’s Visionary Innovation Group, spoke with him about the future-oriented focus of Siemens; the Mega Trends impacting the company; how it has reorganized its businesses in response to these evolving trends; and what technologies he would be betting on to make it big over the next decade.
Sarwant Singh (SS): What are the key Mega Trends that are impacting Siemens today?
Roland Busch (RB): There have been at least four Mega Trends that have impacted us over the last 7-10 years. These include urbanization, globalization, demographic changes in terms of aging populations, and climate change. Over the last five years, we have added a fifth – digitalization. It differs from the others in that it is related to technology while the others aren’t. But digitalization has had such a huge impact on all of our markets and is rolling on so massively and in such a fast way that we’ve added this global Mega Trend to the existing ones that we believe are changing all markets.
SS: For my book “New Mega Trends: Implications for our Future Lives”, I had interviewed Peter Löscher, the then CEO of Siemens AG. He had spoken about organizing the business around three Mega Trends and then he added a fourth, which was the Infrastructure & Cities business which was structured around urbanization. Now you’ve added digitization as the fifth Mega Trend. Can you tell us a little more about the reorganization, especially as it relates to the widespread digitization that exists today?
RB: The first point is that, regardless of how we organize ourselves, we are riding these Mega Trends or are trying to align our business accordingly. So as you rightly said, we did have the Infrastructure & Cities sector. However, Siemens doesn’t have this division any more and has, instead, dealt with these areas under the umbrella of smart infrastructure or digital enterprises. However, we can confirm and reiterate this logic and this being an outcome of what’s happening in the market. The fact that we have added digitization also has an impact also on how we structure our company because this also means we have a focus point. The holy grail of AI, for example, is where AI is perceived as an engine which solves every problem. We, at Siemens, talk about more specific AI where we deploy technology to solve a specific problem being faced by a vertical or a particular industry. This makes it more meaningful since within our organization we work with different industries. It’s all about discrete or process industries and we are focusing on this.
It’s about smart infrastructure; everything to do, for instance, with energy, such as distributed energy or buildings or energy consumption or distributed energy systems since we see a trend away from centralized power plants to more decentralized ones. This whole thing centers around this space, including our digital offerings. I can go on and on. Mobility is the same. Gas and power is the same. So we are leveraging our platform across all these units. Again, our platform is a sum of technology, a technology stack, an ecosystem and this plays into the whole nine yards of Siemens’ markets.
SS: You mentioned platforms. We believe that everything will eventually become an IoT platform. Platforms will become a commodity. In this context, how would you distinguish one platform from another?
RB: The concept of a platform is based on the fact that it is a technology stack, that it features a substantial amount of technical expertise, and that it is about an ecosystem. And, therefore, this is the first objection I have against your statement, it cannot be commoditized. Our platform, including our ecosystem, is and will be unique in the market; you will not find another technology ecosystem or stack that is alike. So it is not about whether or not we will have a layer in our technology stack or our operating system MindSphere where one might see other competitive products. Instead, there is only one ecosystem which is serving this technology stack and this platform and this is ours which is very powerful. The reason it is so powerful is that we are covering many different verticals. So it is worthwhile, for example, for an IT integrator to take his practice onto Siemens’ platform, because they can leverage it from energy to healthcare, to industry to mobility. Therefore, it is not at all a kind of commodity. I do believe the more it scales, the more it differentiates.
SS: You head Siemens Mobility GmbH. What is the vision of mobility in Siemens?
RB: Our vision is to be able to contribute to solving the global mobility problem, which is essentially moving people and goods within an urban environment or across urban environments. This is a big challenge. That is why I believe that if one does not solve the mobility challenge, it will restrain growth in our economies and in our cities, and it will make our cities places where it will be problematic to live.
I do believe we have the ingredients to make a contribution. First and foremost we offer public transport, railroads as a rolling stock, and also the signaling system. This brings me to my first point which is that to solve the mobility challenge, one has to focus on public transport. Do not believe that autonomous cars will solve the mobility problem. It could make it even worse. Do not believe that any kind of platform which is just incentivized to put more people into cars will solve the problem. One has to, and this brings me to my second point, offer not only the rolling stock offering or the public transport offering but also the chance to make an intermodal offering. We do traffic management as well so we can really guide people toward where the capacity is and we can guide them towards increased use of public transport and integrating mobility modes better. That is another advantage. We have invested in a company called HaCon which does scheduling and planning. It’s the most common platform used by rail operators worldwide. And this approach is something that we want to expand upon and see how we can really make intermodal usage for customers easier, and enhance how traffic is guided and managed.
SS: Can you comment on the Siemens Alstom merger plans?
RB: The point is we had a plan, gave it lot of thought and, for reasons I can talk about for hours, we failed to get approval from the European Commission. However, are not concerned. Ours is a very strong business, it is growing, we are a leader in profitability in the business, we have a cash conversion rate, and a good RoI contribution for Siemens. We are technology leaders in several areas. So this means we will be building this business in the future from a position of strength and will explore many options. We have given ourselves time to do that and are under no time pressure. This will allow us to come up with the right answers about what will happen next.
SS: You’re also the CTO. Looking ahead 10 years, in what technologies would you put your money?
RB: I would put my money first and foremost on something I have a very strong feeling about – Siemens’ IoT platform. We have a very good customer base and position in our business areas. The unique combination of our domain know how, expertise in software, cybersecurity and hardware, our very strong technology stack, together with our extremely strong and growing ecosystem leads me to believe that we could be the IoT systems/IoT platform in this industry market.
The other technology that I believe will spread out rapidly in the industrial space is 5G. It can change so many things in the way we currently run manufacturing sites. I think there will be a very strong tailwind for any kind of cybersecurity solutions/elements/technologies in it.
I also believe in the future of what we call ‘digital twin’, which is basically fed by our software portfolio , our software suite. We have a $5 billion industrial software business, and are among the 10 largest software companies in the world. This part will definitely grow extremely fast. And the digital twin, which is currently seen by many people as only a concept, will be the backbone of any future industry or manufacturing industry because it is so powerful. Once you have the digital twin of your products or systems, they can be optimized in a much faster way, they can be developed more rapidly and development times can be shortened.
So the benefits are countless. In turn, we will see a massive increase of data storage, of the need for processing power because everything that one sees today will be digitalized and this is another element where I foresee tremendous growth. And lastly, when we talk about processing power, at a certain point in time beyond the ten year horizon, quantum computing will allow the jump to the next level. We are not working on a quantum computer itself because that is something for other companies to work on. We don’t do processors and the like but we are working on technologies that can help us use quantum computing or quantum computing processing.
SS: I have a question for Mr. Sunil Mathur, Managing Director and Chief Executive Officer of Siemens India. Now that China has derailed a bit, everybody is talking about India. Does India offer huge prospects for Siemens and, if so, in what particular sectors?
Sunil Mathur (SM): Absolutely. You start with the government’s plan of “power for all” and we are in the gas & power business. The government is focused on developing smart cities. We are in the smart infrastructure business. The Indian government has an agenda of “healthcare for all” and we have healthcare in the country with Healthineers. From revamping the railways to improving mobility services, we have the expertise to meet these high priority areas. When talking about “Make in India”, our digital industry’s operations are here in India. So we are basically mirror imaging almost exactly the plans outlined by the government.