Preamble
The pattern is clear: the battle for leadership in the PLM space has created a focus among the leading platform developers—the Big Three—around seamlessly linking product development with manufacturing and automation solutions.
Siemens was first in the race when, a few years ago, the PLM division merged with the company's large automation department and formed the Digital Factory division.
In 2018, the PLM developer PTC followed in this track by investing in a partnership with Rockwell Automation, a collaboration that also meant that the latter bought into PTC with $1 billion.
A recent announcement from PLM market leader Dassault Systèmes signals that the company is making a similar move: joining forces with the Swedish-Swiss automation and robot firm ABB. The goal of the alliance is to develop software for digital industrial solutions based on the combination of the companies' respective PLM (Dassault’s 3DX) and automation software portfolios (ABB’s Ability).
Strategically it is a smart move, but it will be a tough journey.
Context
Generally speaking, the development is a logical one as far as the concepts of Industry 4.0 and IIoT(Industrial IoT) are concerned. In these areas, the trend is that we’re moving toward a breakthrough at a practical level.
There is still a lot to unpack from the companies' respective portfolios; however, the overall picture is that Siemens has come the furthest, but that the hunt for the leader is on. On the surface, the recent news about ABB and Dassault gives the world three global suppliers of solutions that include the digital thread from product idea and definition to production and, in some cases, life cycle support. But there’s more to it, claims ABB CEO Ulrich Spiesshofer.
"This game-changing partnership will serve our customers to lead in innovation and growth, fundamentally transforming their entire value chain to tap the vast opportunities of industrial digitalization. Together, we are offering an open, end-to-end digital portfolio—from digital twin to asset health—that gives our customers a competitive edge, building on our combined offering, domain expertise and global reach,” he said, pointing to the fact that, “ABB is adding Dassault Systèmes to its strong partner network for industrial digitalization, including Microsoft, HPE and IBM.”
How things develops with this new combination, remains to be seen. My general take is that structurally, the alliance looks exactly right, but the work to transform it into flexible platform solutions is a tough and time-consuming journey.
Platform Thinking Is the Centerpiece of Modern Product Realization
Platform thinking is now a centerpiece of modern IT support for industrial product development and realization. The mindset involves linking product development systems with manufacturing systems, which is a tough but necessary challenge for those who have ambitions to establish themselves in the upper crust of the industry. The idea of this type of “all-embracing” system is not new, but the trend toward practical and implementable solutions has accelerated in the light of the Industry 4.0 and IIoT concepts.
In this regard, Siemens's Digital Factory has mainly been out early. It is doubtful whether any other player has been able to offer a more complete connection between product development and manufacturing/automation.
Generally, the link between PLM/IT and OT technology (Operational Technology) is not a simple story. For Dassault and the 3DEXPERIENCE platform (3DX), a challenge has been to bring 3DX together with an often diversified set of existing production software tools for customers on the manufacturing side of the equation. Initially, this caused some problems with some automotive companies, where, in particular, Jaguar Land Rover's investment in 3DX as a base platform in the company's pill project has been a “bumpy” journey.
While complex to implement–which in varying degrees goes for all big systems–3DX as a base in product development processes eventually has worked well, while synchronization of this work with the manufacturing site's different systems and collaboration with the supply chain in some places created problems.
Among other things, this is why the decision to form an alliance with ABB is a very good idea for Dassault. The incentive to achieve competitive automation-coupled solutions can definitely tighten the competitiveness of the company's manufacturing-related solutions.
One Element in Hunting Siemens in Automation
But the hunt for Siemens PLM has been, and is, in full swing. Dassault can be regarded as the leading player on the PLM side in terms of total revenue–and that PTC developed a leadership in the IoT/AR (Augmented Reality) areas is hardly questioned–but, when it comes to factory automation, there is no doubt that Siemens is the shining star.
Take a look at the below outline of the top companies in factory automation in terms of global market share, according to Statistas’s figures for 2017:
- Siemens: 19 percent
- ABB: 13 percent
- Schneider: 9 percent
- Rockwell and Mitsubishi Electric, both 8 percent
For Siemens Digital Factory—including PLM, Automation and Motion Control—revenues in 2017 amounted to $13.2 billion, of which just over $5 billion comes from PLM, making automation-related revenues substantially higher. In Europe's automotive industry, Siemens is the clear leader in automation.
For ABB, it is unclear exactly what Statista counted as “automation revenues”. According to the annual report for 2017, ABB had approximately $6.3 billion in revenues for the Industrial Automation division, while the Robotics area landed on about $8 billion. Certainly, therefore, there are parts of the other three divisions that Statista picked up on ABB, which resulted in second place 2017 within factory automation with 13 percent.
Rockwell is strong in the automotive industry, mainly in North America, and in 2017, Rockwell's automotive sales grew more than 20 percent. Compared to Rockwell, Siemens definitely dominates the European market, is second in North America, and both are even in Asia and the Pacific.
When, Not if, Dassault Would Jump on Automation
When PTC revealed its partnership with Rockwell Automation in 2017, it became clear that none of the three majors would let go of the opportunity to close the IT loop for product lifecycle management voluntarily and without combat. The question was really when, not if, Dassault would jump on the automation train.
With its 3DX platform, the company has had great ambition to cover the entire scope of product realization. Still, the dominant components in the portfolio have, over the years, been around CAD solutions, CATIA (high end) and SOLIDWORKS (midmarket desktop 3D CAD). Even today, the picture is that Dassault receives most of its revenue from CAD, representing about 55 percent of the company’s total.
For Siemens, CAD dependence is lower; about 28 percent of its revenue total came from CAD software, NX (high-end) and Solid Edge (midmarket desktop 3D CAD).
The fact that the French PLM developer now chooses to cooperate with ABB is certainly surprising, but also feels logical. As a market leader in automation, the Swedish-Swiss automation player is globally active, covers several industry segments and has the necessary resources to develop solutions that cover broad areas.
As for PLM revenue, Dassault was the market leader in 2017 (based on the latest numbers that analyst CIMdata published), before Siemens PLM.
Here's how the picture looks when it comes to the PLM developers that CIMdata refers to as "Mind Share Leaders", based on 2017's total revenue within PLM (Source: CIMdata):
- Dassault Systemes, a total of $5.7 billion
- Siemens PLM, $5.2 billion
- Autodesk, #3.4 billion
- SAP PLM, $2.1 billion
- PTC, $1.8 billion
- Oracle, $1.5 billion
What Does the Technology Look Like? ABB's Ability Portfolio in Focus
That said about the companies' respective market positions, what about the technology that Dassault and ABB will offer to the market? In their press material, they note that, "They will offer customers a comprehensive range of advanced open digital solutions that increase competitiveness while increasing flexibility, speed and productivity in their products' lifecycle, manufacturing and operations."
Above all, ABB's strong solutions based on the digital Ability technology is the main contribution on the automation side, while Dassault's share relates to the 3DX platform, which can be described as a PLM/PIP solution (Product Lifecycle Management/Product Innovation Platform).
Dassault is far from the only PLM player represented in the company. In fact PTC’s solutions are probably the most common in the group, but Siemens PLM is also well-represented in some departments. In the robotics division, ABB also uses SOLIDWORKS and even Autodesk’s AutoCAD is present as a basic tool.
An interesting fact is that ABB already works internally on the 3DX platform to model and simulate its solutions before delivering to customers. In the course of the journey, the intention with this partnership is that ABB will develop and provide customers with advanced digital twins that enable users to run ABB solutions and their operations with improved overall efficiency, flexibility and sustainability.
Considering that the merger will be clear to competitors Siemens and PTC, the pace of the integration work is paramount. There is no time to lose when the competitors have already come a long way (Siemens) or are already in full steam (PTC/Rockwell) to sharpen their solutions.
Speed in the Integration Work Will Be Crucial
ABB and Dassault's strategy in this also points to quick action. In a step-by-step approach, focus will be on factory automation, robotics, process industry automation, and electrification solutions for smart buildings. The first joint solutions will be presented at the upcoming Hannover Trade Fair in Germany, now in early April (April 1-5).
“Industry in the 21st century is no longer determined by the possibility of manufacturing goods. The positions and competitiveness of today's market leader will depend on the ability to establish cutting-edge technical know-how. This is what will differentiate competitors and the point is that everything happens right now. When world industries begin to converge towards digital technology, all aspects of industrial activity are transformed,” said Dassault's CEO, Bernard Charlès, adding, “In the industrial renaissance, a platform orientation is made possible in which the real and virtual worlds will inform and reinforce each other. In this, our partnership with ABB will build on decades of combined expertise to help customers make the most of this powerful and dynamic trend.”
"Downtime Can Cost Millions"
Of course, the Dassault chief is right in this regard. The world of product realization is under strong pressure to change. In today's highly automated industries, with digital factory modeling and flexible robotized manufacturing systems, companies can work with more design iterations at a faster rate resulting in more robust designs. This, in turn, contributes to accelerating the transition from mass production to mass individualization, where products are manufactured in a larger quantity, smaller batches and in shorter lifecycles.
For many manufacturers, the cost of downtime has increased dramatically in recent years, as delivery of "just-in-time" has become the norm. “One hour of downtime at a modern production site can cost more than $ 1 million,” notes Bernard Charles.
Dassault Systèmes works with companies of all sizes in 11 industry-packed solutions to help them meet today's new challenges. On the 3DX platform, all technology and capacity are integrated into a coherent digital innovation environment, which delivers digital continuity from concept to manufacturing to ownership and back. Bernard Charles usually describes 3DX more as a business platform than as a pure technology platform. Industrial companies can, he claims, "integrate the platform's 3D applications to create a digital twin that captures insights and expertise from across the entire ecosystem, to measure, assess, and predict the performance of an industrial asset and help optimize business around it. intelligently.”
More about ABB's Ability Portfolio and the Integration Path
These capabilities will now be combined with ABB's Ability. The portfolio is generally rich. Ability was launched in 2017 and today offers 210 digital–to varying degrees–compatible solutions for planning, building and operating industrial operations with, as they say, “higher productivity and safety at lower costs.”
The question now is how ABB's Ability portfolio can be linked together and integrated with Dassault’s PLM portfolio. A challenge lies in the quantity of different technologies. ABB have 210 different solutions collected under the Ability umbrella.
According to a basic plan the initial focus is on slightly different things depending on areas. This is how it looks:
Factory Automation and Robotics
“Digital twin experiences for end-to-end optimization of processes and systems, combined with the flexibility of robotics, give the factories the flexibility to adapt to increasingly dynamic markets. This includes ready-made manufacturing solutions and services, together with joint consultation for the conversion of industrial business, to optimize and accelerate the launch of new products.”
Electronics manufacturers can quickly increase the production of new, but short-lived, products, while food processors can switch between locally-tailored seasonal offers while producing at high speed.
In the automotive industry, Dassault/ABB point out that highly automated industries enable digital twin experiences of factories with an integrated design and manufacturing environment to support new assembly processes with flexible and re-configurable cells. "It also makes it possible to link separate systems, such as connecting logistics automation systems to robots at production lines that depend on exact delivery of parts for optimal production," the partners say.
Smart Buildings
Again, we talk about digital twins and their importance. A "digital twin system" enables a smooth workflow during the design, construction and operation of buildings and connected sustainable transport solutions. The available information, in combination with Dassault Système's virtual universe 3DX, will also allow greater customer interaction during phases and operation of design specifications. "
Process Industries
The competitive pressures in process industries, such as mining, are tough. It requires companies to continually look for new ways to increase safety, productivity and energy efficiency. at websites while reducing costs and risks for daily operations. A digital model of the underground environment in conjunction with mine planning and control systems would enable optimization of energy consumption and mine automation, and enable mining operators to monitor and optimize production in real time, while running virtual simulations of future scenarios.
Bottom line: the partnership a good start, but a lot remains on the journey to catch up with competition. It will be interesting to see how the integrated solutions will change Dassault’s DELMIA and Apriso products, which presently are the digital manufacturing solutions that are offered.