Siemens PLM Tackles Product Costing

Recent years have seen the Siemens Industry Automation Division extend its leading position in the industrial software market with the acquisition of UGS in the United States in 2007, innotec in Germany in 2008, Elan Software Systems in France in 2009, the Brazilian company Active Tecnologia em Sistemas de Automação, Vistagy in the US in 2011, and the German IBS AG in 2012. All of these companies were leading industrial software suppliers in their respective fields.

At the recently held Siemens product lifecycle management (PLM) analyst conference in Boston in early September 2012, Siemens presented a slide (see figure 1) showing its five most recent acquisitions. The giant told us to stay tuned for more acquisitions soon. To that end, a week later Siemens announced a definitive agreement to acquire Perfect Costing Solutions GmbH, a leading global provider of product cost management and estimation software solutions. Following the acquisition, Perfect Costing Solutions will become part of the Siemens PLM Software business unit.

Figure 1

At the analyst summit, Siemens PLM talked about the new realities for manufacturers whereby ever more people are collaborating, searching for more info and making complex decisions, with ever less room for error. Indeed, in this information age, aren’t we all flooded and overwhelmed by a deluge of information coming from all directions? But how much information is needed to make the right decision? We often don't know what info is important to make decisions, and having too much information can lead to reaching the wrong conclusions, with bad ramifications. In fact, engineers make decisions on a daily basis that are worth millions of dollars, often without being aware of the fact.

Siemens’ New PLM Take

Siemens wants to take PLM to the next level whereby more people are intrinsically aware and receive only pertinent information to make integrated systems decisions on time and with greater accuracy. The so-called High Definition (HD)-PLM user experience, characterized by being active, personalized, intuitive, context-aware, and fast (with high performance), should immerse users but only in the right context. By delivering solutions to key industries (automotive, aviation and defense [A&D], hi-tech, energy, marine, machinery, etc.), Siemens PLM Software strives to enable its users to make smarter decisions for better products.

Data in Siemens PLM environments is gathered and filtered from multiple sources so that information can be delivered within the context of users’ roles  and responsibilities. According to Siemens, there are about 20,000 decisions involved in making a new car (with regards to, e.g., parts, suppliers, shape, material, etc.), and each one is an opportunity to make either a positive or negative difference. Siemens plans to talk about great moments in product decision-making that its customers have made. The vendor wants to tell real stories where small, everyday decisions have a big impact.

Perfect Costing for Better Design Decisions

In a nutshell, helping its customers make smarter decisions that lead to better products has long been a hallmark of Siemens PLM Software’s business strategy and HD-PLM vision. Product cost estimation and analysis early in the product lifecycle, along with intelligently integrated information, is an important part of that good decision-making process, leading ultimately to improved profitability.

Knowing total cost of ownership (TCO), total landed costs (TLC), etc. is a big trend in the enterprise resource planning (ERP) and supply chain management (SCM) realms. Several consulting firms have bought these types of solutions. I don't know of any PLM providers with a very good costing solution, and neither does Oleg Shilovitsky. Dassault Systèmes has ENOVIA X-BOM Cost Analytics and SolidWorks Costing, while PTC has Windchill Cost. SAP has said that it was going to use the multi-faceted SAP HANA in-memory analytics for product costing in late 2012—the first product offering related to HANA and PLM.

Frankly, I thought that Siemens PLM Software’s next acquisition would be bigger and more ambitious than product costing. I was expecting a move toward application lifecycle management (ALM) for embedded software and systems engineering. But, on second thought, the costing domain is certainly important. I believe all major PLM solutions have costing capability, but none has yet mastered it.

So Siemens PLM’s latest acquisition is an attempt to move deeper—it give the vendor a better story to tell alongside its “Smarter decision, better products” tagline. Perfect Costing Solutions has a ten-year history of helping companies in the discrete manufacturing industry improve the effectiveness and efficiency of their business processes in calculating, controlling, and optimizing product costs.

Concocted PLM Systems

But while the so-called Big Three or Five PLM vendors (depending on how one looks at the PLM market) try to leapfrog each other, feature by function by module, Siemens, PTC, Dassault Systèmes, and Oracle (who offers Agile PLM) will continue to acquire shiny objects with lots of fancy new features. Unfortunately, this race only complicates the integration story of already complex and over-engineered PLM systems for large enterprises.

Think about it: Siemens PLM bought yet another code base. Some might recall Jim Heppelmann, PTC’s CEO, facetiously saying a few years back on a PTC earnings call, “(Siemens) Teamcenter has no center.” The irony is that the same is increasingly true for Windchill PLM and other over-engineered PLM systems built upon several acquisitions of product on disparate technologies. Somewhat resembling Workday in the Tier 1 ERP space, one should watch Aras Corp as a younger open-source PLM provider with a new philosophy—it is not competing on features but is rather differentiating itself on its unified and compact Aras Innovator PLM platform technology. 

Dear readers, what are your comments and opinions with regard to product costing in design and manufacturing, and Siemens’ aforementioned acquisition. I would certainly be interested in your experiences with this software in general and with Perfect Costing and Siemens PLM in particular.

Further Reading

TEC blog post (Nov 2011): What Could Be Some New Frontiers for Large CAD/PLM Providers?
TEC blog series (June 2012): CAD-centric PLM, ERP-centric PLM, and Organic PLM: What’s Right for You? – Part 3
TEC report (Sept 2012): PTC Windchill and Creo: 2012 State of Play
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