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The SAP/Siemens PLM Partnership: Two Questions SAP Customers Should Ask

Guest Author

By Jon Chorley, Chief Sustainability Officer and GVP, Supply Chain Management Product Strategy, Oracle

When SAP and Siemens announced that they would partner to provide integrated, end-to-end applications across product lifecycle management (PLM), supply chain, and asset management, I had a lot of questions. I’m sure SAP customers do as well.

With this partnership, SAP will offer Siemens’ Teamcenter PLM software and Siemens will offer some of SAP’s supply chain and asset management applications, following the theory that bringing multiple legacy systems together will magically provide a modern approach for customers.

SAP and Siemens were correct in determining what the market needs and wants. Companies are looking for a way to accelerate product innovation and link it more effectively into all aspects of business operations, including supply chain and manufacturing. They also want to use the latest technologies to enable rapid prototyping, faster time-to-market, and new business models such as subscription services.

However, with SAP’s spotty track record on integrating applications, I would say that SAP and Siemens customers have cause for concern. Even SAP’s Chairman of the Supervisory Board, Hasso Plattner, acknowledged the company’s failure to integrate its own applications in an interview earlier this year with Handelsblatt, a leading German-language business newspaper:

“We bought some companies just because they had a nicer user interface. But that’s not enough… When you ask major SAP customers, you always hear the same thing: ‘You have to bring the services into line!’ Oracle has done that. The idea of simply letting every company run independently and autonomously may even have made sense from a business viewpoint… Yet technologically, we didn’t make the right decision. That cost us a year and a half to two years, but mentally the toll was a lot more.”
   

Given that history—and the importance of integrating product development with the supply chain and other functions—here are two questions that customers might want to ask SAP about this partnership:

  1. Given that SAP has consistently demonstrated an inability to effectively integrate technologies of companies it actually acquires, why should I expect a partnership with an independent and equivalently established company to be any different?

As Plattner admitted, SAP has not driven any kind of integration across its own technologies and its acquired applications. If SAP can’t integrate technologies it’s acquired, like SuccessFactors and Ariba, how successful will it be when working with a separate company that has its own agenda and objectives?

Oracle has always viewed product lifecycle management as an extension of the supply chain. We've worked diligently to break down the process rules between engineering, design, and the supply chain, and we have built a unified, end-to-end system specifically for the cloud, with a common tech stack and data model.

The Siemens PLM application is a good product but it was not built for the cloud – and then SAP will attempt to integrate it with its own set of older products, also not built for the cloud. How will that work – and how will it benefit customers? It’s very unclear.

And if these companies can come to a common agreement on how to rebuild these technologies for the cloud, they will have to overcome not only technical issues on the product development side but also the challenge of aligning two organizations, two boards of directors, and two sales teams.

Although I’m certainly glad that it’s endorsing Oracle’s strategy, history tells us that SAP won’t be able to execute.

  1. Siemens PLM is old and was not built for the Cloud. What will the next generation of Siemens PLM look like, and how can I be assured that it will work effectively with whatever SAP eventually delivers in the cloud?

While SAP and Siemens may think they’re going to deliver an integrated approach, I sense that much of their focus might be on easier-to-deliver bells and whistles – perhaps a digital simulation, 3D printing, rapid prototyping – but not on the true PLM and supply chain integration that companies need.

This is critical because competition no longer takes place just between products; increasingly, products are offered as a service. It’s essential that a company’s PLM technology is tied into its sourcing and manufacturing as well as its finance systems, so new business models can be explored. And if a company offers its product on a subscription basis, asset management and maintenance are also critical.

All of these aspects of the supply chain and back office need to be well connected if you want to accelerate your launch cycle. Companies need to understand how product innovations affect their supply chain, how they’re going to start gearing up, what the potential demand picture for new products looks like, and how all of that links into a coherent new product introduction process.

With Oracle Cloud Applications, all of these processes are natively integrated and leverage machine learning technologies. It's hard to see how that's going to happen with SAP and Siemens; there are likely to be islands of development, with some owned by SAP and some owned by Siemens, and thin bridges between and among them. Without tightly integrated product development and management among the various teams of both companies, its really difficult to see how they will be able to deliver on the promise they’re making to customers.

As Oracle’s chief sustainability officer, I can’t help but look at this announcement from an environmental perspective as well. Obviously, product design has a part to play in the production of hazardous materials, controlling waste, improving energy efficiency, and more.  

A strong, integrated PLM solution with intelligence built in enables design teams to make smart environmental choices over the full lifecycle, from sourcing through distribution. This is among the factors that companies need to consider when looking at modernizing their product development processes.

The bottom line

Speeding innovation and time-to-market has never been more important. And as this tumultuous year has shown us, companies that have integrated systems and processes are better able to innovate quickly. Whether that becomes the case in this SAP/Siemens partnership remains to be seen – but if past history and their intrinsic cultures are anything to go by, the outlook does not look good. Partnerships like this are like ships passing in the night. Good for an exchange of signals but with no lasting engagement. 

In contrast, building to this vision has been Oracle’s focus for years. We have taken the hard road and not the expedient one. We now have customers all over the world that are using our integrated applications to innovate faster, adapt operations to meet rapidly changing markets, plan effectively, and build sustainable supply chain operations.

If you would like to learn more about how Oracle’s cloud applications for supply chain are helping companies build a foundation for future growth, please visit Oracle.com/scm.  

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