Siemens Plans Software Deals This Year to Boost Connected Plants

Siemens AG (SIE) plans deals with software makers to plug technology gaps in its service business this year as Europe’s largest engineering company seeks to accelerate revenue growth from Web-connected factories.

Siemens is considering both takeovers and partnerships, according to Peter Weckesser, head of the company’s value services unit.

“We want to grow by a significant double-digit percentage every year in terms of revenue,” Weckesser said in an interview at the Hanover industry trade fair in Germany. “There will be technology partnerships, ranging from saying that we are buying a technology in from a partner, all the way through to M&A activity.”

Siemens currently offers products that optimize manufacturing by remote monitoring, identifying processes inefficiencies and preempting failures by trend evaluation. The Munich-based company last year bought British production-planning software specialist Preactor International Ltd., adding to the 680 million-euro ($938 million) acquisition of Belgian software maker LMS International in 2012.

Growth from industrial services is outpacing that from industrial automation, Siegfried Russwurm, the head of Siemens’ industry sector, said at a press conference yesterday.

Huge Quantity

“The acquisition of a sales channel is not what we are looking at,” Weckesser said in the interview. “Our business model is dependent on being able to collect information from a particular process, and then being able to relay this huge quantity of information to customers in a professional manner, whether that’s something like energy or vibration data.”

Siemens has a facility in Erlangen, Germany, which aggregates data from customers globally in real time and uses it to prevent factory downtime. The company will add similar facilities and the U.S. and China “in the next few years,” according to Weckesser.

“It is a subscription-based service model,” Weckesser said. “There’s a price per month, which is calculated by the quantity of data delivered by the measurement devices.”

To contact the reporter on this story: Alex Webb in Munich at awebb25@bloomberg.net

To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net Kim McLaughlin, Thomas Mulier

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