Siemens— A Work in Process

Sometimes, even when you're number one, you have to try harder. Here's the challenge. You're the world's largest supplier of industrial and building automation systems. Where do you go and how do you grow from here?Edward Krubasik, executive vice president of Siemens AG's industrial segment, faces this challenge daily.

07/01/1998


Sometimes, even when you're number one, you have to try harder. Here's the challenge. You're the world's largest supplier of industrial and building automation systems. Where do you go and how do you grow from here?

Edward Krubasik, executive vice president of Siemens AG's industrial segment, faces this challenge daily. The industrial divisions of Siemens comprise roughly 31 billion DM (about $20.5 billion) in revenue and include Automation and Drives (A&D), Siemens Building Technologies (SBT), Industrial Projects and Services (ATD), and Production and Logistics Systems (PL). A&D alone, at 13.5 billion DM ($9 billion), represents about 8% of the global market for automation and drives.

Double-digit growth and double-digit productivity are two of the rigorous goals Dr. Krubasik has set for Siemens' industrial segment. His short answer on how to achieve these goals: "Organize our operations to be market-facing; develop value-enhanced products; and provide solutions that promote our customers' business strategies." In Dr. Krubasik's words, Siemens is a "work in process."

Globalization, innovation

Siemens plans aggressive growth through regional expansion, innovation, and new application areas. With revenue heavily weighted toward Germany, Siemens aims to strengthen its market positions in North America and Asia-Pacific. Its current automation market share in the U.S. is 2%, which it plans to grow to 4% by 2001. The A&D Group is predicted to grow close to 10% per year over the next five years.

While much of this revenue growth will come from existing operations, Siemens also plans to grow through acquisitions, strengthening its position in process automation. There likely will be a significant process control acquisition in the not-too-distant future.

To strengthen internal growth, Siemens has invested heavily in its Totally Integrated Automation (TIA) strategy. TIA combines automation components, such as motors, drives, controls, and sensors, with software to provide integrated systems serving industries as diverse as automotive, chemical, and food. As well, Siemens has formed a strategic alliance with Microsoft to use Windows CE for embedded systems. With 107 billion DM ($71 billion) in sales and 30,000 software developers, Siemens AG is the largest company dealing in real-time control to sign such an agreement with Microsoft.

Siemens does not expect to sit on past laurels. Dr. Krubasik himself is a bit of an anomaly for Siemens. A doctor in nuclear physics, he joined Siemens only last year, after a distinguished career with the management consulting firm, McKinsey & Company. As a member of Siemens' managing board, he has a clear vision of where the company should go, and how it will get there.

On the surface, it's quite simple. Get closer to the customer. Provide a single point of contact for Siemens' products. Improve customer payback. Provide open solutions. Increase productivity.

Will Siemens succeed? The U.S. market has been a particular challenge for Siemens automation business. We'll be monitoring its progress very closely to see if Siemens can deliver the customer value, and market share, it's striving to achieve.


Author Information
Jane S. Gerold, Editorial Director jgerold@cahners.com




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