2007: Acquisition of UGS Corp.
Siemens is especially well-positioned today in digitalization thanks to several forward-looking acquisitions in the 2000s. The most important of these was UGS Corp., an American specialist in digital product data management, computer-assisted design and production process simulation, offering end-to-end systems and solutions all along the value chain. UGS was an excellent complement to Siemens' existing automation capabilities.
The company was integrated organizationally into Siemens' Automation and Drives unit as the “UGS PLM Software” Division. Legally it was integrated into the US regional company, Siemens Corp. With UGS, Siemens could now offer hardware, software and support for the Digital Factory, all from a single source.
Other acquisitions would follow. In 2012 there was LMS, a provider of mechanical simulation software; in 2016, it was CD-adapco, a specialist in simulation software for flow mechanics; and in 2017 came Mentor Graphics, a maker of software for semiconductor design. All in all, over a decade, Siemens invested some 10 billion US dollars, and strengthened its lead in features for the Digital Factory.
2008: The environmental portfolio is presented
Siemens presented its environmental portfolio in the summer of 2008. It included products, systems, solutions and services for using renewable energy, enhancing energy efficiency, and protecting the environment through technology, for example in water or air purification.
President and CEO Peter Löscher spoke of a “gigantic opportunity.” Siemens was already a “leading green infrastructure giant”; its “experience, technical expertise and financial soundness” made it a prime candidate to advance this “green revolution.” The figures showed Löscher was right. In the prior 2007 fiscal year, Siemens's environmental portfolio had already generated 17 billion euros in revenues – almost a quarter of the corporate total. The portfolio's products and solutions were saving Siemens customers 114 million metric tons of carbon dioxide. By fiscal 2014, revenues had reached 29.9 billion euros, and the CO2 reduction had risen to 317 million tons. Another two years later and it was 36 billion euros in revenues and 521 million tons of eliminated pollutants.
This course of sustainable corporate management has been maintained consistently and integrated into two more corporate strategy programs: Fit42010 and Vision 2020. As Joe Kaeser said in 2015: “Cutting our CO2 emissions is not only an expression of our sense of responsibility, it is also good business.”
2008: A new corporate structure
When Klaus Kleinfeld ordered a change in focus to the megatrends of urbanization, demographic change and climate change in 2005, he gave the company a new orientation that Siemens would incorporate into its organizational structure three years later. The 10 Groups were replaced by three Sectors and 15 Divisions, and the Regions were combined into Clusters.
- The Industry Sector focused on industrial customers in production, transportation and building technology, and combined the former Automation and Drives, Industrial Solutions and Services, Transportation Systems, Siemens Building Technologies and Osram Groups.
- The Energy Sector concentrated on energy companies and the oil and gas industry, and comprised Power Generation and Power Transmission and Distribution.
- The Healthcare Sector served the healthcare industry, and contained the former Medical Solutions Group.
- There were also two cross-Sector business lines: Siemens IT Solutions and Services and Financial Services.
- In 2011 a further Sector was added – Infrastructure & Cities – which embraced Mobility, Building Technologies and Power Distribution.
However, the new structure fell short of expectations. So on October 1, 2014, the Sectors and Clusters were broken up. The number of Divisions was reduced from 16 to 10, and a Healthcare business unit was set up.
2014: Vision 2020
On July 31, 2013, former CFO Joe Kaeser replaced Peter Löscher as President and CEO of Siemens. Kaeser joined his colleagues on the Managing Board in developing a long-term plan for the company. The new corporate concept, released to the public in May 2014, was appropriately named “Vision 2020.”
It called for Siemens to focus entirely on the growth fields of electrification, automation and digitalization. The former Sector structure would be broken up, and the number of Divisions would be reduced from 16 to 10 plus Healthcare. By 2020, costs were to be cut by a billion euros, underperforming businesses would be put back on their feet, and customer satisfaction would improve. Capital efficiency was to be 15 to 20 percent, 75 percent approval from the workforce was targeted on the topics of “management” and “diversity,” and employee participation in the company's success was to be increased by at least 50 percent. The foundation of these measures was an “ownership culture” that would encourage every individual to do his or her best at their jobs, thus contributing to Siemens' long-term success.
Thus the CEO was setting goals that could serve as both a compass and a benchmark on the way to 2020. The company would be restructured. In November 2016 Siemens announced one of its strongest fiscal years – new orders, sales revenues and profits were up substantially. And the acquisition of Gamesa and Mentor Graphics in fiscal 2017 took the company a major step further in implementing Vision 2020.
2015: Acquisition of Dresser-Rand
One objective of “Vision 2020” was for Siemens to grow in attractive markets with an important future. In May 2014, the company invested some 950 million euros to acquire Rolls-Royce's business in aero-derivative gas turbines and compressors, thus strengthening its position in the growing oil and gas industry and distributed power generation. In September Siemens made a takeover bid for stock of the US company Dresser-Rand. The acquisition, completed in June 2015, brought Siemens the world's leading provider of compressors, steam and gas turbines, and engines, at a price of 7.8 billion dollars.
It was an ideal addition to the company's own portfolio in the worldwide oil and gas industry and distributed power generation. The headquarters of the Energy unit were relocated to the USA.
These two acquisitions strengthened Siemens's position in the forward-looking fields of electrification, automation and digitalization. From now on the company would be able to present complete solutions and services all along the value chain in energy.
2016: next47 is founded
In summer 2015, CEO Joe Kaeser asked Chief Technology Officer Siegfried Russwurm to launch an innovation initiative so as to pool and advance the new startup operations that had hitherto been allocated to a variety of different departments.
A new unit, with the working name “Innovation AG,” would provide the leeway to pursue good business or project ideas, irrespective of the underlying business. Funded with 100 million euros in support money spread over three years, Innovation AG, the Siemens Technology and Innovation Council (STIC) and an innovation fund were part of a new culture of innovation with which the company intended to boost its strengths further.
The new unit was formally named in June 2016: “next47.” The number 47 stands for 1847, the year when Siemens was founded, and “next” refers to the company's ambition to advance the next generation of pioneering innovations. The total investment came to a billion euros. Both sides would benefit from next47: Small, agile startups with good ideas could take advantage of the technological and legal expertise, customer base and financial strength of a worldwide corporation. And Siemens acquired immense potential to enhance its innovative strength and thus safeguard its future. The management of next47 was entrusted to Lak Ananth on November 15, 2016.
2018: Vision 2020+
After the goals set forth three years ago in the Vision 2020 had already been almost fully achieved by 2017, Joe Kaeser initiated the next transformation of the tradition-steeped company in 2018 with a successor program, Vision 2020+. The further developed concept is setting the course for long-term value creation through accelerated growth and stronger profitability with a simplified and leaner company structure.
The main aim of the Vision 2020+ company strategy is to give Siemens’ individual businesses significantly more entrepreneurial freedom under the strong Siemens brand in order to sharpen their focus on their respective markets. On October 1, 2018, Siemens received an optimized corporate structure, comprising three “Operating Companies” and three “Strategic Companies.” The former Divisions and Business Units were incorporated into these Operating Companies. Among them Gas and Power covers the entire energy business. Smart Infrastructures handles all of Siemens’ infrastructure solutions. And Digital Industries handles the business in industrial digitalization. These new arrangements are accompanied by the three strategic companies that had already been set free so they could operate more independently: Siemens Healthineers, Siemens Gamesa Renewable Energy and the then planned Siemens Alstom, today Siemens Mobility.
Joe Kaeser was certain that only those who acted from a position of strength would be able to play an active role in shaping their future: “It would be irresponsible to rest on our laurels now. It won’t be the biggest companies that survive, but the most adaptable. That’s why we’ll […] give our business considerably more entrepreneurial responsibility than before.”
2020: The new face of Siemens
To the outside world, the change process that the company now launched was most clearly evident in the carveout and public listing in March 2018 of Siemens Healthineers, the company’s healthcare business. Yet it was not until 2020, when Siemens spun off its energy business, that the company’s realignment under Vision 2020+ reached its culmination and, at least for the time being, came to an end. This realignment was more fundamental than anything the company had experienced since the establishment of Siemens AG in 1966.
Preparations for the next major strategic move began shortly after Healthineers’ public listing. Management’s decision to spin off Siemens’ energy business stemmed from shifts in the market that had long been underway: energy businesses were increasingly decoupling from solutions for industry and infrastructure. They also operated in a highly regulated sector of the economy. On May 7, 2019, the Supervisory Board decided to propose to the Annual Shareholders’ Meeting that the company’s energy activities be spun off from Siemens AG. The new company, Siemens Energy, would combine Siemens’ energy business with its majority stake in Siemens Gamesa.
The “new Siemens AG” would have an industrial core comprising Digital Industries, Smart Infrastructures and Mobility. The spin-off was approved by an overwhelming majority of shareholders at an Extraordinary Shareholders’ Meeting on July 9, 2020. The process was completed when Siemens Energy AG was listed on the stock exchange on September 28, 2020.
Siemens AG, Siemens Energy and Siemens Healthineers – three separately managed companies – now form a powerful ecosystem under one brand: three different companies focused on three different sectors, yet connected by the name Siemens. Powered by their newly won freedom, Siemens AG, Siemens Energy and Siemens Healthineers are poised for industry leadership in terms of indicators like market share, growth and sustainable profitability – a goal that would have been hard to reach in the conglomerate structure of the “old” Siemens AG.