We have ABB forming a JV with Dassault Systems. We have Rockwell firstly linking up with PTC and now a Rockwell and Schlumberger tie up. They will significantly make a difference in the complexity of those offering Industrial IoT platform solutions.
What do these strategic moves mean to the IIoT market and to potential clients?
In some way, they indicate levels of consolidation, the realism of how to compete, and catch up with the bigger IIoT Platform investors today, that have been pushing and pioneering the IIoT market.
The two, GE with its Predix IIoT platform and Siemens and its Mindsphere one, are equally facing a certain crossroad in future decisions. I’ll outline later in this article or have raised questions previously in past posts. The impact of these competitors joining the fray is certainly announcing this market is getting highly competitive.
What will be future decisions for others offering more niche platform solutions as well, such as Bosch and Schneider Electric? More is yet to come but when you begin to see multiple announcements in acquisitions, partnerships, and JV’s, then you know the market is entering its next phase of growth – that crossing the chasm, one that is entering a very competitive positioning to grab market share and client wins. Investment decisions are perhaps about to get even bigger or solution sets more “imaginative” to attract clients into making their commitments.
Firstly, a short snapshot of the recent Partnership announcements
ABB and Dassault Systèmes.
They announced in late February 2019 a partnership to offer customers in digital industries a software solutions portfolio ranging from product life cycle management to asset health solutions.
The two companies are aiming to provide customers an end-to-end offering of advanced open digital solutions, enhancing the competitiveness of industrial companies, while increasing flexibility, speed, and productivity of their products’ lifecycles, manufacturing and operations according to ARC Advisory Groups recent view
The partnership will combine the strengths of ABB Ability digital solutions platform and Dassault Systèmes’ 3DEXPERIENCE platform, and build on both companies’ strong installed base, deep domain expertise, and global customer access.
ABB has already adopted the 3DEXPERIENCE platform to model and simulate its solutions before delivering them to its customers. With this partnership, ABB will develop and provide customers with advanced digital twins, enabling customers to run ABB’s solutions and their operations with improved overall efficiency, flexibility, and sustainability.
The companies will, in a staged approach, focus on factory automation and robotics, process industry automation, as well as electrification solutions for smart buildings. The first joint solutions will be showcased at the upcoming industrial Hannover Messe trade fair in Germany, April 1-5, 2019.
Initially, this JV will focus on factory automation and robots, smart buildings, process industries such as mining will happen in a staged approach. (Reference link is here)
Rockwell Automation and PTC and the Factory Talk Innovation Suite
I covered this on a dedicated post recently ” Are PTC and Rockwell Automation Delivering the Connected Enterprise?
Rockwell Automation in June 2018 made this equity investment that gave them a 9% investment into PTC. The aim is within this partnership to leverage both companies resources, technologies, industry expertise, and market presence and will include technical collaborations across the organizations as well as joint global go-to-market initiatives.
At present both believe this is a marriage of equal value and opportunity, a real partnership of shared need, in my opinion. If they can deliver on their claims of “being comprehensive, innovative and integrated solution providers” then they do have a real competitive positioning that shifts the dynamics of the IIoT platform providers. Is this a real winner?
Rockwell Automation & Schlumberger with their Sensia solution
This is announced as the first fully integrated Digital Oilfield integration solution provider. I want to pick up on this in more detail in a later post. Let me offer three visuals here from their recent announcement to give a brief understanding of what they are chasing as the prize and why they are combining
The partnership between Rockwell and Schlumberger is bringing together complementary expertise and technologies into a combined offering as their go-to-market solution.
The concept of combining their strengths in a specific Oilfield & Gas market makes real sense. This will be operative in the summer of 2019
These recent strategic JV announcements have set my mind thinking
I liked the quote recently from Bernard Charlès, Vice Chairman and CEO, Dassault Systèmes to begin this thinking here and in future posts.
“The Industry of the 21st century is no longer determined simply by the ability to manufacture goods. Today’s leaders will be determined by superior mastery of technical know-how. This is the new competitive differentiator and it’s happening now due to a convergence of digital technologies that are transforming every aspect of the industrial business. In this industry renaissance, a platform approach enables the real and virtual worlds to inform and reinforce one another”
Questions, questions, questions will need answers in the coming months.
I wrote a summary of A platform can’t stand alone, within my round-up of platforms in 2018 getting into some of the shifts that will occur in 2019. What I mean by “platforms not standing alone” is it needs strategic partners, real solutions in its offering and clients attracted to its value and solution-set to resolve their problems. With these shifts in market positioning, competition will certainly accelerate with these recent partnership announcements.
It is too early to see the lasting impact but we can begin to speculate at this point in time. I guess what becomes a new imperative is all those Industrial IoT platform providers will need to have in place their “go-to-market strategy by this summer of 2019.
I think there is a real need of the intensity of focus on the differentiation and solutions being offered within the go-to-market approaches, that have to be in place by then, otherwise, potential clients will hold back their decisions even further until all alternatives and propositions become clear.
It is in the interest of all platform providers to have distinct offerings in place and fully focused upon by their sales, support and technical resources. Between now and the summer will be a very busy time to hone the value propositions, into compelling client stories they can relate too!
Will the market continue to fragment into specialized platforms, focusing on specific solutions, or will the “big two” (GE & Siemens) be able to “straddle” multiple industries and attempt to offer “comprehensive solutions,” or is there enough space for each approach? That is still evolving but needs new market positioning value definitions
ABB further deepening into IIoT platform solutions in a stronger manner in their tie-up with Dassault negates that somewhat big two ‘lock’ and form a third biggie but they do have a lot of catching up to do. With the help of Dassault Systemes will they level that playing field in specific solution sets? This becomes an interesting partnership.
Dassault has been slow themselves in recognizing the value of IIoT platform solutions. That slow to market can be equally applied to ABB & Rockwell. Will they catch up due to these strategic partnerships to gain advantages in valuing the “complementaries they gain in partnerships or just stay in the game, as late entries?
Where will the present two IIoT frontrunners of GE & Siemens go, to differentiate themselves, validate the heavy investments they have made, justify to the investors that the route is the right one to have taken, as they have carved out and constructed this Industrial solution provider market? They need to seperate their general platform messages and become more 1to1 or market specific, they are not telling compelling stories that clients in their business want to hear or relate too.
Both GE & Siemens have, to date, made mostly vertical investment decisions acquiring solutions (Example Siemens and Mendix) to be integrated or taking significant investment positions to advance “their” offerings (Siemens and Bentley) as examples of the need to acquire route. Will they consider joint venture positions differently for geographical, industry-specific or in different ways that shift the market again.
Inward looking may have opened the door to let others go through.
GE made a decision in December 2018 to spin out its Predix. We have yet to see the outcome of this decision and in some ways, this “interim” period has created the very vacuum for others to jump in and establish themselves, before GE and Predix announces its new entity, direction, and commitments into IIoT Platform investments. This “new business construct” must be due very soon but this current “hiatus” has surely taken out a lot of momentum from Predix in the past months and will continue to do so in the forthcoming months. This offers a real opportunity to others.
Siemens also have been really caught up in a very significant re-organization. Also, you have to ask did Siemens capitalize on this timing as much as it should have done or was it equally caught up in its own major reorganizations bringing together its consolidated “Digital Factory” division in a much wider Corporate reorganization under Vision 2020+?
The inward focus you can speculate of both GE & Siemens might have opened the door or encouraged others to be bolder and capitalize on these moments of more inward focus.
It will be argued as coincidental for both GE & Siemens but potentially costly unless a specific market focus can be seen in the coming months by both. I would reckon by Summer 2019 we will see some major changes as the IIoT market needs to refocus to gain real, big traction in client gains as shareholders take a growing interest in understanding returns and growth potentials. The clock is ticking.
The prize of who has the better client friendly IIoT platform has got more competitive
Accelerating technology solutions that clients “want too” adopt in their significant improvement over what they currently have in place, is essential. The recent “spate” of offering up a deluge of use cases goes part of the way but these remain far from compelling. These use case examples alone are not enough to get real, deep engagement and commitment, for client conversion onto a platform solution.
The whole value delivery engine for distinct offerings for intelligence, connectivity, and automation in design and execution are more the propositions clients want to hear, above “just” technology credentials or the impressive partner list. These are rapidly accepted in the market as essential table stakes.
2019 is a year to really deliver on the promise and for someone to (finally) accelerate away.
So where is this all heading, the IIoT market? Who will win?
Who wins in the solution offering specific to clients need in the coming twelve to eighteen months will emerge as a platform needed in the industry. I repeat this is going to be a very tough, competitive period. It will need some brave decisions on how to drive the development and performance of powerful new IIoT and digital twin solutions.
My bet tends to fall on the side of specialization at this moment of time as the eventual winner.
Will a greater specialization beat the broad all-encompassing IIoT platform approach taken so far by GE and Siemens? Specialization of focus is needed by all.
Technology solutions have to tackle specific industry designs and you have to be very close to your client’s needs and solutions to provide the answers. Does a “heavyweight” (GE & Siemens) offer the same depth of engagement that can solve specific industry, location, and legacy designs? Do they design to “generalize” or “specialize” where do you place your bets on solution offerings’? The argument goes that GE & Siemens make the machines or physical solutions, so they should have a greater advantage but do they?
I think “green field” then the provider of the physical solutions has the upper hand and here, GE & Siemens have the advantage.
The whole integrated services of Digital Twins for example in virtual modeling, concept design, virtual testing, visualization, and final physical design makes good investment sense in a total package. Here Siemens stands out, even better than GE in what I can see.
Yet I still don’t see this Digital Twin advantage spoken off within Siemens given the clear differentiator it should have had. I am not convinced they have the “compelling story” right in the way they might have. I assume the investment in digital twin design must be high.
Many potential clients visiting a fully Digital Factory, taken through the digital twin concept are often “blown away”. They see the future and how the digital factory is a significant step up on the existing ones, many still operate or even thought was possible, the view of the future but not yet today in their minds or budget calculations. Many are still grappling with resolving their own digital strategy, let alone committing to major investments. Translating this future into new investment decisions must be very hard when you have heavy investments in legacy positions.
You ask has technology run ahead of present market reality? In many cases perhaps, as it is not yet in achieving breakthrough momentum, and broad adoption. what will make the winning case for a deeper client commitment to investment?
Yet what about solutions for an existing plant?
Application solutions (apps) becomes a real differentiator. Are app solutions specific to an industry, to one customer or whole segments? The more you have a specialized focus, the more you can apply the best app solution. Apps at present can be “lighter” in solution, in other words, to solve a very specific problem, more low-code applications, or highly complex that deal with significant resolution.
Finding the “sweet spot” for an app needs to be found otherwise you are having the cost of redesigning the solution each time. Currently, technology applications show the need for at least 20 to 30 applications to transform the production system effectively, (McKinsey report the Next Economic Growth Engine) not the enterprise. App development today seems a real “drag” on client commitments to be convinced of digital value and ROI. We are still in the extended pilot phase termed “pilot purgatory”. This needs resolving.
These recent JV partnerships change the game
What is better? The combination of manufacturing the equipment and wanting the data that flows off this coming into your own platform solution (GE Predix or Siemens Mindsphere) or focusing on the connecting up of all suppliers plant as the primary positioning service? The entry of Rockwell, Dassault linking up with PTC, ABB, and Schlumber, challenges the very heavy investments of Siemens and GE, who I think are not getting the traction and growth they want. So the returns become harder as a direct result of these partnerships. They “lock-in”” of many within the installed client base within these partnerships base has made it harder for others to break-in.
I have suggested this is a real “make or break” year here. With competitors entering into these IIoT markets, seem previously as “laggards” but making that clever JV decision to catch up, without spending to the same levels, are changes the dynamics somewhat. They are putting even more pressure on the big two industrial platform providers of GE & Siemens. Something different will have to happen or it will be a potential chase to the bottom in margins to attract clients, eager to trade off one IIoT platform provider with another.
Growth is not manifesting itself as well as expected was my feeling in 2018. Will this announcement of partnerships galvanize the market?
The solution rationale of IIoT platforms has not changed. This is capturing the flow of data, services, and money and establishing as good a lock-in as you can achieve. Capabilities and relations are shifting in this hunt to emerge as the IIoT platform provider clients commit too. Clients want to stay flexible but also want client- provider commitment and greater reciprocity in the trade-off of services offered. Finding the right balance becomes a key differentiator.
The emphasis on claiming improved overall efficiency, flexibility and sustainability need to be clearer in how this is really going to innovate and transform their business models and get closer to the real cost and return. The client hears the story, can see where technology can be adopted but is not yet at the point of sizable commitment at the scale these IIoT platforms need to get returns on the network effect.
Clients still have the uncertainty of the true digitals value to their (existing) performance and the cost of resources to undertake this and investments this will eventually mean. IIoT platform providers do not have the client story fully nailed down yet, as they got caught up in their own technology discovery journey. That shift needs to happen, the 100% focus on the client and providing clear, distinctive solutions to THEIR needs.