Realize Live: Siemens Cloud Revenue Growth Fueled by Digital Threads Interconnecting Its Xcelerator as a Service Platform

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By James Iversen | 2Q 2023 | IN-6983

With 2,000+ attendees, impactful keynote speakers (Brian Carbrey, Chief Architect of Digital Engineering at Boeing, and Brad Keselowski of RFK Racing), along with multiple manufacturing use case exhibits, Realize Live was an interactive display of NX, Solid Edge, and Xcelerator capabilities with a digital twist.

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Transforming the Landscape: Digital Threads' Effect on Applications


The clear focus of Realize Live 2023 was the use case of digital threads and their ability to unify applications across the factory floor, all of which takes place under the roof of Siemens Xcelerator. Since 2021, Siemens has been working to develop an interconnected Software-as-a-Service (SaaS) platform, aptly named Xcelerator as a Service (XaaS). In addition to iterative performance enhancements, the emphasis of digital threads bridging the gap between mechanical and electrical systems for a more dynamic, real-time workspace was widely communicated throughout the event. Siemens has been working on its digital thread connectivity in XaaS to solve efficiency issues involving quality control and predictive downtime.

Digital threads can achieve better real time insights from bi-directional sharing data between applications all the way from design to assembly in a continuous feedback cycle. By physically identifying issues in the product or machine and digitizing the information into concise data streams, digital threads enable manufacturers to spot deficiencies earlier in the production line. Traditional applications such as NX and Solid Edge (Computer-Aided-Design/-Manufacturing/-Engineering (CAD/M/E)), MendiX (application development), TeamCenter X (Product Lifecycle Management (PLM)), Zel X (PLM for Small and Medium Businesses (SMBs)), Industrial Operations X (automation of industrial production), and SimCenter HPC (Computational Fluid Dynamics (CFD) simulations) are just a small sample of offerings inside Xcelerator that have received notable improvement due to digital threads.

Xcelerator as a Service: Accomplishing Company Goals


With the ambition of achieving a 40% Annual Recurring Revenue (ARR) coming from cloud ARR by 2025, Siemens has been leveraging XaaS to reach these goals. In 2Q of FY 2023, Siemens reached 25% cloud ARR compared to the 4% cloud ARR seen in 2020. Siemens announced it anticipates cloud ARR to be over US$1 billion in the near future. Overall Year-over-Year (YoY) growth of 16% (US$21.1 billion) with Digital Industries Software (DIS) at 23% to US$5.99 billion.

Growth of cloud ARR for Siemens has been heavily driven by two factors: the increased revenue spending of existing users and further integration of SMBs.

  • Siemens has targeted SMBs, which typically use simplistic Two-Dimensional (2D)/Three-Dimensional (3D) modeling systems, to entice them to sign up for Solid Edge. From this initial point of contact, they can leverage the enhancements of NX and the greater Xcelerator platform for increased revenue streams.
  • By selling a needed service, such as Solid Edge, Siemens has opened the door for SMBs to optimize its factory performance with NX and Xcelerator when workloads increase and scalability of the business becomes front of mind. This strategy has already started to pay dividends as 74% of cloud orders come through SMBs.
  • Large manufacturers already subscribed to NX or the Xcelerator platform are purchasing more user seats for the system and Siemens has witnessed an expansion rate of 16% for these customers.

Aiming for the Top: Benchmark of Manufacturing SaaS


Siemens’ play is clearly articulated. Provide a unified service in the cloud with interconnected applications in Xcelerator through a comprehensive but navigable digital thread, then build out Xcelerator as an all-in-one SaaS platform with four tenets in mind: portfolio, ecosystem, sustainability, and marketplace.

  • Portfolio: Curated or customizable set of software and IoT hardware offerings built upon standard Application Programming Interfaces (APIs).
  • Ecosystem: Integration of new applications from Siemens solution partners or independent developers.
  • Sustainability: Applications suited for advancements on energy efficiency, sustainable development, and factory optimization.
  • Marketplace: Created to explore all offerings from the portfolio and ecosystem tenets, along with expert assistance to help manufacturers decide what is necessary for its business.

Siemens has seen market-specific success deriving from its focus on the four tenets as it has become a leading provider of software for automotive manufacturers. As of November 2022, the automotive industry was the largest manufacturing vertical by revenue (MD-MMD-102) and has been early adopters of cloud systems. All 23 of the largest car manufacturers use Siemens Xcelerator, along with 20 of the most successful plug-in electric car producers. Siemens has started to dominate this space and has surpassed Dassault as a software provider for automotive manufacturing.

Additions to Xcelerator do not come solely from the development team at Siemens. With 5,000+ partners building add-ons to the service through Siemens Ecosystem, Xcelerator is seeing progress from companies such as BAE systems, Gulfstream, Boeing, and Wisk Aero in creating new and elevated ways to use the system. Current users such as Boeing are using Xcelerator for Electrical Bill of Material (EBOM) optimization, reducing wire usage in planes for a more cost-effective product. RFK Racing uses NX to skip the prototype phase of development and implement new parts on its cars, cutting down time to market by 6 weeks.

Regarding new developments, Siemens announced it will be looking into and refining its token pricing structure. Tokens enable Xcelerator to become a customizable package that allows manufacturers to interchange up to 85 application modules based on company workload and usage within Xcelerator. While still a new development, adaptations over the next year will refine the exchange and operability of tokens. Siemens will be actively looking at the utilization metrics of tokens as they provide a promising solution for SMBs that don’t meet the requirements for a full-use seat of NX software.

Although light on groundbreaking new developments, Realize Live 2023 demonstrated where the direction of innovation is heading for SaaS manufacturing providers. With top-of-the-line digital twins, PLM (EBOM and Manufacturing BOM,) and CAD modeling systems, Siemens is a top competitor in this space (CA-1307). With ABI Research seeing a steady saturation in the manufacturing SaaS market, Siemens has positioned itself well for future growth. By getting in early with SMBs, along with solid market share of large-scale automotive and aerospace manufacturers, ABI Research anticipates that Siemens will continue to grow its cloud ARR, as long as it sticks to the core principles of consistent updates and easy-to-use applications.


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