Matt ChanDirector, Industry Value Engineering SAP Asia Pacific Japan

25 February 2016

Digital Transformation for Manufacturing Industries

By 2017, manufacturers will actively channel 25% of their IT budgets through industry clouds that enable seamless and flexible collaboration models.

By 2018, 75% of manufacturers will be coordinating enterprise-wide planning activities under the umbrella of rapid integrated business planning.

By 2016, 70% of global discrete manufacturers will offer connected products, driving increased software content and the need for systems engineering and a product innovation platform.

25% 75% 70%

Trends that Drive Discrete Manufacturing (by IDC)

By 2018, 40% of the top 100 discrete manufacturers and 20% of the top 100 process manufacturers will provide Product-as-a-Service platforms.

40%

vestments that enable digitally executed manufacturing will increase 50% by the end of 2017, as manufacturers seek to be more agile in the marketplace.

50%

The Digital EconomyDisruption and Business Opportunities are Everywhere

Uber is not just another taxi company – It is transforming into an “urban logistics” company with 200,000 drivers, roughly double the size of the UPS delivery workforce

• Who will stay in the business In the next 10 years 40% of the S&P 500 will no longer exist, if they do not keep up with technology trends

• Leaders are emerging from nowhere90% of CEOs believe the digital economy will impact their industry, but less than 15% are executing on a digital strategy*

• Industry boundaries are blurringEvery company is expanding beyond traditional industry boundaries and also becoming a technology company

Siemens is not just an industrial powerhouse – It is a software company connecting its industrial assets in the cloud and enabling customers to generate new revenue streams by selling services, not products

THREE GEARS OF CUSTOMER ENGAGEMENT

Closing-the-Loop with Customer Engagement & Commerce Gears

1. BUYING: From products to solutions

2. OWNING: Predictive Maintenance, Usage-Billing

3. ENGAGEMENT: Moving beyond sales force automation

BUYING EXPERIENCE

OWNING EXPERIENCE

ENGAGEMENT EXPERIENCE

BUYING SOLUTIONS From Selling products to Solutions

SellProducts

Product lifecycle management / Engineering collaboration Make to stock / Make to order manufacturing networks Direct & indirect sales

Augmentwith Parts &Services

Service operations Service parts management Product usage, maintenance and safety training

Risk resilient financing Operations monitoring Performance based billing

ProvidePerformance

ManageContracts &TCO

Value based solution selling Predictive maintenance Service level agreements

DIGITALLY-ENABLED CONSTRUCTION & MINING EQUIPMENTFor the Mining Industry

Mining Company:• Investment Cost

(Capex →Opex)

• COGS(Training, Maintenance…)

• Productivity

• Land Rental

• Margin

Re-Imaging Business Model for Construction and Mining Equipment Manufacturer From Selling Product to Solutions:

Selling Equipment Up-time, Equipment Operating Services, and Sharing the profit

Mining Company/ Contractor

Dealer / Contractor

Manufacturer/ Dealer/3rd Party

Operators Parts Services

Owned By Mining Company

AS-IS

Managed By Manufacturer

Managed By Manufacturer

Managed By Manufacturer

Operators Parts Services

Owned By Manufacturer

TO-BE Key Benefits

ENRICH OWNING EXPERIENCE

Connected Devices (IoT) are changing the paradigm of delivering after-sales service

• PUSH Service Notifications• How is your asset health?• How is your asset usage?

• Predictive/ Preventive Maintenance • Break-Down Assistance• Usage-based Billing • Service Order Routing• Spares Fulfilment

IT / OTConnectivity

Condition Monitoring

Remote ServiceFault PatternRecognition

Machine HealthPrediction

Create Service Order Schedule Order Execute Order

on mobile device Visual Support

Kaeser Compressors is one of the largest providers of compressed air systems and compressed air consulting services.

Situation: changed the business model from selling compressors to selling compressed air through the Sigma Air Utility service.

Company

NEW ENGAGEMENT PARADIGM

• Sell Anywhere, anytime• Get Insight into your business

• Accelerate productivity

• Know your customers

• Track and score interactions • Progress leads from anonymous contacts to buying

customers • Discover right audience by segmenting data• Nurture Communities• Crowd-source

THANK YOU