Siemens: Will the Sleeping Giant Awaken?

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By: Jesse Berst

A recent visit to Germany has me convinced that the Siemens Energy division has awakened from a self-imposed coma and may soon become a much stronger force in the Smart Grid.

 

Siemens had already been sleepy and slow in the years leading up to the Smart Grid tipping point. Unlike rivals such as IBM and GE, it failed to take any significant role in shaping the Smart Grid debate in the United States. It rarely participated in trade associations, planning meetings, lobbying or standards discussions. Even Swiss giant ABBâ€" normally the most staid of the Big Four grid suppliers â€" had better Smart Grid messaging and marketing. And that’s saying something considering that ABB wears "behind the times” as a badge of honor, preferring a safe-and-sane, we’ll-get-there-when-we-get-there approach.

 

Sleepwalking through the Scandal

But if Siemens’ complacency made it sleepy, it was the bribery scandal that pushed it into a coma. Distracted by investigations, criminal charges, fines, firings and reorganizations, Siemens was literally out on its feet for a while. One executive told me privately he believed nearly half of top management had been fired, reprimanded, transferred, or otherwise changed out as a result of the investigations.

 

(If you didn’t pay attention to the scandal as it was occurring, it involved hundreds of millions of dollars in bribes paid to foreign officials to win contracts, especially telecommunications projects. This article from the Economist provides a concise summary.)

 

With that mess finally behind it, the entire company is moving forward again and now has something to prove. Of all the divisions, Energy has the most immediate opportunities in front of it â€" especially if it can pull together a Smart Grid story.

 

It certainly has a lot of Smart Grid components. Siemens may well have the world’s broadest collection of power technologies, ranging from generation through transmission to distribution and right into the customer premise with building automation and energy management. If it could pull those pieces together and apply its vaunted engineering precision, it could push the state of the art.

 

How Siemens Could Lead

A number of avenues exist for Siemens to assume a leadership role.  Consider these examples of Siemens potential:

 

Example number one: Siemens has long been a leader in substation automation based around the IEC 61850 standard. Until recently, U.S. utilities preferred DNP and other legacy protocols instead. Now the stimulus bill has U.S. policymakers determined to push through standards, whether utilities like it or not. Not to be left behind, the IEC (the European-dominated International Electrotechnical Commission) just announced that it was accelerating Smart Grid standards too.

 

Siemens could and should take a leadership role in extending those standards and, most importantly, getting them out into real-world installations.

 

Example number two: Siemens is a worldwide leader in building automation, HVAC controls, and energy management. There is a growing realization that a Smart Grid must talk to smart buildings. Today, companies such as Site Controls are making a business by tying into building automation systems from Siemens (and its competitors) to establish demand response programs. But shouldn’t Siemens be pushing the grid-building connection itself? You have to appreciate the irony of a Siemens-supplied building forced to use a third party to talk to a Siemens-equipped substation or control center.

 

Can It Break Down the Silos?

As is the case with General Electric, many of Siemens’ Smart Grid components are scattered in different parts of the company that don’t always know each other very well. The ultimate vision of the Smart Grid is end-to-end intelligence and communications â€" a holistic, ecosystem view that is hard to accomplish with siloed divisions. GE has tried to solve this kind of problem by bringing the pieces together under a common umbrella, first with ecoimagination and more recently with Smart Grid.

 

We suspect that Siemens needs to do something similar. An announcement of a Smart Grid team or committee would be a good sign that the company has its many bright engineers finding ways to work together.

 

I’ve met most of Siemens’ top Energy executives. The impression I got was of people waking from a long sleep. They’re looking around and realizing that the Smart Grid has passed the inflection point and needs to be taken seriously. They’re bringing in customers to brainstorm about what’s needed to move forward and how Siemens can help. Equally important, they are talking to each other across divisions.

Perhaps even more telling is this week’s announcement that Siemens, in partnership with Smart Grid management software management company eMeter, is setting up three global centers to provide Smart Grid service and support for customers.  See the summary in this week’s News Roundup.

 

I don’t know how your biorhythms work. I stumble around for a while in the morning, but once I am fully awake, the morning hours are my most productive. Likewise, I suspect that we may see a Siemens that is reinvigorated after its unfortunate pause. If so, that will be good news for the sector. Competition produces better products and better prices. We’ll all be better off if a revived Siemens steps up and starts pushing the Smart Grid pace.

 

   Economist article summarizing the Siemens bribery investigation

   SGN company profile of Siemens