Two president-CEOs in a room does not often produce the bonhomie witnessed on the Mentor Graphics booth at DAC 2018, observes Caroline Hayes
The adage ‘buyer beware’ would seem not to apply in the case of the acquisition of Mentor Graphics by Siemens PLM in March 2017. Mentor Graphics’ president and CEO, Wally Rhines and Siemens Product Lifecycle Management (PLM) Software’s president and CEO, Tony Hemmelgarn spoke with one accord, agreeing with each other, quoting each other and even laughing at the points in the conversation.
When I asked about how the transition had gone, Hemmelgarn was almost blasé: “Siemens PLM has done so many of these that they have a process, it is very well organised and orderly,” he said. One secret is not to bulldoze over a company’s organisation, he revealed: “They don’t mess with anything until they get to understand the organisation, but even then most of the changes we have had are limited to finance, legal, some IT, maybe a little HR,” he added.
Rhines was eager to agree: “I challenge you to find anybody who says anything has changed,” he said. “Tony told everyone we need to get to know each other better before we do anything and it was our people that said: ‘wait a minute, we have, what $10million a year coming in from automotive companies, and we’ve got one or two people supporting the business and Siemens PLM has over 100 people on site at these companies, why would we wait to take advantage of that?’ In some of these areas, the push was from Mentor, we moved faster than was actually planned by Siemens,” he said.
Much has already reported of the synergy of the two companies in terms of system design and the autonomous space. Yet, there were areas we didn’t expect to have any overlap, revealed Rhines, like IC design and emulation. “We had sold emulators to system customers for system emulation before but we didn’t expect to have the Siemens complementary products that took it from being a chip verification to being a platform for system verification,” he said. Nodding in agreement, Hemmelgarn added: “The whole autonomous space was an area we knew had some touchpoints but the more we got together the more we know there was many areas we could bring together with what Mentor had,” he said. He cited the architecture for sensor fusion for DRS360, which is combined with TASS [PreScan virtual environment from another recent acquisition TASS International] for virtual validation and verification of algorithms and then linked that to a product called HEEDS [from a 2016 acquisition CD-Adapco], for design optimisation. Similarly with autonomous vehicles, the two companies were already being specified on the same project before March 2017.
“Long before the acquisition . . . 20% of Mentor’s revenue was in automotive,” asserted Rhines. “Mentor was the first EDA company to develop tools specifically for automotive electronics [which evolved into the Capital family]. . . The embedded software business at Mentor, which is substantial, has largely been focused on automotive,” he continued, “and it turns out that Siemens PLM is the leader in automotive as well so that’s a complementary thing that lets [us] scale resources and became very, very efficient in covering those customers,” he added. The autonomous vehicle industry will rely on software validation of algorithms to prove Level 4 or 5 for autonomous driving, noted Hemmelgarn.
Another collaboration area is the IoT. Hemmelgarn said they are beginning to see areas where they can start bringing together IoT capabilities, such as Siemens’ Mindsphere operating system, with Mentor’s analytical software, Quantix, and some of the other tools already in place today.
Rhines picks up the theme: “We had a relatively small company, Quadex, that it turns out does all their work with CAMStar which is a provider of test floor software and all the stuff feeding in to Mindsphere so you can do AI analysis of secondary effects on the manufacturing floor – that was a synergy that wasn’t planned at all,” he said.
The IoT uses the advantages of Siemens as an industrial group; Hemmelgarn points out that PLM was brought in 10 years ago, describing it as part of the company’s drive towards digitisation. Since then, digitisation has crossed into different industries. “The advantage Siemens has is that we run most of the factories around the world with our factory automation,” explains Hemmelgarn. With Mindsphere at its centre, and Mentor capabilities, he is convinced that the company can capitalise on its digital twin offering to aid design.
The IoT is more than preventative maintenance and commission monitoring, he insisted. “We do that very well, we have a built-in mass market for that, but we are also the only one that provides a digital feedback loop to what we call the digital twin; the digital representation of a physical product in our factory,” said Hemmelgarn. If a product is not operating in the field how developers thought it would, data from sensors can be fed into the digital twin. One of the values Mentor adds, he continued, is that a digital twin represents the mechanical, electrical and software of a product. “If we say to a customer ‘We can only help you with the mechanical characteristics, but this company can do the electrical part . . . .’ Well, that’s part of the reason that we did this merger in the first place, there was a tremendous value for our customer . . . it fits in very naturally”.
There is only going to be a few survivors in IoT predicted Hemmelgarn. He believes Siemens will be one of them because of its worldwide customer base, together with its feedback loop. “Back to the digital twin. . . I think that is a differential factor in the marketplace”, he added.
The Siemens digital twin feedback loop adds action to the intelligence of the IoT. “We are not just telling you the problem, we are going to tell you how to fix the problem, because we have a digital twin representing the entire product. No one is doing that in IOT today,” Hemmelgarn continued.
For example, if the air conditioning is not working, sensors can only report the fault. “Because we designed the product in our virtual tools, we simulated it, we know what it’s supposed to look like. Everyone else is going to say ‘You have got a problem’, we are saying you can take the data from this, feed it back and start running the analytics. There are people that can do part of it, say the CAE characteristics, but they can’t do the electrical or manufacturing,” he explained. “That is where the real value of IoT begins to pay off; understanding exactly what’s happening and changing it real-time; that’s a lot more than telling me the product is over-heating,” he said.
Planning a future together
Asked about the next step, Hemmelgarn replied: “Further integration of our mechanical CAD tools, for example with PCB and wire harness and, back to IoT, we talked about Quantix integrated with CAMstar, integrated with Mindspere, we see a lot of opportunity there. . . We see overall opportunity looking at continued investment in the space of autonomous vehicles. . . .We will continue with the M+A process, partly because inside Siemens we have been a big part of the Siemens strategy over the last 10 years and that is not stopping. It is all going towards digitalisation and we are a big part of that.
“What’s interesting is we have done more acquisitions in the IC space that we have in the systems side in the first year of operation together,” said Rhines. “I think that is sending a very strong message that we see opportunity in all parts of Mentor. Again, what’s so exciting is that our customers see it – they understand this idea of bringing this digital world together where we have to represent everything not just mechanical characteristics, is a real differentiator in the marketplace.”
When asked if there were any changes, at all, since the acquisition, Rhines said, with a wry smile: “The average person in China or India probably hasn’t heard of Mentor Graphics but they have all heard of Siemens”.