Rumors that Siemens will disolve the Business Unit “Infrastructure & Cities”

Decission shall be communicated 1Q 2014 and be effective 10/2014.


Is the living-lab Europe too self-confident?

Based on some insights from the “2013 Shanghai Intelligent Building Expo” urbanisation really takes up pace in China. Over the next 20 yeras urban population is predicted to increase by 350mio. There are plans to newly build 50,000 skyscrapers and 170 underground transportation systems.
Energy efficiency is the most critical factor in the chinese urbanisation process as the building sector stands for approx 40% of the total energy consumption.

It will be interesting to observe what solutions will be tested and rolled out for the intelligence of a building e.g. automation, HVAC, lighting, elevation as well as its substance e.g. construction, isolation, energy supply.
Will solutions be developed in China and exported to Europ and North America? Will chinese companies buy into the european market e.g. with M&A or sponsored pilot projects (like Toshiba in France) or will it be the other way round?
So far, listening to stakeholders in Europe, there is the manifest belief, that Europe is the living lab for the golbal future.

Learning about the ambitious chinese plans the self-consciousness of “established” multi-nationals might be a bit too self-confident.

New kids on the block

Software developers seem to discover “City” as a customer. Having developed software for business processes like accounting, controlling, sales, purchase, production, logistics, personnel it is only a small step from handling this business data to also manage the respective assets. As soon as a city gains transparency on their asset conditions and cost (e.g. infrastructure, lighting, busses, energy….) the software developer could climb up the value chain and start to actively manage the assets as a new business field.
So far the asset management is an own domain or part of the asset-/product-suppliers territory.

As a reaction to protect the assets proprietary systems are an option. However in times of increasing connectivity the customer city can insist that interfaces are open and data is shared.

Focus on short term revenue excepts engagement in city projects.

(Smart) City engagement needs innovation. Innovation is mostly defined as technological innovation. Technological innovation incorporates risks. Focussing on revenue entails to avoid or at least minimize risk.

Does engagement in (smart) city projects consequently have to be avoided?

No, because innovation in the urban context is rather about new business models and combination of existing technology.

Traditional incentive systems slow the pace for smart city development

City as a customer offers the chance to initiate solutions across segments. But most multi-nationals are structured in a segmented way, organized in business units with sales targets set up within.

When talking to multi-nationals and even to regional energy suppliers the segmented structure is seen as an organisational problem to address holistic projects. If you look at energy companies most of them are structured in e.g. production (subsegmented in e.g. gas and power) and distribution /grid. Same applies for conglomerates (=Mischkonzerne) on industry side with e.g. divisions Energy, Grid, Energyefficient Buildings, Mobility, Security, Water.

Although corporate strategy defined an approach cross segments KPI for incentives is broken down on business units, cascaded down even on product group level. No wonder that the sales force focusses on turnover in their own specific area.

Conclusion: Cross segmented targets for sales are the prerequisit for holistic solutions within SC projects. And the strategy to approach city as a customer needs a reflection in KPI, sales targets and organisational structures.