Case Study
Mergers & divestutres
Intro
Siemens Energy: A Complex Global
Carve-Out and IPO’s impact on IT
Siemens Energy (SE) underwent a significant carve-out from Siemens AG, resulting in its public listing in October 2020. This strategic separation was aimed at enhancing focus and agility in the evolving energy sector.
Business Overview of the Carve-Out:
Siemens Gas & Power Carve-Out from Siemens AG:
The Siemens Gas & Power (GP) segment was carved out from Siemens AG to make Siemens Energy a more responsive and market-oriented entity. This move was intended to capitalize on the energy markets by operating as a smaller, more focused entity. The restructuring facilitated a nimble approach to technological innovations and market shifts, enabling SE to better meet the demands of global energy solutions.
Restructuring of the Solutions Business Unit:
Simultaneously, the Solutions business unit, underwent significant restructuring. Initially a business unit in Siemens AG, Solutions was integrated into Siemens Gas & Power. This involved a strategic realignment of vertical markets to better align with the newly formed Siemens Energy’s focus areas. Notably, the Minerals market was carved out, while Subsea, Fuel Cells, Operations & Engineering Centre, and Customer Services were added to enhance the business unit’s offerings.
Impact of COVID-19:
This coincided with the COVID-19 pandemic, introducing significant challenges. The crisis required a swift shift to remote working and the adoption of robust virtual collaboration tools. Despite these hurdles, the project teams efficiently maintained their schedules, ensuring the carve-out and integration proceeded on time, showcasing resilience and adaptability during these unprecedented circumstances.
Scope of the Carve-Out
The SE carve-out involved Siemens AG and Siemens Gamesa, impacting global operations in 116 countries and 91,000 employees, with €28B in revenue and a €1T order backlog. Governed by stringent legal requirements due to Siemens AG’s minority stake, it necessitated a thorough IT system separation to ensure compliance and operational integrity.
This structured separation not only streamlined Siemens Energy’s operations but also positioned it strategically to leverage emerging opportunities in the energy sector, enhancing its ability to innovate and execute in a competitive environment.
DETAILS
The carve-out teams managed a vast IT transformation across 116 countries, involving over 9,500 applications and 70,000+ users.
As the Global Head of IT for Solutions, I led both the integration into Gas & power and the separation from Siemens AG, overseeing IT carve-out operations in 40 countries and implementing a dedicated secure data center.
Despite COVID-19 challenges, the IT teams successfully streamlined Global IT operations, reducing costs from €900M to €600M over four years, strengthening Siemens Energy’s IT operational foundation.
Scope
The IT scope of the carve-out was vast and pivotal, aiming to establish a robust and independent operational framework for the newly formed SE. Here’s an overview:
Application Management: Over 9,500 apps were evaluated for transition, with decisions to move, copy, replace, or exit ~5000 apps each based on strategic needs.
User Migration: Approximately 70k users across 116 countries were migrated to new IT environments, ensuring continuity and security.
IT Clusters: The IT landscape was organized into clusters such as Infrastructure, ERP, non-ERP, TSA, and Service & Support for focused management.
Team & Leadership: A central team of over 100 IT professionals was tasked with overseeing the entire carve-out process, ensuring effective execution and compliance.
Complex System Integration: Highly integrated systems, data separations, and interfaces added complexity, requiring detailed planning to ensure accurate and secure data handling across all operational aspects.
ERP Platforms: The carve-out expanded the ERP systems from 18 to 26, tailored for specific regional and business unit needs, affecting numerous interfaces and business processes.
Non-ERP Applications: Over 4,500 non-ERP applications were impacted, segmented into 16 clusters including PLM, Manufacturing, CRM, and Project Management, and more. Each was assessed and strategically handled based on its criticality and relevance.
Infrastructure scope: The project involved transitioning 12,000 SharePoint sites, managing 890+ servers, overseeing the secure migration of critical data housed in complex IT infrastructures and more.
TSAs & Licensing: Technical Service Agreements (TSAs) and licensing negotiations were crucial for ensuring access to necessary software and systems mitigating risks associated with software continuity and compliance.
This structured approach ensured that Siemens Energy could operate independently and efficiently.
Deliverables
The SE IT carve-out program was executed to ensure seamless operational continuity, strategic IT alignment, and compliance with legal requirements throughout the transition:
Centralized Team Coordination: Over 100 IT professionals managed diverse clusters including Infrastructure, ERP, non-ERP, TSA, and Service & Support, ensuring effective execution across all facets of the carve-out.
Application Management: Evaluated over 9,500 applications for strategic alignment, resulting in the successful transition of ~2,700 apps, copying ~1,200, replacing ~160, and exiting ~340.
ERP & Non-ERP Systems: Expanded the ERP landscape from 18 to 26 systems tailored for various needs, while managing around 4,500 non-ERP applications critical to business operations.
Legal Compliance & Separation: Adapted 650+ applications to meet regulatory standards and ensured all IT systems were appropriately segregated to maintain compliance.
Comms & Support Framework: Developed a comprehensive IT communication strategy and established a Cutover Control Centre to address real-time issues, ensuring continuity of IT services.
Infrastructure & Security Measures: Configured and secured multiple data centers, including a dedicated secure data center known as Falcon, and managed the transition to public clouds like MS Azure, AWS, and Google Cloud, ensuring seamless operations globally.
Project Management & Agile Implementation: Utilized Agile methodologies to manage the program’s complexity, with a centralized repository for tracking and reporting to maintain rigorous oversight and align all teams with project objectives.
TSAs: Effectively managed TSAs to ensure uninterrupted service and support during the transition, facilitating the ramp-down of services while maintaining critical system operations.
These efforts underline a strategically coordinated approach that supported Siemens Energy’s strategic objectives, facilitated legal compliance, and ensured operational continuity in a complex environment.
Revenue &
Costs
Achieved a 33% reduction in IT costs, lowering global IT budget from €900M to €600M over four years.
Operational Continuity
Transitioned ~5000 apps while maintaining operations across 116 countries ensuring near zero downtime.
critical infrastructure
Created a €2M military-grade data center, on budget, on time, meeting DE government requirements.
Security &
compliance
Enhanced data security and improved system reliability for 75,000+ users and 890+ servers.