Siemens Taps New Boss
Siemens introduced Jim Hagemann Snabe, a 51-year-old veteran of software house SAP, as its next chairman, scheduled to take effect next January, according to Bloomberg. The move makes sense as Siemens seeks to adapt its 19th-century industrial heritage to the 21st century, says William Mackie, an analyst at Kepler Cheuvreux who rates the company a buy.
As Siemens products become more automated, they’re throwing off a growing flood of data that requires sophisticated software to really understand. And for Siemens, software and related services offer key advantages: they tend to be more profitable than industrial goods, they have predictable revenue streams, and they’re “sticky,” meaning they make it harder for a customer to defect to a competitor.
Snabe has “the crucial perspective of a man who has spent a large part of his career focused on the software and hardware elements of the technology sector,” Mackie said. He also represents a stark departure from previous Siemens chairmen: The native of Denmark would be the first non-German in the job, and one of the few foreigners in top management. Snabe would also be the youngest person to ever serve as chairman, by more than a decade.
It’s his job experience, though, that really makes Snabe stand out. The company’s current chairman, Gerhard Cromme, 73, made his name at companies like industrial giant Thyssenkrupp and building materials producer Saint-Gobain, and earlier chairmen were mostly Siemens lifers. Snabe has “in depth industry expertise in software and digitalization,” Cromme said in the statement, adding that the nomination sets the course for “long-term succession planning and continuity” at Siemens.
Snabe’s nomination comes as Siemens’s rivals are spending billions to reinvent themselves for the digital age. General Electric has said that by 2020 it wants to become a top-10 software company, to rival Oracle and Microsoft. Swiss competitor ABB says it plans to boost its software and services revenue from 15 percent of total sales to about a third in coming years. Siemens raised its full-year outlook after renewable energy projects and digital services led to better-than-expected first-quarter profit even as Europe’s biggest engineering company said orders are starting to weaken.