"If you look back to when Siemens did the acquisition, they said, ‘We are doing this to invest, not to cost reduce.’ And they have been absolutely true to their word."
Wally Rhines, President and CEO, Mentor, June 25, 2018
There has never been that much debate over the big 'why' - or even 'whys' - behind Siemens acquisition of Mentor. The increasing integration of ICs at the earliest stages of systems of systems design, the influx of new system-oriented clients (from Google to Tencent), and the challenges of Industry 4.0 all provided ample strategic foundation. The last 12 months have all been about the execution.
Part One of this series reviewed the higher profile aspect of Mentor within Siemens: its ability to move faster and bid higher when making acquisitions. But now let's look at what is happening to the existing Mentor businesses.
As Ravi Subramanian, Mentor vice president and general manager of its IC Verification Solutions Division, has explained, the future is being defined by a "strategic framework" Siemens required its new subsidiary to create. This covers both internal and external investment.
"We put in a lot of time across the company toward getting a clear view on where to make or buy investments, to being clear about what we want to do to realize that vision," Subramanian added.
Two metrics support the internal side: headcount and Siemens integration. Mentor executives then point to a third that is set to emerge over the coming months: an accelerated product roadmap. But, for now, let's stick to what can already be seen.
"I’ve been at Mentor for 14 years, and it is very different post-Siemens, said Jean-Marie Brunet, senior director of marketing for Mentor's Emulation division. "And we’re not growing only because of acquisition. The phenomenal difference for me is that we are growing the investment in headcount far more quickly today than we have for the past 14 years."
Looking at the company's IC Verification Solutions division (ICVS), it has boosted employment at Solido Design Automation since its acquisition by 50% - perhaps not that surprising given the rationale behind the buy and the intense R&D resources that AI and machine learning demand.
But, that stands alongside a 30% increase for all of ICVS' analog and mixed signal activities (of which Solido forms a part) and a 28% increase at the division as a whole. All added since the Siemens acquisition.
In his keynote DAC interview, CEO Wally Rhines stressed that the new hires are directed toward R&D, running across a range from 15% to 35% across all of Mentor's IC activities.
Mentor - Siemens integration
Then there is the question of integration with and, where possible, a leveraging of other parts of Siemens PLM. When the deal was originally struck, Mentor suggested it might take a year before such collaborations truly began to see the light of day. Siemens wanted to take its time seeing how to finesse things together rather than bash them into place, the explanation went.
Twelve months on, Neil Hand, director of marketing for the IC Verification Solutions Division, described a process that is now under way. "We’ve looked and we’ve seen where there are gaps that can be filled by greater collaboration with other parts of Siemens as more of a unit," he said. "So, if you look at things like requirements traceability and management of that whole process, there are things we can do there to link together products from both sides. The net result is to build out these types of flow."
A priority area here emerges from another 2017 Siemens acquisition, Dutch automotive software simulation specialist TASS International.
"There's a stress on safety, ADAS [advanced driver assistance systems], and autonomous driving with TASS that obviously matches a lot of what has been happening across Mentor, so that is the flagship example," says Subramanian. "But it doesn't stop there.
"If you look at factory automation, there are Mentor products that were already well on the way to being integrated with those from Siemens - Valor is the obvious example. Now we can take that further.
"But it's not only that we have had time to see where those opportunities are. We are now doing more to leverage opportunities out of the Siemens sales force, which can give us more weight when it comes to some of their historic systems customers who now find ICs part of the challenge. And at the same time, our know-how and our sales team allows Siemens to draw upon much greater IC expertise there as well."
Nevertheless, much of this cross-pollination is at a relatively early stage, as both sides acknowledge. One hope, though, is that it could ultimately produce not merely administrative and marketing benefits, or serious economies of scale in R&D (though both will be welcome), but also some novel products.
"What we're starting to see are the benefits of having multiple views of the same problem," Hand explained.
"In EDA, we have a chip-centric view of the world – and that’s necessary to solve our customers' problems. In, say, 'traditional' Siemens, they’ve got very much a big systems problem. They wouldn’t know how to solve the chip problem or the lower level system, but once you start the interactions across that divide, you want what comes out is usually something different from what either side would come up with by themselves. It's a chance to really change things."
Mentor, then, is happy to be getting the investment to make it quicker, nimbler in M&A and also stronger in terms of its broad R&D and its market reach. That third upcoming metric - the accelerated roadmap - will say much about how successful that process is being, but there is already an awful lot of confidence around.
In the third and final part of this series we have taken a deeper dive to look at one specific Mentor division, Tanner EDA, the Windows-led tooling division that is often just as good a bellwether on where the market is going as some of its better known counterparts.