Custom Software Doesn’t Differentiate Manufacturers

Last week, IndustryWeek attended Realize LIVE 2026, the annual event held by Siemens Digital Industries Software, this year convening in Detroit, Michigan. We spoke with Tony Hemmelgarn, CEO at Siemens Digital Industries Software, to discuss his beginnings in the manufacturing software industry and three lessons for manufacturing leaders in how they need to handle the digital side of their businesses.

The following interview is edited for length and clarity.

Dennis Scimeca: When you were at the University of Dayton, you were studying mechanical engineering technology. Was the idea that you would go into design or were you always more interested in the software? I know you were really interested in CAD early on.

Tony Hemmelgarn: I went a hard way, man. In school, I liked art and things, I like drawing, I guess I would say. Drafting and design. I actually went to a two-year program for that, and then I went to work for a company in Dayton, Ohio, called CAD CAM Incorporated, and I started using this CAD stuff.

I did a little bit of it in school, I was at Wright State, a two-year school … Then I realized you’re not going to make a whole lot of money just doing the drawing part of it. But I loved the CAD side and started using it.

Then I went to University of Dayton at night for a number of years to finish up this engineering program and it wasn’t really to go towards the engineering side. I did want to stay more on the software side, because I saw what we were able to do.

And I’ve been lucky enough my entire career to ride an industry that pretty much started from its infancy to where we are today, and every time you thought, oh, it’s kind of mature and whatever, something new would come out.

If you saw the Pepsi demo I gave yesterday of flying through the factory, it looks photorealistic … Sometimes people say “Why would I ever need it to be photorealistic?”

I remember the first time we started doing wireframe, and I was working at CAD CAM. … One of the functions [on our terminals] was you could take the model wire frame, download it, and start spinning it.

I start spinning [the wireframe model] and the guy behind me says, "Holy cow, why would you ever need any more than that?" Think about that, and where we are today. I even tell people today I still get excited seeing a 3D model spin on the screen because of where it’s at, so that’s kind of how I got into this whole thing.

DS: You’re looking at big software stacks and entire plants. Did you ever want to work at that scale, versus sticking strictly with the design software side?

TH: Years ago when I was doing the deployment of Ford and other places, I started to realize that it’s not just about the CAD. Data management was a big deal.

When I started focusing on that, a lot of my peers said, "What are you doing? That’s the boring side of the business. Why would you ever go there?

I said, "Well, it can be very exciting what you do there as well.” And then when I saw what Technomatix was with digital manufacturing all those years ago … this thing’s getting bigger, and it just keeps getting bigger. There’s more and more we can simulate, more and more we can think about as a digital twin.

Now I probably go too far the other way, I probably am already projecting things I think we could be doing that are way beyond maybe what we’re able to do right now, but it will happen. It will. Absolutely. In this space.

DS: Do you think anyone in manufacturing leadership has to be able to project themselves into the future in terms of software?

TH: I think so. … Someday I think I’ll write a book about the disconnection between projects that are being implemented and leadership in a company. Why are all these projects late? Why is it so hard to implement PLM, even ERP systems, whatever?

I argue it’s because the management’s not close enough to the problem. They say, “Just get this done.” Well, wait a minute, you’ve got to make some tough decisions about how you’re going to work as an organization, what you’re doing, and you’re kind of letting it run amok amongst the teams, and they’re not aligned on what’s going on.

Most times when we struggle with implementations it’s the IT organization not aligned with the business. And then when you [ask] “Who’s the guy making the call here?” and they’re not close enough to the problem.

The best deployments I’ve seen are where the management’s right there, they understand this stuff, and they’re involved with it from day to day, and help drive it through, carrying the flag. “This is what we’re going to do.”

Nine times out of ten there’s a disconnect the other way, it’s why projects are over budget, they’re not on time, they don’t deliver what they want, because they’re not close enough to what the problem is, and [management isn’t] there and helping.

I’m not saying you have to be the deep technical guy, but you sure as heck should have an understanding of what you’re trying to accomplish and how you’re going to get there. And by the way, don’t believe your teams that are creative engineers when they say "We can just build this [software] ourselves and we’ll integrate it, we’ll take care of it." You’ll never get there because the world’s too competitive.

There’s a reason nobody builds their own CAD tools anymore. They did years ago. [Now,] you can’t afford to. You’ll never keep up. Yet we still had people saying, "I’m going to build my own MES systems." Really? You’re trying to compete in your space and your differentiator is going to be because you built your own MES system?

I don’t think so. And I think that’s one of the challenges with this, is people have to get close to the problem and not act like it’s somebody else’s problem to worry about in the organization in engineering or manufacturing. My opinion.

DS: I’m hoping to get three leadership lessons we can share. So let’s call that lesson one, you have to be close to the problem. What’s lesson number two?

TH: It’s not the tech, it’s the people in the process. … The tech’s important, very important. You got to have it right, but if you haven’t thought about the people and the processes and everything that go along with it, be careful.

Think about 3D printing, additive manufacturing. I’ve had customers over the years say, “Here’s this part, can I 3D print it?” Why would you want to if you’re not going to change the way you design it? Why do you want to print it? You want to optimize that thing to take advantage of what 3D printing does, lightweight it, make it stronger but much lighter, and there’s lattice work and all these kinds of things you could do.

You have to change your design process to be able to do that. And I think most times people don’t recognize that until it’s too late.

I had a discussion today about customization. I’ve heard so many people talk about [not wanting to customize software] … but oftentimes they do and that’s a painful thing. You pay to customize, you pay to maintain, you pay to get out of it.

Customers run old software because they are not able to upgrade, because they customize the heck out of it. I think you have to be very, very careful when you start thinking you’re so special versus the rest of the world.

Where you can differentiate, and I argue this a lot, is speed. We all have the same tools, we all have the same thing, but the guys that can move faster through the implementation start to have a competitive advantage.

My job is either to convince you that you’re not as special as you think you are, or you convince me that we’re missing something in our software. And that can happen. We keep developing our software. But there are a lot of times when somebody thinks they’ve got something unique. I deal with thousands of companies all over the world, I can tell you that’s not as unique as [they] think it is and probably not going to be a differentiator for [them].

DS: So could the second lesson be “Don’t assume you’re as original as you think you are?”

TH: I want to be careful of that because it sounds condescending. I would just say, make sure you really understand where your true differentiation is with your IP and the things that you do versus where somebody tells you it is.

DS: Okay. Lesson number three?

TH: This gets a little specific, but I find it interesting that you go to school for engineering and you learn statics, dynamics, thermodynamics, strength of materials, all these things, and I will tell you that 90% of the time in a meeting with customers over the years, the discussion is bill of material, and what the heck do I do with a bill of material, and how do I drive it?

The bill of material is your backbone, it’s your information, it’s everything you’re doing in the company. Do you have a handle on that? … If your data is not trusted and accurate AI can’t work, but I would also argue, if you don’t have a way to figure out how to deal with the data in a true engineering environment that’s moving dynamically, you’re always going to fall behind.

DS: So the third lesson might be to really understand your BOM as soon as you get into a new position.

TH: But I want to be careful, it’s not just the BOM, the parts list, it’s your bill of process, your bill of material, your bill of service, all of those things together. We like to say you have one single source of truth and different views of what’s going on.

So it’s not just the bill of design, it’s not just the bill of manufacture, it’s all of that encompassed together that you really need to understand. It’s more about, do you understand your configuration of your data, where your data is at, how it goes through your life cycle, how it goes through the full process of everything you’re dealing with?