Navigating Digital Transformation in SMB Manufacturing — Siemens - July 15, 2025

By Staff Reports - July 15th, 2025

As AI, edge computing, and IT/OT integration reshape the future of manufacturing, small and midsize businesses (SMBs) face both unique challenges and outsized opportunities. Bobby Cook, Senior Director of Global SMB Strategy at Siemens Digital Industries Software, brings deep insight into this fast-moving sector. With a focus on aligning enterprise-grade technology with the scale and budget of SMBs, Cook discusses how digital transformation is becoming essential for operational efficiency, competitive resilience, and long-term innovation. In this wide-ranging conversation, we explore strategic, operational, financial, and technological imperatives driving SMB modernization. NOTE: The feature below has been organized into the strategic, operational, financial contexts that emerged in the interview.

Here is what he had to say:

STRATEGIC CONSIDERATIONS

BTR: What strategic trends are shaping how SMB manufacturers approach digital transformation today?

Bobby Cook: There’s a strategic inflection point underway. Historically, SMB manufacturers may have viewed digital transformation as something reserved for larger players with deep pockets. That’s no longer the case. Competitive pressures, global volatility, and labor shortages are forcing even the smallest manufacturers to become more agile and more data-driven. Digital transformation becomes the strategy—not just a tactic—for managing risk and accelerating growth.

AI, edge computing, and IT/OT integration are not just buzzwords—they are enabling tools that allow SMBs to get more value out of every asset, whether it's personnel, equipment, or supply chain relationships. From a strategic perspective, this means SMBs can now compete in ways they couldn’t a decade ago. They’re moving from reactive to proactive, and that changes everything from procurement and engineering to customer experience and speed to market.

We’re also seeing that companies are rethinking their market positioning. They're using digital tools not just to produce more efficiently, but to offer new services, create new revenue models, and enter new markets. That’s a major shift. This is about becoming smarter, more flexible, and more customer-centric—and it all starts with a strategic commitment to digital.

BTR: How is AI shaping long-term strategy for mid-sized manufacturers?

Cook: AI is fundamentally changing the strategic mindset of SMBs by enabling them to do more with less. That’s incredibly important in today’s environment. You can embed industry-specific subject matter expertise into AI agents that continuously monitor, analyze, and optimize operations. This becomes a force multiplier. Instead of hiring an army of specialists, SMBs can extend the value of their teams with embedded intelligence that supports design, quality assurance, production, and logistics.

Strategically, AI also unlocks the ability to respond to market signals in near real-time. If you're monitoring equipment performance, quality trends, or supply chain variability, AI can surface patterns before they become problems. And that insight can inform not just operations, but also product development, pricing strategies, and customer service models.

In short, AI lets SMBs become data-driven in ways that were previously out of reach. It helps them respond faster, plan better, and innovate more boldly. That’s why it’s not just a technology investment—it’s a strategic necessity.

OPERATIONAL CONSIDERATIONS

BTR: What is the current operational readiness of SMBs to adopt technologies like AI and edge computing?

Cook: Most SMB manufacturers are somewhere between awareness and early adoption. Many are still dealing with fragmented systems—what I call a mix of “new, inherited, non-ideal, and sometimes obsolete” technologies. This creates islands of information that make it hard to optimize operations across the product lifecycle.

But the desire to modernize is growing rapidly. Volatility in the market—whether it’s supply chain issues, labor shortages, or geopolitical instability—is making agility essential. And that agility starts with better data integration. SMBs are starting to recognize that they don’t have to do a full rip-and-replace. They can invest incrementally, focusing on high-impact areas like real-time data capture, workflow automation, and remote monitoring. These are operational wins that lay the foundation for broader transformation.

We’re also seeing a growing interest in digital twins, simulation, and model-based systems engineering—even at the SMB level. That tells me companies are beginning to see the operational value of connecting the physical and digital worlds. They want to build smarter factories and faster feedback loops. The tools are there—they just need the right guidance to deploy them effectively.

BTR: Are IT and OT teams working more closely together?

Cook: Absolutely. Historically, these groups were siloed. OT focused on safety, uptime, and precision. IT was concerned with networks, applications, and cybersecurity. But with digital transformation, these teams are being asked to collaborate more deeply. AI and edge computing need input and infrastructure from both sides.

At Siemens, we’re seeing more joint decision-making between OT and IT leadership. They’re starting to speak a common language because the technology itself requires it. For example, when you enable edge-based monitoring on a machine, it’s the OT team that knows what “normal” looks like, but it’s the IT team that ensures secure, cloud-enabled data transfer. Digital transformation works best when these groups converge—and that’s what we’re encouraging through our platform strategy.

Integration is no longer optional. Data silos lead to missed opportunities. The best-performing SMBs are the ones that break down these organizational barriers and create cross-functional teams that understand the end-to-end product lifecycle.

FINANCIAL CONSIDERATIONS

BTR: Digital transformation sounds expensive. How do SMBs make the business case?

Cook: It’s a fair concern. But the economics of transformation are shifting. The cloud has eliminated the need for massive up-front capital expenditures, and we’re seeing a growing trend of self-financing transformation—where early efficiency gains fund subsequent investments.

Studies from industry analysts like IDC and Gartner show that manufacturers who adopt integrated digital strategies see a 30% increase in productivity and a similar reduction in operating costs. When you start quantifying downtime reductions, yield improvements, and labor efficiency, it becomes clear that transformation pays for itself. The key is to start with a manageable pilot and track ROI from day one. We help SMBs do that by aligning our offerings to their existing infrastructure and business goals.

ISG has also reported that companies investing in AI-enabled shop floor automation are realizing ROI in under 18 months. That’s a powerful metric. It shows that with the right implementation strategy, digital transformation can be not just affordable but self-sustaining. Our goal is to make that path clear and achievable for SMBs.

BTR: How should SMBs prioritize investments across IT and OT budgets?

Cook: One mistake we often see is treating IT and OT investments separately. In a modern manufacturing environment, they’re deeply intertwined. A new piece of machinery might come with built-in sensors and digital controls, which require IT integration. Likewise, an upgrade to your ERP or MES system might impact how operators interact with machines on the floor.

So the real question is: Where can you drive the most value in the shortest time? Often that’s at the intersection—places where small investments in data connectivity or workflow automation can unlock big productivity gains. We encourage SMBs to think in terms of “time to impact.” That might mean modernizing a QA process with AI-enabled defect detection before investing in a full ERP overhaul. It’s all about sequencing the investment to maximize business value.

And here’s another point: sometimes the savings come from avoiding waste—time, materials, rework, downtime. If you can show how an investment cuts those losses, you’ve made the financial case. It’s not just about spending—it’s about spending smart.

TECHNOLOGICAL CONSIDERATIONS

BTR: What technologies are proving most useful in early transformation efforts?

Cook: The most impactful technologies for SMBs are those that address their immediate pain points—lack of visibility, inefficient processes, and limited resources. Edge computing is a great example. By processing data locally at the machine level, SMBs can act on information in real time without waiting on cloud round-trips. This has huge implications for predictive maintenance, quality control, and adaptive manufacturing.

AI is another game-changer—especially when combined with subject matter expertise. At Siemens, we’ve invested in embedding that intelligence directly into our tools so that even a small team can benefit from best practices developed across thousands of use cases. And then there’s IT/OT integration. Getting machines, systems, and people connected is foundational. Once you have that data flow, everything else becomes possible.

Another fast-emerging area is low-code and no-code development. These platforms allow SMBs to customize and automate without hiring a full development team. It’s about making technology accessible, flexible, and aligned with your unique needs.

BTR: How does Siemens help SMBs overcome complexity in implementing these technologies?

Cook: Our approach is to meet customers where they are. That’s why we created the Siemens Xcelerator marketplace—to offer modular, scalable solutions that are accessible to smaller organizations. We focus on ease of deployment, embedded training, and measurable outcomes.

For example, an SMB might use our low-code development platform to automate a specific shop floor process without hiring a developer. Or they might deploy an AI-powered defect detection solution using existing camera feeds. We’ve also developed accelerators—templates and workflows—that shorten the path from idea to value. The point is to reduce friction and eliminate barriers to entry. Transformation doesn’t have to be disruptive if it’s done in the right order with the right partners.

We also provide a structured onboarding process that includes diagnostics, readiness assessments, and hands-on workshops. It’s not a one-size-fits-all approach. It’s tailored to your team, your equipment, your market. That’s what drives adoption—and ultimately, success.
BTR Conclusion

Bobby Cook’s perspective reflects a growing awareness that SMBs are no longer on the sidelines of the digital transformation story. They’re now at the forefront—taking bold steps to modernize, innovate, and compete at scale. As edge computing, AI, and IT/OT convergence become more accessible, the conversation is shifting from “if” to “how” and “when.”

Manufacturers who embrace this shift are likely to emerge more agile, efficient, and resilient than ever before. Those who wait may find themselves constrained by legacy systems and cost structures that no longer serve the demands of a fast-changing market. Through strategic alignment, operational readiness, smart financial planning, and the right technology partners, SMB manufacturers can unlock a future where digital isn’t just a tool—it’s a competitive advantage.