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LEVERAGING FINANCE FOR DIGITAL TRANSFORMATION


John Bolton, sales manager, Industry, Siemens Financial Services, looks into the drivers and challenges for digital transformation, why OEMs need their manufacturing customers to feel confident and capable of investing, and how to choose the right financing partner


companies (OEMs or vendors), energy costs are significantly higher than pre-pandemic, and the cost of raw materials and components has also inflated. In addition, supply chains have been disrupted and are being restructured to mitigate geopolitical risk, and new governments across the globe are creating further uncertainties. Furthermore, the manufacturing sector itself – the users of OEMs’ manufacturing machines – is experiencing a softening of demand in many parts of the world. The global perspective is important, because most manufacturing equipment OEMs serve international markets. But while the market outlook is challenging,


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drivers of demand are also growing. In particular, digital transformation – the drive to Industry 4.0 – is widely recognised as a ‘must do’ for manufacturers. There is wide consensus that the cost savings, production efficiencies and competitive advantage to be gained from digitalisation cannot be ignored. That means adopting and investing in new, digitalised manufacturing equipment, is essential. In addition, mandatory corporate sustainability


reporting standards are driving demand for more sustainable production, and post-production, machines. In fact, digitally enabled equipment


ressures faced by manufacturing equipment companies today are immense. Input prices have risen for manufacturing technology


is the technology platform that enables more sustainable production capabilities: less energy use, lower volumes of raw materials, fewer defects, improved uptime through remote maintenance, and so on. Digitalisation and sustainability are two aspects of the same trend – symbiotic, interdependent. Government is also behind the transition


to digitalised manufacturing and climate targets. A new subsidy and tax-break regime was introduced at the last budget, along with major infrastructural developments around clean hydrogen power.


THE NEED FOR INVESTMENT Despite there being clear commercial advantages of digital transformation in manufacturing, underpinned by government support, manufacturers still remain hesitant to commit to the substantial capital investments required. They are not keen to tie up their funds in capital equipment that will take some years to deliver full return on investment and more. This hesitancy is understandable. An analysis


commissioned by Siemens Financial Services (SFS) of the manufacturing sector as a whole shows that headwinds (negative factors), especially rising input and labour costs, have inflated more than tailwinds (positive factors such as production and confidence) in the sector.


22 DESIGN SOLUTIONS NOVEMBER 2025 Nevertheless, the need for manufacturers


to invest in digital transformation will not go away, and OEMs need every technique in the box to help their manufacturing customers feel confident and capable of investing.


INTEGRATED FINANCING BOOSTS SALES Embedding flexible financing options is one of the most powerful ways of making investment in new- generation equipment palatable, and financially sustainable. For example, in a recent research project commissioned by SFS among international manufacturing equipment OEMs, 66% said that integrated finance options helped them sell more machines from their sustainable portfolios. On the more general level, another research project revealed that OEMs said integrated finance enabled 20% more sales revenue, and 24% more profitability, than if products were offered without these financing options. So the broad view from the manufacturing equipment OEM community is that flexible financing options certainly get more deals over the line, by helping the manufacturing customer spread the cost over time – in alignment with the flow of benefits being received from the investment – and keeping the manufacturer’s cash free and liquid for agile sales or business growth initiatives.


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