Siemens 2008 Annual Report Download - page 211

Management’s discussion and analysis 115
Streamlining Other Operations. Other Operations consist primarily of operating business activities not allocated
to a Sector or Cross-Sector Businesses. By the end of scal 2009 we intend all business activities in Other Opera-
tions to be integrated into an existing Siemens business or service, divested, moved to a joint venture, or closed.
Reducing SG&A. During scal 2008, we initiated a global program for the reduction of selling, general and
administrative expenses (SG&A program) as part of Siemens’ transformation programs, with the goal of securing
our competitive position against the backdrop of an impending global economic downturn. The program is tar-
geted at improving the efciency of the selling and administration processes in our corporate functions, in our
Sectors, Divisions and Cross-Sector Businesses, as well as in our regional Clusters. Under this program, we intend
to reduce global SG&A costs until scal 2010 by approximately €1.2 billion from the level of scal 2007.
Investment in sustainable growth
We continually invest in sustainable growth by advancing our technology through R&D, strengthening and
streamlining our organization, and demonstrating corporate responsibility.
Environmental portfolio. We expect average annual growth of approximately 10% from our environmental port-
folio through scal 2011. This would result in approximately €25 billion in revenue from environmental and cli-
mate protection in scal 2011, up from approximately €19 billion in scal 2008. This in turn would enable us to
help reduce the greenhouse gas emissions of our customers by 275 million metric tons annually in 2011 with
products and solutions installed since beginning of scal 2002.
As we expand our environmental portfolio externally, we also intend to reduce our environmental footprint inter-
nally. We currently aim to improve our environmental performance at our global production systems by 20%
with regard to energy consumption, CO2 emissions and water consumption, and by 15% with regard to waste.
We intend to achieve these goals by the end of scal 2011, normalized for revenue growth.
R&D. In scal 2008 we invested 4.9% of our revenue in research and development, for a total of approximately
€3.8 billion. The pace of technology evolution in many of our businesses is swift, requiring continuous innova-
tion. In scal 2009, we will continue to spend a substantial amount on R&D, which is expected to continue to be
an important differentiation factor in global competition.
Corporate Responsibility. Siemens has a long heritage of corporate responsibility reaching back to founder
Werner von Siemens. In scal 2008, we brought signicant management attention to resolving outstanding legal
and regulatory matters while strengthening our corporate governance systems, such as by establishing a new
Managing Board position with responsibility for all legal and compliance issues.
Opportunities
Even in the current difcult economic environment we see selective opportunities for expanding our business
and improving our protability. Due to the current market environment and expected market development,
however, we do not expect these opportunities to lift us above the targets mentioned above.