Seems like the world leader in enterprise applications SAP is getting serious about Internet of Things (IoT). Earlier in 2017, SAP announced its new portfolio, dubbed Leonardo that is an umbrella of tech du jour buzzwords — Machine Learning, Internet of Things, Big Data, Analytics, and Blockchain. As part of its commitment to strengthen the IoT business, SAP also committed an investment of 2 billion euro over a period of five years.  

With the launch of Leonardo, the German tech major scored a significant lead over its competitors in integrating IoT technology in business processes. The key takeaway here is that the biggest vendor has brought an outcome-oriented approach to IoT, integrating technology with business processes.  

Dubbed as the “innovation digital system”, SAP’s new solution portfolio can apply emerging technologies to business processes, all in an integrated fashion.

SAP CEO’s vision in expanding the solution portfolio

Of late, SAP was all about HANA and the company invested significant marketing dollars in the in-memory platform, pegging it as the most disruptive enterprise technology to emerge in the last 25 years.  Now, Leonardo is bringing together SAP’s software assets around big data analytics, SAP cloud platform, machine learning and blockchain. Leonardo can be plugged into SAP’s various offerings and can deliver outcomes for specific business processes in an accelerated timeframe. What it means for customers is that businesses are risk-proofed and needn’t make a huge investment in a new technology without knowing the ROI.

SAP CEO Bill McDermott is steering the company in the right direction.  Over the years, there has been a concerted effort among Fortune 500s to embrace disruptive technologies and break down data silos. According to McDermott, “ Half of last year’s Fortune 500 companies actually lost money. Today, you’re seeing established companies shake things up on their own terms because a failure to do so from a position of strength will result in a fast decline”. Add to the fact that oil and gas, transportation, and mining sectors are now waking up to Industry 4.0.

McDermott believes Leonardo will deliver a technology blueprint and show the risks, outcome of the applications and the investment made at scale.

SAP joins the billion dollar IoT club – pivots to a platform company

SAP is one of the largest providers of enterprise software and the recent investment means it has made its IoT ambitions very clear. Here comes the added advantage, SAP, today has the most innovative product portfolio and is providing solutions not just to the Global 5000 but also SMEs.

This means a long customer list and its new promotional pricing around Leonardo, though hazy but outcome oriented makes it a good fit for the Global 5000 customers. SAP’s bundled offerings that includes HANA and the powerful HANA Cloud Platform means combining real-time business information with IoT data which is the game-changer here.

McDermott reinforced the above view with his statement. The key priorities for SAP CEO is to get 90% of SAP customers migrated to the new platform by 2025 and enable them to transform into intelligent enterprises. The second issue on his agenda is to get billion users of SAP cloud solutions to accelerate the adoption of new innovation. At the heart of digital innovation is reducing cost and improving productivity. By applying machine learning to shared services, like accounts payables and receivables, costs can be reduced by 50%, he explains. Through IoT and applying predictive maintenance to assets, ROI can be improved by 20%. “By improving the customer experience, revenue can grow by 5-20%,” he said.

Has SAP joined the Industry 4.0 revolution?

So is SAP in the IoT race with powerhouses GE Digital, Siemens, Cisco and other players? Today, IoT largely plays out in the industrial sector and SAP  sees a growing opportunity in Industry 4.0. SAP has a sizable IoT portfolio and plays a major role in automotive, pharmaceutical and aerospace sector besides retail, telecom and other verticals. It’s industrial IoT solutions include connected asset, connected product, connected fleet, connected infrastructure, markets and people. SAP Leonardo is in sync with the needs of Industry 4.0 and comes armed with predictive analytics suite. There are plenty of use cases representing the Industry 4.0 maintenance model —  transitioning from reactive to proactive and scheduled to predictive maintenance.

Here’s an example of manufacturing use case where predictive maintenance required IoT services to acquire data from sensors, Big Data storage for managing data, predictive algorithms to make sense of the data, and access to application program interfaces (APIs) from core ERP solutions to coordinate and execute the actual asset repair. “The power comes from all of these technologies—machine learning, IoT, Big Data, blockchain, and analytics—working together to differentiate based on the hidden knowledge behind the data,” said   McDermott in closing.