The #MondayMusings Industrial Transformation blog series provides insight and analysis for executives from the previous week’s briefings, events, and publications @LNSResearch.
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SAP recently held its SAP Leonardo Live launch in Frankfurt, Germany. Although we have seen some of the parts of SAP Leonardo before, this event brought together the complete story of SAP’s Internet of Things (IoT) strategy along with a broad array of customer success stories. It was also presented uniquely; getting away from hours of PowerPoint. In fact, two professional news broadcasters led the plenary sessions. They almost made all the “presentations” into interviews, starting with the opening executive Tanja Rueckert, President of SAP IoT and Supply Chain, and continuing with SAP executives, customers, and partners.
Tanja introduced the key requirements of how SAP Leonardo can help businesses with their transformation:
- Digital Transformation means business and IT should always be together
- Top executive sponsorship is a must-have
- There must be an open culture and a passion for change management
- Even with a small start, you must think of transformation from end to end of your business.
The key message underlined in the presentation about SAP Leonardo was that it is not a product but rather a gathering all the tools and processes need to implement Digital Transformation. The opportunity is now. With so many different technologies maturing at the same time, this is the 4th industrial revolution. These technologies include Cloud computing, mobile, Big Data, IoT, analytics, Machine Learning and AI, and new platforms. All these will drive Digital Transformation, and Franck Cohen, SAP Chief Commercial Officer, emphasized that Machine Learning and AI are the technologies that are going to bring the biggest change to industry even though they are currently the least mature of the key Digital Transformation technologies.
Use Cases, Lots of Use Cases
The majority of the event was taken up with customer presentations. It is very impressive to see the results of a partnership between SAP and its enormous customer base (350,000 customers), with different parts of the Leonardo portfolio used in a multitude of ways. We have already seen the impressive Trenitalia Predictive Maintenance system using analytics to save hundreds of thousands of Euro in maintenance costs. Nestlé demonstrated their use of SAP MII to build standard applications across the SQAP ecosystem and 400+ plants while allowing freedom in Manufacturing Executions Systems (MES) and control systems. It is inconceivable for Nestlé to standardize MES across all its plants with such a variety of systems, level of automation, and cost base. The use of MII is to standardize interfaces to all business systems and connect to IoT applications.
It was fascinating to see the breadth of applications from automotive importers getting closer to their customers with the connected car, to connected farms driving more yield and farm to fork connectivity. Until now, the low hanging IoT applications have been around maintenance improvements, but Leonardo in all its breadth is starting to demonstrate wider applications in real production environments, even if many are just small starts.
Getting Started
All the technology that is wrapped together by SAP Leonardo supports the Digital Transformation process. However, the key to success is not the technology but the ability to use it to transform business performance. SAP introduced Design Thinking into its internal development processes in 2004 and now offers it to customers to help them think about and create applications that put the people first in both creating and using the new technologies.
This will be a big change for many traditional companies that use IT to design and implement their systems. Starting from a new perspective and, starting small, will bring new solutions to old problems. In time, this will bring new solutions to new problems. SAP is offering an eight week “Accelerator” program to allow customers to adopt particular industry solutions and LoB accelerators, for specific operational roles, in the environment. From this starting point, they will be able to drive design thinking and become much more customer focused in business process design.
Manufacturing Maturity
SAP followed on from the demonstrations they showed at Hannover Messe in the manufacturing operations space. They demonstrated how they could implement sophisticated, complex discrete manufacturing process with SAP ME and MII. The architecture allows a split between Cloud and on-premise as required. SAP Cloud supports all the manufacturing Apps but allows deployment as needed for confidence in connectivity and availability.
There was also a strong emphasis on 3D printing with the announcement of a 3D printing market place closely integrated into the SAP Ariba B2B network. We see many vendors jumping into the 3D printing market, but clearly, the extensive reach and size of the existing SAP Ariba network gives SAP an opportunity to become a leader in this exploding market.
Final Thought
SAP has had a complex and changing set of IoT related products, platforms, and services. SAP Leonardo has brought together all the key elements required for a SAP customer to embark on the journey of Digital Transformation. LNS Research expects to see a rapid growth of SAP customers choosing to take the SAP Leonardo route. SAP still has some way to go to convince manufacturing companies to go deep into the plant with SAP solutions, but the maturity level has increased substantially. Large discrete manufacturers who crave integration into their SAP systems and the IoT should consider SAP Manufacturing solutions.
