IoT for Business is in phase one of its’ development but phase two and three are waiting in the wings and will enable organisations to transform themselves and achieve a new level of efficiency. They’ll potentially be able to enter new markets, Michael Lynch, the global co-lead of Internet of Things at SAP, tells George Malim
The Internet of Things (IoT) is starting to gain momentum in both consumer and enterprise sectors. As the hype continues to rage in the consumer market, the business sector is getting on with the business of generating value from IoT. “Our customers are looking now to drive business value out of the multitude of capabilities that IoT will bring,” confirms Michael Lynch, the global co-lead of Internet of Things at SAP. “We’re very focused on a group of systems that can grow value in a range of setting and change the focus from a technology discussion to the business outcome.”
SAP sees itself as the provider of three key elements to achieving successful IoT for business. The first is to take SAP’s existing applications and enable them for IoT. The next step will be to innovate with customers and partners to develop new applications.
“We don’t believe the existing applications are the end of the opportunity,” Lynch explains. “Customers want to innovate in areas of their own choosing and we want to work with them to find breakthroughs that transform and enhance their businesses, using IoT.”
The third element of SAP’s IoT for Business strategy is to provide the platforms businesses will require in order to handle the sheer scale of IoT deployments. “As the market develops and new applications and technologies are rolled out organisations require enormous scale in their IoT platforms,” says Lynch. “With big data and in-memory platforms like SAP HANA, we can provide a platform for other applications to scale up. Partners want platforms that can develop rapidly.”
SAP sees an opportunity to provide those highly scalable platforms and enable organisations to connect into its networks and business suite innovations. The concept of a platform that can connect various business sources and has the power and scalability needed for organisations to extract business value is one that is regarded as highly difficult for individual organisations to achieve. SAP is looking to become the provider that enables businesses to accelerate and simplify IoT deployment by providing that platform.
It’s still early days for the IoT, though. Lynch, however, sees several sectors starting to move ahead with deployments. Large multi-national corporations in automotive and heavy asset industries, in utilities, in manufacturing and, increasingly now, in retail are embracing IoT.
“You will see solutions in all kinds of areas,” confirms Lynch. “We see solutions in telematics and industrial automation helping those sectors. Our main focus is on those industries but SAP is a big place and lots of other areas are being addressed.”
Although IoT is seen as relatively new, it’s worth considering that the business pre-dates the terminology. “SAP has been enabling IoT at the platform level for many years if you think about applications such as RFID (radio frequency identification), for which we have hundreds and hundreds of customers,” Lynch adds. “In terms of specific IoT products that we have in the market today, we’ve released an extended version of our manufacturing platform to optimise configuration and throughput and connect predictive analytics to maximise machine uptime.”
“That’s an example of an update to an existing technology but we also have a new product that enables cloud-based predictive maintenance, for example,” he says.
Lynch gives an example of a connected logistics deployment at the Port of Hamburg in Germany. Hamburg Port Authority handles an average of 10,000 ships and nine million cargo containers each year and anticipates it will handle 25 million cargo containers by 2025. The challenge facing the Port is that it is unable to expand its geographic footprint so it needs to accelerate the turnaround time for ships docking and the trucks that collect the shipping containers.
With 5,000 trucks entering the port each day now, a traffic handling solution is required to enable it handle a likely trebling of truck numbers. SAP, along with Deutsche Telekom and other partners has created a traffic hub that ensures trucks don’t enter the port until their container is ready to collect.
Another example Lynch gives is at motorcycle manufacturer Harley-Davidson, which through using connected manufacturing applications from SAP, shrunk the size of its manufacturing platform by one-third and increased productivity by 19%, driving a 7% increase in margin.
Other companies are using IoT for business to take them into entirely new commercial areas. Compressor manufacturer Kaeser initially deployed an IoT system to track its compressors and manage their uptime.
“The first thing companies want to do is track equipment and get a dashboard,” explains Lynch. “However, that’s only the first step. Stopping there means you have the information but then have to go back to the practices of 1955 and send out a guy in a truck to check the situation. Phase one is to the get the information and the dashboard, phase two is to optimise what to do about the insights you receive and phase three is to provide new services to customers.”
Kaeser is using the insights it has gained to move to a pay per use model so, instead of simply selling compressors, it now can provide them as a service. The company says it has seen it double its business. This is the ultimate stage where creativity is applied to data from connected devices to create brand new business models, products and services. SAP is enabling this level of creativity and reimagining of business models for its customers today.
These early deployments are pioneering IoT for business and there is a long development path yet to be journeyed down. Lynch points out that much of that innovation will come from specialist companies or dedicated new teams within large businesses. Both will rely on the scale of the platforms and the connections into business applications that SAP can provide.
“If you look at IoT for Business as a process to transform the information into a database and then use it to transform the way a company operates with the end goal of re-imagining your customers’ experience, SAP is the only company with the capabilities to take through that path,” Lynch concludes.