by Alan Griffiths
@cambashi_alan
LinkedIn

Summary

Years ago, one may have thought SAP to be a ‘typical’, closed, on-premise ERP system that was expensive to install and customize.

Cambashi’s visit to SAP TechEd in Barcelona in October challenged those perceptions:

  • With S/4 HANA Cloud ERP business suite, SAP offers a truly multi-tenant cloud implementation, and the tools to move from older versions.
  • SAP has adopted open APIs and provides free SDKs for many platforms.
  • It is heavily promoting ‘the Intelligent Enterprise’, making use of its Leonardo capability and also embracing the IoT, ML (Machine Learning), RPA (Robotic Process Automation – business process automation), bots and blockchain, and extending these technologies into Connected Applications (Connected Products, Connected Assets, Connected Fleet ).
  • SAP’s devops, database and cloud capability are very strong (e.g. HANA in-memory database, Kubernetes containers, Hadoop, Data Hub orchestration etc.) and it is using this to deploy industry applications.

These capabilities have been coming for some time within SAP (and they exist elsewhere with various other providers of different stripes) but taken in the round, they show how the company has transformed itself to offer truly innovative, agile solutions to enterprise customers.

SAP TechEd exhibition
Figure 1 – general view of SAP TechEd exhibition

It was interesting to contrast SAP’s ‘Connected Applications’ approach (which is what the industrial IoT is evolving into) with that of Oracle and IBM, which – strategically – sit on either side;

  • Oracle offers the ‘full stack’ for an enterprise solution, from the low-level Oracle Java Embedded technologies at ‘thing’ level’ to its suite of Oracle-cloud-based Connected Applications (such as ‘IoT Production Monitoring Cloud’, ‘IoT Fleet Monitoring Cloud’ and ‘Service Monitoring for Connected Assets Cloud’). And Oracle provides its own cloud platform.
  • IBM has an open source approach to software and application development, as illustrated by its recent acquisition of Red Hat, the open source, Linux-oriented, enterprise software provider, and its collaboration with Hyperledger (also Linux-based) for blockchain. IBM also provides its own IBM Cloud platform though it is open to collaboration – as announced by SAP at this conference.

IBM’s Connected Applications (IoT) go-to-market strategy is primarily through partners who will deliver the solutions based on its technology such as IBM Watson IoT Platform for IBM Cloud.  It also offers IoT-based solutions through its Maximo Asset Management system.

Of course there are many other players in the Digital Transformation/Connected Applications market, and there are many more ‘technology providers’ with IoT platforms and applications.  Cambashi is now tracking this market and it will be interesting to see how it develops.

See below for further detail on the SAP TechEd conference and for information about Cambashi’s ‘Charter Program’.

Disclosure: SAP paid hotel and travel expenses for this event

Connected Applications discussions with SAP executives

Cambashi was fortunate to talk with the following key executives, with a particular focus on Connected Applications;

Bjorn Goerke,
Chief Technology Officer and President SAP Cloud Platform.

Sindhu Gangadharan,
Vice president and head of Integration for the Office of the CTO.

Dan Lahl,
Vice President, Product Marketing.

Sven Denecken,
SVP, Head of Product Management and Co-Innovation S/4HANA.

Udo Paltzer,
Product Manager and Team Lead for SAP Cloud Platform Integration and SAP Cloud Platform Internet of Things;

Giorgio Murroni,
Business Development and Product Management, IoT

Mike Eacrett,
VP Product Management – Big Data

Robert Meusel,
Head of Data Science for Intelligent Asset Management

Gil Perez,
SVP Products & Innovations, Head of Digital Customer Initiatives

David Judge,
Vice President, SAP Leonardo, Machine Learning and Intelligent Process Automation

Byron Banks,
VP, Product Marketing, Analytics

Notes from these discussions follow.

Bjorn Goerke, Chief Technology Officer and President SAP Cloud Platform

Goerke emphasized SAP’s focus on the ‘Intelligent Enterprise’ which is intended to go beyond what a ‘standard’ ERP system provides by offering more ‘visibility, focus and agility’.  This is achieved through:

  1. The Intelligent Suite;
  2. The Digital Platform;
  3. Intelligent Technologies.

He acknowledged that IoT/Connected Applications is a huge market and that SAP isn’t going to do everything itself – referencing the work they are doing to provide open software and build partnerships.

Bjorn Goerke presents the Intelligent Enterprise
Figure 2 – Bjorn Goerke presents the Intelligent Enterprise
diagram showing SAP's Intelligent Enterprise
Figure 3 – diagram showing SAP’s Intelligent Enterprise

The ‘Intelligent Enterprise’ (diagram above) consists of:

  1. The Intelligent Suite; essentially the core SAP capabilities (now available in the cloud through Business Suite 4 SAP HANA)
  2. The Digital Platform; the cloud-based platform with ‘Open Connectors’ using RESTful API’s, using the HANA in-memory database and the FIORI UI to present the applications (see image below)
    SAP Cloud Platform Open Connectors
    Figure 4 – SAP Cloud Platform Open Connectors

    SAP Cloud Platform Functions
    Figure 5 – SAP Cloud Platform Functions
  3. Intelligent Technologies; such as AI/ML (Machine Learning), analytics, IoT, blockchain and ‘IRPI’ (Intelligent Robotic Process Automation). Sap Analytics Cloud provides these capabilities (see below)
SAP Analytics Cloud
Figure 6 – SAP Analytics Cloud

Intelligent Robotic Process Automation is becoming immensely important as companies seek to automate processes across several domains – this can provide great business value and enhance the customer experience through ‘AI-enabled bots’ (using Leonardo technology) which were demonstrated at the event.

SAP Intelligent Robotic Process Automation
Figure 7 – SAP Intelligent Robotic Process Automation

Sindhu Gangadharan, vice president and head of Integration for the Office of the CTO at SAP, assumed the role of a commander leading a Mars mission to show how ‘total workforce management’ – part of the intelligent suite – can improve productivity amongst finance, HR, procurement and sales departments.

Goerke invited Alyssa Carson, at 17 NASA’s youngest astronaut trainee, to talk about her plans to join the Mars mission in 2033; although Goerke himself would have liked to go, for him this was the next best thing!

Alyssa Carson, NASA's youngest astronaut trainee
Figure 8 – Alyssa Carson, NASA’s youngest astronaut trainee spoke about the Mars mission for 2033

Regarding the IoT and ‘connected applications’, Cambashi asked Goerke to tell us a bit more about his ambitions in this area.  He said that as this was a huge market, SAP wasn’t going to do everything itself and referenced the work they are doing to provide open connectors and build partnerships.

Sindhu Gangadharan, vice president and head of Integration for the Office of the CTO at SAP

Gangadharan explained SAP’s open approach to integration from the user (User-Centric Applications), through the Cloud/OnPremise, to the Real World Objects (‘things’) and the various integrations that are provided.

SAP's CIO guides for Integration
Figure 9 – SAP’s CIO guides for Integration

And the image below shows the range of third party integrations SAP now supports:

SAP Cloud Platform Open Connectors
Figure 10 – SAP Cloud Platform Open Connectors

Dan Lahl, Vice President, Product Marketing at SAP

Lahl stressed SAP’s openness, as shown by their foray into metadata services, its deployment on private cloud with IBM and Atos and Google (Global Cloud Platform).  Dan also hosted a tour of the exhibition tour where Mike Eacrett, VP Product Management – Big Data, showed how SAP Data Hub could be used to orchestrate applications and data flows – in this example, it controlled model vehicles that were all travelling round a track at different speeds and avoiding collisions by varying their speed.

Mike Eacrett, VP Product Management – Big Data, demonstrating SAP Data Hub
Figure 11 – Mike Eacrett, VP Product Management – Big Data, demonstrating SAP Data Hub

Sven Denecken, SVP, Head of Product Management and Co-Innovation S/4HANA at SAP SE

Denecken is driving S/4 HANA for SAP for which they now have nearly 10,000 customers, 40% of which are new to SAP.  An example IoT customer is Kaeser Kompressoren which went live on S/4 HANA in 2017.  It now has 5,200 out of 6,000 employees using SAP.  Kaeser uses SAP Data Hub to orchestrate the data from compressors in the field and provide predictive maintenance in an innovative IoT project (a co-innovation with SAP).  They can see where the compressor stations are located, stream the service data, and analyze it in the SAP Analytics Cloud.   Kaeser can also maintain data about compressors running in customer location, thus providing a ‘digital twin’.

The co-innovation approach demonstrates SAP’s openness – the same SDK that SAP uses internally is provided to third parties to allow them to access the Data Hub APIs.

Udo Paltzer, Product Manager and Team Lead for SAP Cloud Platform Integration and SAP Cloud Platform Internet of Things;  Giorgio Murroni, Business Development and Product Management, IoT

Udo and Giorgio explained how SAP Leonardo IoT Platform and IoT Services are being deployed into industrial use via ‘Connected’ applications, such as ‘Connected Product’, ‘Asset’, ‘Fleet’, ‘Infrastructure’, ‘Markets’ and ‘People’.  This is a sophisticated product marketing approach that goes beyond generic ‘IoT projects’ and creates applications targeted for particular market areas.

SAP is already working with IBM to provide its IoT Service on its Private Cloud.

Mike Eacrett, VP Product Management – Big Data (SAP Data Hub, EIM and SAP Vora) at SAP

Eacrett explained the fundamentals of Data Hub and how it can be used to orchestrate data – for example in a Hadoop data lake or Amazon S3 cloud storage.

Data Hub is not a data warehouse; it acts like a flight control center – locating data in various locations and then bringing algorithms (as if from a catalog) to process it through pipelines or workflows.

In addition, SAP HANA Vora – an in-memory computing engine – can be used to make big data more accessible and usable.

Robert Meusel, Head of Data Science for Intelligent Asset Management at SAP

At a more detailed level, Meusel presented the basic building blocks of an SAP-based IoT application driven by ML (Machine Learning) – see image below – and gave examples of how companies are applying ML to derive meaning from the data and direct action.

SAP's vision for IoT applications driven by Machine Learning
Figure 12 – SAP’s vision for IoT applications driven by Machine Learning

Typical use cases valuable to customers are:

  • Identification of unusual states (e.g. for anomaly detection)
  • Failure prediction (e.g. SAP Predictive Maintenance and Service, below)
  • Failure mode analysis (e.g. to improve design).
SAP Predictive Maintenance IoT solution
Figure 13 – SAP Predictive Maintenance IoT solution

Meusel described one implementation where a large ($15B annual revenue) customer used data from 20 sensors to produce approximately 5GB of raw data per year to predict pump failure and trigger appropriate action to avoid the potential issues.

Another large ($57B) chemical corporation collected data from 33 sensors over one year and analyzed it to produce a failure prediction model that had 80% accuracy.

Meusel pointed out that, even if the data collection and interpretation is highly automated and the algorithms are applied correctly, it is still necessary (and often time-consuming) to explain this to the end user and help them to implement it in the field.

Gil Perez, SVP Products & Innovations, Head of Digital Customer Initiatives, SAP

Perez presented the highlights of two surveys SAP has recently done with 250 and 350 customers respectively.

In the first survey, 92% were positive about using blockchain, although only 2-3% claimed to have it in production use.

In the second survey, the ‘positive’ figure rose to 99.5%.

Gil saw this as a ‘red light’ as it indicated unrealistic expectations from users based on limited experience.  The most promising use cases were:

  • Supply chain and IoT
  • Finance/Audit
  • Legal and regulatory
  • Sustainability

SAP is confident that there is great potential for blockchain but it needs to be applied where the technology fits. One key determinant is ‘do the parties trust each other?’.  If not, that is one good indicator.  Other positive indicators are when:

  • The network needs to be decentralized.
  • Smart contracts are needed.
  • Asset transfer is required, rather than just verification.

Perez pointed out the importance of having good data when starting a blockchain project as all transactions are, by definition, immutable which means that ‘bad’ data will persist.

SAP positions itself as agnostic to blockchain technology supporting Hyperledger Fabric, MultiChain and Quorum™ (an enterprise-focused version of Ethereum promoted by J.P.Morgan).  It is heavily testing the Quorum (permissioned blockchain distributed ledger) technology and one pilot project has been running for over 6 months with over a billion transactions recorded.

The main industries initially being targeted are those where SAP already has a major presence and it is creating three industry-led consortia (selected from SAP’s 24 IBUs) to drive its adoption:

  1. Life Sciences and Pharmaceuticals, currently having 7 members.
  2. Consumer Products, Retail and Agribusiness, with 15 members.
  3. High Tech and Telco, with 18 members.
SAP's Blockchain Industry groups
Figure 14 – SAP’s Blockchain Industry groups

That is, over 40 companies are already working in consortia, and there are over 4,300 individual members.

SAP’s ‘horizontal’ capabilities such as ‘financials’, ‘HR’ and to a lesser extent ‘manufacturing/production’ may be included in any of the above.

The agreements are initially multi-lateral such that all participating companies (including SAP) own the IP from that work.

The next level, as companies wish to develop competitive applications, is to move to bilateral agreements in a ‘co-innovation’ arrangement (of which there are currently about 90).

The third level is for SAP to productize the applications and make them available as standard product (of which there are 4 so far).

David Judge, Vice President, SAP Leonardo, Machine Learning and Intelligent Process Automation; Byron Banks, VP, Product Marketing, Analytics at SAP

Judge explained SAPs product strategy for Intelligent ERP, including Intelligent(/Robotic) Process Automation, Conversational AI and Machine Learning based, on Leonardo.

Why you should automate repetitive tasks
Figure 15 – Why you should automate repetitive tasks
SAP's Intelligent ERP concept
Figure 16 – SAP’s Intelligent ERP concept

His view is that RPA will become a massive market and that in this arena, only SAP can provide robust, deeply-integrated RPA because it is able to go within their databases and applications.  Other third-party RPA programs are ‘brittle’ because they work at UI level.

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