This IDC Manufacturing Insights blog highlights recent announcements from SAP on its 5-year, €2 billion investment plan to accelerate innovation in its Internet of Things portfolio.
As we have been tracking the use cases for Internet of Things (IoT) in Manufacturing, those that are seeing some of the greatest levels of investment and activity enable smarter management of production assets and optimized maintenance of equipment that the OEMs maintain on behalf of their customers. Manufacturers are keenly interested in ensuring their product equipment operates more effectively and efficiently. And, those OEMs that support manufactured equipment and machinery at the customer site are eager to find more cost-effective and value-added ways to offer these services. IoT is one of the critical innovation accelerators to enable both of these use cases. The challenge for manufacturers is selecting, implementing, integrating, and managing the technology to enable predictive maintenance and service. With its most recent IoT announcement, SAP is offering a way to make this less cumbersome.
At a recent IoT customer showcase event in Italy, SAP announced a €2 Billion, 5-year Investment Plan to accelerate innovation in its IoT portfolio, scale service, support co-innovation efforts, grow its partner ecosystem, and increase sales and marketing efforts around what it is calling SAP IoT. The investments have already begun:
- PLAT.ONE, an enterprise IoT services provider in the SAP HANA Cloud Platform ecosystem
- Fedem Technology, an advanced engineering analysis and building software vendor
- Altiscape, a cloud-based open-source big data start-up,
SAP has added these technologies to its SAP IoT portfolio which is based around SAP HANA Cloud Platform and core business applications of SAP S/4HANA.
In addition to adding innovative technologies to its SAP IoT portfolio, SAP is creating a network of SAP IoT labs, in select locations globally, to co-innovate with customers and partners around IoT and Industry 4.0. We have seen this approach used by other enterprise software vendors and IT Services providers to foster innovation and showcase the latest technology to customers. Providing a tangible way for manufacturers to see how a technology can be applied to a business challenge is essential to moving companies from the researching/considering phase of IoT investment into pilot/proof-of-concept projects. In our 2016 IDC Vertical IT and Communications Survey, our research shows that 41% of discrete manufacturers today are researching or considering IoT initiatives, and their approach is predominantly project-based. Having a way to move more quickly to piloting and testing a project can advance adoption by months.
Another way to hasten roll-out of IoT initiatives is through the use of pre-built packages. SAP is delivering packaged IoT offerings that help manufacturers tackle specific use cases for IoT. The Industry 4.0 packages initiate operational and business system connectivity to monitor equipment performance on the shop floor as well as adding performance analytics and asset intelligence. These packages can be used by manufacturers to optimize their own factories, or as part of a services offering to the OEM's customers as part of a maintenance contract. SAP highlighted a customer who is using the package for the latter, transforming their business as a result. The company provides packaging equipment to other manufacturers, and with SAP IoT is now transitioning to a service-oriented offering, using software for remote inspection and monitoring and managing the health and performance of the equipment on an ongoing basis for the customer.
In the recently published IDC Manufacturing Service Innovation MaturityScape report, which subscribers can access here, product-service systems are the highest, or Optimized, stage of maturity. A small group of manufacturers have reached this point today, which means there is still much work to be done in applying IoT and other important innovation accelerators to products and services for digital transformation.