The Role of Digitization & Integration Across Industrial IoT

15th November 2018

Although Kevin Ashton called the hitherto known “Embedded Internet or Pervasive Computing” as “Internet of things ( IoT)” in 1999 during one of his presentations to Procter and Gamble management on Supply Chain optimization using RFID technology, IoT as a commercial application concept gathered wider interest only in 2010. Since then IoT has been growing in colossal proportions in its reach, richness, influence on the business value creation and ubiquitous application possibilities. A McKinsey and Company article estimates that approximately 127 devices are getting added to IoT eco system every second, while a Forbes article estimates states that about 2.5 quintillion bytes of data are produced every day in the world today.

IoT in industrial context – referred to as IIoT plays a crucial strategic role and provides a powerful competitive edge to organizations. The Industrial Internet of Things – also popularly known as Industry 4.0 and often referred to as 4th Industrial Revolution (the 4IR) – is fundamentally changing the very characteristics of traditional Value Chains, Business Models and the conventional ideas of Products and services.

IIoT essentially comprises of digitization and integration of vertical and horizontal value chains of Industries, digitization of products and services offerings and help creating innovative digital business models. This means IIoT is enabling a seamless collaboration between process and people, making supply chain intelligent and data enriching of products and services across the extended industrial eco systems. IIoT is actually creating a fundamentally new set of terms of competition for the Industries – almost differentiating by categorizing them as Industry 4.0 Haves and Have nots.

With over 70% of the world’s business transactions being run on SAP in almost 180 countries, SAP rolled out a framework called Leonardo in 2017 - SAP Leonardo seeks to clinically reimagine the end-to-end business processes and transform an enterprise into an intelligent enterprise.

A quick look at as to how Leonardo platform offers certain unique capabilities to incorporate intelligent technologies namely – IoT, Analytics, AI and ML across and at every stage of the enterprise value chain. Thus, creating what it calls – Leonardo Bridge that connects everything in the value chain of an organization by converting them to Connected Products, Connected Assets, Connected Fleet, Connected Infrastructure, Connected Markets, and Connected People. This real time omni-connected state of an enterprise makes the entire value chain super-efficient, insightful with a high degree of visibility on the Supply networks, creates optimal availability and utilization of assets, increases customer experiences, automated process, predictive maintenance capabilities, optimal fleet management, effective Energy Management, Vehicle Geo Tracking, tracking and traceability to name some.

Leonardo also offers two key core digital capabilities to the enterprises–A Cloud Platform that supports micro services and In Memory Computing capabilities through SAP HANA data management suite.

Under the SAP Leonardo framework, here are the expected business value benefits presented in 3 buckets.

Products and Services: An average of 5-20 % increase in revenue from Omni Channel, 85% increase in forecasting accuracy, 10-20% reduction in the quality related cost.

Assets and Resources: 10-40% reduction in maintenance cost, 30-50% reduction in the machine downtime, 20-50% reduction in the inventory carrying cost, 20-30% reduction in the energy consumption, 25-50% improvement in the shared services productivity.

Innovation: 5-10% higher revenue growth, 20-50% reduction in time to market.

Furthermore, Leonardo also addresses two formidable challenges encountered by Enterprise computing today namely – the Latency (a serious time lag between sending and receiving the mission critical business data) and – managing the increasingly becoming complex monolith enterprise software architecture.

First - to mitigate the challenges of Latency - SAP Leonardo offers Edge computing capabilities through configurations that allows the shifting of processing of Compute, Storage and Business logic semantics from the centralized cloud to the distributed Edge of the node. What it means is that since the computational processing occurs closer (at the edge of the node) to the sensor in an IoT application, the response time reduces by more than a factor of 100 compared to response time when the computation takes place on the cloud side and what is more important is with high availability.

Second – SAP Leonardo framework seeks to decentralize SAP’S traditional monolith Service Oriented Architecture to offer Micro Services through SAP Cloud Platform. In order to meet the ever-increasing demands of customer specific applications that requires shorter development and deployment cycles, SAP Cloud Platform provides a range of tools for development of rapid, agile, limited functionality, easily deployable, manageable, loosely coupled micro services which are independent and hence eliminates the need for extensive release planning.

In the final analysis, SAP Leonardo is a futuristic platform that seeks to transform the entire suite of SAP application from being just a System of Record to a System of Intelligence.

If man’s discovery of Malleability and Ductility properties of metals led to the first Industrial Revolution in 18th century , today it is the Bittability (digitization), Nettability (ability to get connected to internet) and Thingability (devices with sensors) are driving the Industry 4.0.

SAP Leonardo is a resolute and consummate response to Industry 4.0.

Article Authored by: Shashimohan Doddamane, SAP Director, Ciber India

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