SAP is betting heavily on IoT technology as a serious new growth opportunity.
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The company recently announced it is staking a little more than $2 billion in developing internet of things (IoT) applications and IoT services in the next five years.
Now, it's becoming a little clearer just what SAP has in mind with this investment, as it unveiled three new IoT services aimed at helping enterprises to develop IoT applications, reduce the costs and IT resources needed to manage IoT data, and derive business value from this data.
The IoT services are SAP Connected Goods, SAP Dynamic Edge Processing and SAP IoT Application Enablement.
It appears SAP is laying the foundations for a solid IoT application environment with the new IoT services, according to Holger Mueller, principal analyst and vice president at Constellation Research Inc.
"SAP keeps adding IoT functionality in a smart way, with starter and example code packages to help customers build IoT solutions, using the SAP Hana Cloud Platform (HCP)," he said. "This is expected to be a successful strategy, given that IoT solutions in their real implementation vary substantially between deployments and need a PaaS [platform as a service] platform to ensure the ultimate fit for every enterprise. Now, we have to see how customer adoption validates the market viability of the IoT packages SAP has built."
Although SAP's IoT services offerings look good on an individual basis, they may lack a coherent narrative, said Jon Reed, analyst and co-founder of Diginomica Ltd.
"SAP's IoT approach has come a long way in a couple of years -- from bold talk and few specifics to a series of interesting ventures and use cases, many of which take advantage not only of HANA, but so-called end-to-end scenarios that tap into SAP's ERP strengths," Reed said. "SAP's HCP could play a role here for SAP customers looking for IoT services and a platform to build on, but SAP needs a more coherent view of how all these IoT initiatives tie together. There are a few groups in SAP that seem to have their hands in IoT projects, so it's very difficult from the outside to explain how they fit together into one value proposition for customers."
Those struggles are not unique to SAP, as vendors and their customers try to pinpoint exactly how IoT data can benefit their businesses. SAP's new products approach the challenge from three aspects: machines, data origination and virtual modeling.
Get to know your coffee choice patterns
SAP Connected Goods is an HCP-based application that's designed to help businesses manage and get value out of mass market devices and machines, such as vending machines, coolers and power tools, according to Elvira Wallis, SAP's senior vice president of IoT smart-connected business.
"The reason why we came to this is that some of these goods are really interesting for our customers, because you can extend the value chain whether you are a manufacturer or OEM provider, in that you can now derive information from these devices and have a lot more knowledge," Wallis said.
SAP heavily pushes its HANA Cloud Platform to users as part of the S/4HANA roadmap.
Data from the devices can help ensure the machines are stocked adequately and the goods are stored properly. It can also help identify relevant device trends and use patterns, and then set up rule-based alerts to replenish stock. SAP Connected Goods also includes built-in integration with SAP BusinessObjects Cloud, which enables the creation of customized dashboards for analytics.
"For example, take industrial coffee machines that you put in offices or stores. You can measure now the type of coffee is consumed -- black, decaf [or a] fancy milk drink like latte -- and you can know what kind of coffee people consume from every machine, and then correlate that with location data," Wallis said. "From there, you can figure out if there are patterns, like if people in rural areas consume different than urban areas or in different states. This allows you to spend your marketing money better in areas where you know what they drink. You don't have to spend on fancy milk drinks if they, by and large, drink black coffee."
Data living on the edge
Meanwhile, SAP Dynamic Edge Processing is designed to help deal with the data flowing into organizations from billions of IoT-connected devices and sensors. This enormous and growing volume of data can overwhelm the bandwidth needed to send the data to core processing centers, so the goal of SAP Dynamic Edge Processing is to process more data at the edge of the enterprise network. This can reduce transmission costs while, at the same time, preserving the real-time insights derived from the data.
"A lot of our customers start small, with maybe a few hundred or thousand devices. But, eventually, it becomes a big data problem and then you need to filter data at the edge," Wallis said. "This means you don't have to transmit the data; you save transmission costs and storage costs. So, it's basically targeting the notion of how do we handle large volumes of data and detect patterns at the edge where the data occurs."
SAP Dynamic Edge Processing integrates business context information with IoT decision-making at the edge and filters critical data that should be processed by the core IT system from other data that can be handled locally where it originates. To do this, it combines algorithms, syncing architecture and database technologies with features for device connectivity and onboarding, offline operation, data reduction, local application platforms, immediate response and local storage.
Model behavior for IoT
Finally, SAP IoT Application Enablement provides a way to consume and manage IoT big data without having to manage the underlying data storage. To do this, it combines sensor data, business data and contextual data to create an enhanced virtual representation of the product, service or process. Combining an accurate virtual model of how a thing operates with real-time data collected by sensors allows detailed and realistic digital representations of a physical asset over its lifetime, according to SAP.
"If there's reference implementation of how to handle coolers or coffee makers, there will be customers who say, 'My model of coffee maker is different, so I want the following attributes added.' So, underneath all these models is something called a thing model, and the idea is that you can very quickly whip up the next thing," Wallis said. "If you have a defined coffee machine, you could use the thing modeler to come up with a model or schema for the coffee machine. By using IoT Application Enablement, you have this abstraction layer underneath where you can adapt or extend the things that you model very quickly."
SAP IoT Application Enablement, which is based in SAP HCP, includes microservices that allow other systems to retrieve the enriched digital twin data, including business semantics, hierarchy data, product master data and customer contact documentation.
For developing IoT applications, SAP IoT Application Enablement includes a software developers' kit and development environment with code-generating templates designed to allow developers to build IoT applications faster by focusing on design, rather than coding. It also includes an API to populate a sophisticated semantic data model with sensor and business data. Built-in features also minimize the need to define data management by calculating aggregates, splitting data into warm and cold storage and applying data retention policies.
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