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SAP Leonardo makes progress with new branding strategy

Leonardo initially suffered from high expectations, but SAP is unearthing opportunities in new industries to improve its branding strategy and show there are practical applications.

Originally released as an IoT platform, SAP Leonardo ultimately relaunched as a digital innovation system built on the SAP Cloud Platform that includes the following emerging technologies: AI, machine learning, analytics, blockchain and IoT.

"[Leonardo] is about taking a business problem, which is specific to one customer, find the elements of that problem which are common across the industry, then defining the elements of a methodology, the technologies used to solve that problem and package those up and make them available as an accelerator for the next customers," according to SAP.

But how well is SAP Leonardo living up to its marketing and technology strategies?

"For the last year, I've interviewed literally close to a 100 customers -- people who are continuing to do SAP ECC, people who are implementing S/4HANA, [and] people who are implementing SAP's cloud properties like Ariba," said Vinnie Mirchandani, CEO of Deal Architect. "This is a very different SAP than it was five years ago. And I would say, from a branding perspective, it's still early because it's tough to get customer attention outside their silos."

Similar to its competitors, SAP launched branding programs around innovative technologies, particularly AI, machine learning and IoT, with the hopes that they would generate a huge new revenue stream and drive digital transformation across the rest of its portfolio, according to Joshua Greenbaum, principal at Enterprise Applications Consulting.

"So these were the dreams, whether it's Einstein and Salesforce, Leonardo and SAP, [or] Watson and IBM. You have all these brands," he said. "And for the most part, they failed."

These failures are a result of the innovations that are being pushed and that are well-established from a technical standpoint, but that are still very much nascent from a business process standpoint, Greenbaum said. The ability to translate these new, leading-edge technologies to actual business value, particularly at an enterprise level, has proven difficult.

"I think most of the companies that have tried to do this have found that they are struggling to show the kind of results they thought they were going to get," he said. "And Leonardo is no exception."

SAP Leonardo, like its competitors, initially suffered from an excess of expectations and a lack of real understanding of how to create a business case for widespread adoption, according to Greenbaum.

SAP Leonardo, like its competitors, initially suffered from an excess of expectations and a lack of real understanding of how to create a business case for widespread adoption.

Now, SAP is pulling back from this idea of a separate revenue stream and focusing on Leonardo as an embedded function within the standard SAP offerings. In other words, not selling AI, machine learning and IoT as a means to an end by themselves, but instead looking at how they can improve business processes, Greenbaum said.

"The idea is that the best way to approach Leonardo is to make it something that helps achieve the core functions that SAP has always held, but to do it better, faster, cheaper [and] more effectively," he said. "I think that is the right approach -- to show how these can be incrementally effective and not revolutionary."

The fact that the SAP Cloud Platform (SCP) is the foundation of Leonardo is problematic, however, because the clouds that are successful are more open to developers and have many followers, said Shaun Snapp, an SAP researcher at Brightwork Research & Analysis.

So why would companies use SCP as a development platform for Leonardo? For dyed-in-the-wool SAP shops, it's basically SAP ride or die, Snapp said.

"But if you were to go through the positives and negatives, including the pricing, why would you use [SCP], because you're being restricted very heavily in terms of what you can do in the SAP cloud," he said. "If I wanted to develop enterprise apps, I'm going to choose development tools that are very widely used that have a huge number of people behind them and are being improved."

Therefore, using SCP's architecture as a pillar of SAP is not going to help market Leonardo.

"It's sort of like thanks for nothing," Snapp said.

SAP Leonardo gets enhanced strategy

SAP is fighting to get back in the game by introducing Leonardo to new industries and by selling to customers other than the traditional ERP customers, Mirchandani said.

"These are new customers and new process areas and new industries that SAP traditionally hasn't sold into," Mirchandani said. "In that sense, it's almost a new branding for SAP, and they're getting a lot of sports teams, they're getting IoT manufacturing plants, industrial asset manufacturers and so on, that they would not have necessarily sold to three, four or five years ago."

Mirchandani said he's pleasantly surprised at how SAP unearthed new opportunities and is working with more customers to deliver the results they want. Nevertheless, people are still cynical.

"If you talk to a lot of people, especially analysts, they'll say, 'Come on, SAP is so far behind when it comes to IoT. GE, Siemens in the industrial space, or Microsoft Azure are so far ahead,'" he said. "But I think SAP is making a run for it."

SAP is currently embedding some of Leonardo's technology into the parts of its products, including SuccessFactors and Ariba, where users need to make decisions that can be enhanced using machine learning technology, according to Greenbaum.

Some customers are developing proofs of concept to demonstrate how SAP Leonardo technologies are used to enhance certain business processes, such as using blockchain to improve the supply chain, he said.

"I think the technology is ready for prime time, but it's just that the customers aren't ready for prime time yet," Greenbaum said. "If SAP wants Leonardo to be successful, they're going to have to approach this in a comprehensive way, and that's not just showing some really cool demos."

SAP will need to discuss the data quality and change management problems customers are going to face, as well as be honest with the market about how difficult this is going to be, he said.

This was last published in January 2019

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