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SAP Leonardo enhances digital transformation projects

SAP Leonardo is a marketing term for SAP's next-gen technologies like IoT, AI and ML, and some industry observers believe it helps it sell digital transformation services.

SAP Leonardo originated as SAP's brand for IoT technology, but the company has expanded it to include a variety of next generation technologies like AI, machine learning, big data and advanced analytics delivered via SAP Cloud Platform. However, because this is such a broad range of technologies, Leonardo faces identity issues with customers.

The company is making strides to clarify what SAP Leonardo is, with events like SAP Leonardo Live, which was held this month in Frankfurt. The event introduced a few new Leonardo tools and showcased some Leonardo customer applications, according to David Jonker, SAP senior director of predictive analytics.

The entire concept of Leonardo is to deliver a "system of innovation" that integrates with SAP's traditional system of record technologies, Jonker said.

"SAP Leonardo brings a lot of our innovation technologies together and the approach we're taking is very much about how we help customers implement a system of innovation very rapidly," he said. "It's not something that takes a year or even months but can be counted in weeks, because the last thing that people want is yet another project that takes years to deliver and is kind of fuzzy."

A branding exercise that provides identity

SAP appears to be making the right moves in putting the technologies under the Leonardo name and holding events like SAP Leonardo Live, according to Massimo Pezzini, Gartner vice president and Gartner fellow, who was an attendee.

Leonardo is essentially a branding exercise for a number of technologies that SAP already had, but this should help it compete better with other vendors that want to supply applications for digital transformation projects, Pezzini said.

"This is where the marketing dimension comes in. If I ask you what are the top three or four companies that are leading and driving digital transformation projects, you would probably say Apple, Amazon, Google, or maybe Microsoft, but you don't think about SAP as a digital transformation agent," Pezzini said. "Fundamentally they have created this unified brand and are positioning it as the digital transformation platform. That's the tag line that indicates that under the Leonardo umbrella SAP has aggregated technologies which they believe can help their customers to introduce digital innovation into their business."

Industry accelerators speed application design and deployment

SAP introduced four new "industry accelerators" at SAP Leonardo Live, which are meant to allow customers to rapidly design and deploy applications with processes that are specific to their industry. The new industry accelerators are for chemicals (two industry processes), travel and transportation, and utilities. These join the first industry accelerators for the retail, consumer products, discrete manufacturing, and sports and entertainment industries that were released in May.

Pezzini explained that these industry accelerators are a more interesting aspect of Leonardo than the individual technologies.

"They're not plug-and-play solutions, but are more templates which they propose to their customers as an initial step toward this innovation," he said.

The industry accelerators are a good starting point for businesses to build the use cases for Leonardo applications, according to Stacy Crook, IDC research director of IoT. Going through the engagements with the customer helps them to determine the pain points for their particular industry and see how using the IoT technologies can help them achieve their goals.

"If you can't go to a company and be able to speak their language, if you're just talking about a technology conversation then I don't think that's going to be very effective," Crook explained. "I think this vertical industry packaging will be helpful in bringing that high-level message down to the next level where it feels more applicable to the customer."

One other notable tool SAP unveiled at SAP Leonardo Live is the SAP Leonardo IoT Bridge, a digital command center that provides real-time data to operations managers for applications like supply chain visibility.

"If you have the real-time information [coming from IoT sensors] about where your truck is now, you can marry that with information you have in an ERP system so if you find out that something is going wrong in the supply chain somewhere do you have another part in the warehouse to send out and fix that problem," Crook said.

Interest is there, better definition needed

The question of how many organizations are actually using SAP Leonardo is still open, although Pezzini noted that many SAP customers were already developing digital transformation projects with advanced technologies like IoT before SAP Leonardo was branded. Interest seems to be there, but SAP will need to do a better job of defining Leonardo.

 "Most of [the customers] that I speak with don't yet understand exactly what Leonardo is," Pezzini said. "But I'm also getting quite a few inquiries from systems integrators, service providers -- big guys and small guys -- who want to understand three things: what it is, whether it's a serious thing for SAP and is there any money to be made."

The most important thing that SAP has to focus on with Leonardo is the business outcomes that customers can achieve through IoT and the other technologies, according to Crook.

"SAP's big strategy for IoT is they are trying to tie people with things and processes, and when you think about what kind of company they are and the kind of software they have in customer environments, they're trying to bridge that connection between the information that you're getting out of the IoT device," she said. "It's a question of how you marry the real-time information that you're getting from these devices with the information that's sitting in a more traditional SAP system [like an ERP] or one of the cloud platforms that they have acquired [like Ariba, Fieldglass and Concur]."

System of record base may give SAP advantage

The challenge that SAP faces with selling Leonardo, Crook said, is in taking something that's already complex and abstracting it to make it relevant to the various industries. SAP is not alone in this, as competitors like IBM face similar challenges in trying to explain their digital transformation technologies. Other vendors have the same technologies -- IoT, analytics, machine learning, AI -- but the advantage SAP may have is in its deep base of systems of record data that can be integrated into the new technologies.

"If you're just an average person checking the boxes, you can also look at IBM, Microsoft, AWS and you have to figure out what makes this company different from the rest," Crook said. "SAP has deep industry knowledge and a lot of information that will be useful in these IoT workflows, so they have to keep driving that message home."

Positioning for the emerging digital transformation market

Digital transformation is still in the very early stages for most companies, but SAP Leonardo is being positioned well to take advantage of the opportunities, according to Pezzini.

"I don't think that SAP expects to make millions or billions of dollars off of Leonardo this year, but I believe their priority is to establish the brand, build credibility by showing case studies, and position SAP as a player in the digital transformation and innovation market," he said. "When you ask the question six months from now who are the top vendors leading the digital transformation, they want you to respond Apple, Accenture, Google, Amazon and SAP."

Next Steps

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