Do Not Allow SAP to Dictate IoT to You

What This Article Covers

  • SAP’s IoT Master Plan
  • What is SAP’s Control Real Over IoT Data
  • How to Interpret SAP

Introduction

If I offer to come over and bake you a cake for money, you should not accept my offer. Why? Becuase I have never baked a cake in my life. Now I may have some of the ingredients in my home. But those ingredients can be found anywhere. I have not brought anything special to the table that you can’t get anywhere else.

SAP will continue to talk up IoT, they will be reinforced by their complaint partner network, however, SAP is starting with really nothing for Leonardo. I am quite confident that if a customer were to purchase Leonardo right now, it would end up being a development project.

One thing that SAP cannot answer is why an ERP system like SAP ECC or S/4HANA, which as been designed to decrement inventory, post goods issue, etc, is an efficient platform for aggregating IoT data?

What is SAP’s Real Control Over IoT Master Plan

SAP is not currently a player in IoT. In fact, IoT is a bit of a future-oriented technology or set of technologies at this point. Yet,  SAP has big plans for IoT, and they talk about it incessantly, even when the topic being discussed has nothing to do with IoT as the following quotation from their Q1 2017 analyst call demonstrates.

Yes, I think people forget that the S/4HANA ERP, there is nothing out like it in the market at all. When you look what it does and how it changes businesses and how it connects digital supply chains, it is by far the next generation ERP and everyone else is far way behind. And then when you connect everything, the machine learning and IoT and analytics space…

SAP constantly does this, even though SAP does not have IoT business. So they don’t have a real IoT offering and don’t make money from IoT but they continually talk about IoT. Why. In my previous article titled Why SAP Leonardo Seems So Fake, I stated the following:

Now SAP has been successful in the past when it brought little to the table, but it needed to have the ERP system in place to do so. In those cases, ERP did have the data that the connecting system required. But the issue is that SAP’s ERP systems only has a small subset of the “connected” device data in ERP. SAP’s best move would be to offer free services to migrate this data to ERP (not a good move in my estimation, but I am speaking here from what is good for SAP, not what is good for the customer) and then sell their customers Leonardo using the same logic they have always used to sell software that is not competitive through its inherent capabilities using the tried and true integration argument.

Therefore, SAP needs to get companies placing its data into SAP’s ERP system, so that then SAP can apply the integration argument to divert customers away from better providers in IoT and machine learning. This is not actually what ERP was designed for, and it would not have any advantage over creating a separate hub for this type of IoT information. But SAP still might be able to convince companies to do this, and for those companies, SAP would have a substantial advantage in then selling them something like Leonardo. This is in fact, likely why Leonardo has been so pre-announced.

And this gets into what is SAP’s current control over IoT data.

SAP’s Control Over IoT Data?

This is a logistics graphic. It covers all the modes, ports, rail yards, it even includes drones (in the upper right-hand corner). The title of this slide is SAP Leonardo Connected Fleet. However, what is the major problem with this slide with regards to SAP? Well for one, SAP has almost none of the transportation market in software. SAP makes a product called SAP TM, but it is very lightly installed. I have analyzed TM versus competitors offering in this article SAP TM Verus MercuryGate. SAP makes another product for warehousing called EWM which is again very lightly installed. SAP ERP has a mini-module called WM, which is a highly simplified WMS, but it is really a glorified inventory management module. Therefore SAP’s installed base when it comes to logistics is very low.

Therefore, SAP is proposing something in this graphic that does not exist. SAP provides and maintains none of the data for what is in this graphic.

In order to SAP to pull off its integration argument, that is customers should accept lower capability SAP applications in any area, SAP needs to already control the data to be accessed.

Here you can see SAP is proposing the ability to track all manner of vehicles. 

How is SAP going to get information from so many dimensions? We can see Forklift Analytics, Ride Sharing. Where is all of this happening…anywhere?

Here is another thing that does not exist and is not used.

Where is SAP Vehicle Insights being used? None of my clients use this.  

Conclusion

SAP’s presentation of IoT does not comport with reality. SAP is faking what it has in IoT in order to lull companies into thinking that SAP has more to offer with respect to IoT than they actually do.

References

https://seekingalpha.com/article/4065023-saps-sap-ceo-bill-mcdermott-q1-2017-results-earnings-call-transcript

https://www.sap.com/products/leonardo.html#

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