- Leonardo is an IoT/Big Data “solution” that has been marketed far too early by SAP.
- We evaluate the exaggerated claims of Leonardo and how SAP has attempted to commingle SAP with IoT in the minds of customers.
Introduction: The Real Story on Leonardo
Leonardo has so much hype around it that it requires a calm and unbiased analysis of what it is and the probability that SAP’s statements on Leonardo are true. You will learn both SAP’s projections on Leonardo and our analysis of this by an entity with no association or financial bias.
What is SAP Leonardo?
SAP announced something called Leonardo at SAPPHIRE 2017. SAP Leonardo according to SAP looks something like this.
These are a collection of things that SAP has been talking about for some time. One of them, Design Thinking, is not something in SAP’s software per se but is an approach that SAP has rolled out to everything from product development to sales.
The Logical Problems with SAP Leonardo
SAP demonstrates a problem when it describes, SAP Leonardo that has plagued it for some time. And that problem is an overreliance upon buzzwords and concepts that have yet to meet with much commercial success. In an article by Sanjeev Singh, I found the following terms used.
- …kick off your digital innovation journey
- …an innovative portfolio of IoT (internet of things) solutions to help you extend your digital core (SAP S/4 HANA) with adaptive (machi.ne learning) applications, big data applications and connectivity to imagine and implement new business processes, new business models and most importantly, new possibilities in human life.
When you start using language in this way, it becomes obvious that there is a lot of salesmanships and marketing puffery involved.
- Why would SAP use the term a “digital innovation journey?” Is the implementing company innovating or are they engaging in systems implementation?
- Does SAP actually have an innovative portfolio of IoT? Does SAP presently actually receive revenue of any substance from IoT?
- Why is the term digital core being used to replace the term ERP? What was wrong with the term ERP?
- Does SAP receive revenue of any substance from machine learning? Is SAP known as a machine learning company?
- Why is the term “new possibilities in human life” used? What is that adding to one’s understanding of SAP Leonardo?
The PLAT.ONE Acquisition
SAP acquired the very small PLAT.ONE software vendor. PLAT.ONE is doing what SAP would like to do (although on a very small scale), so SAP purchased them. However, PLAT.ONE had nothing to do with SAP before its acquisition. In fact, for some reason Plat.One did not connect to HANA.
“PLAT.ONE is built using Hadoop and HBase to store unstructured and high-volume data streams. It provides a rich database abstraction layer that integrates with MySQL, MS SQL Server, Oracle and other SQL and No-SQL storage.”
I assume that this web page will be updated to point out that PLAT.ONE will connect to HANA, and the other databases will be de-emphasized. Most likely SAP marketing is already at work changing the web page to say that PLAT.ONE works with SAP. However, PLAT.ONE did not need or connect to an SAP HANA database. And one should also notice that there is nothing here talking about PLAT.ONE connecting to any ERP system, for instance, S/4HANA. That is because IoT does not have anything to do with ERP systems. But SAP will need to superimposed S/4HANA into the mix so that the IoT data is in S/4HANA so the connection argument can be made.
As a researcher who is primarily dedicated to studying SAP, I find it unlikely that SAP will be able to do much with PLAT.ONE. SAP did not integrate BusinessObjects into BW as promised. It did not leverage SuccessFactors except for learning about Cloud/SaaS from them. It is not leveraging Ariba. It did not leverage several acquisitions in the CAD/CAM space and PLM space to do anything with its PLM solution. It did little with the Sybase acquisition. So, therefore, it seems more likely than not that SAP will not do much with PLAT.ONE.
What The Usual Suspects Say About Leonardo
The usual suspects of SAP consultants publishing material, Computer Weekly, Diginomica serving as repeating engines for SAP’s press packets present a positive viewpoint on Leonardo. None of these entities questioned anything that SAP wrote, and performed their duty to SAP admirably. They once again helped to create the echo chamber that SAP desires. SAPPHIRE 2017 is still pretty recent, so what will come next is a series of pro-Leonardo articles by consulting companies that see Leonardo as a way selling more consulting business. In one that is already published, all of SAP’s projections were accepted as true, and then some case studies were mentioned that intend to illustrate that companies are already using Leonardo to improve their business.
Exaggerated Claims on SAP Leonardo
Something like SAP Leonardo requires exaggerated claims. According to the SAP IoT Overview presentation, Harley Davidson is already using SAP’s IoT.
“Reduced production lead time for customized motorbikes from 21 days to 6 hours.”
No explanation is given how this was done. But one is supposed to accept it uncritically.
SAP has a video on The Port of Hamburg which provides very little information on what was done to the customer.
The following video is on digital farming is far better, as in at least some details of what was done are explained.
The problem with this video is that it covers a lot of different areas, IoT being just one.
Secondly, it seems to make the mistake of generalizing all technological advances in farming to SAP. In one scene the farmer is using a non-SAP system to measure the composition of feed. In another there is a digital readout on a combine – that is being sent to a central location (I assume). In another, there is a drone that is selectively dropping insect predators onto parts of a field where it has determined that there are pests.
How much of this is SAP software? Is SAP explaining what their software does in this video, or providing a documentary into new information technologies used in farming? SAP’s logo shows up at the end of the video, but it unclear why as nothing that was shown seems to have anything to do with SAP.
This is the IoT video of an Italian train operator named Trenitalia. The idea is first presented by the CIO of Trenitalia that its IoT strategy in improving predictive maintenance, by recording train data, is dependent upon HANA. However, according to this CIO, the amount of data collected on an annual basis will exceed 700 terabytes. If that is true, this data cannot be kept in HANA.
HANA for Big Data? or Big $$$$ Data?
HANA is the most expensive database you can purchase, and it is priced by GB (this is covered in the article The Secret to Not Talking About the Cost of HANA). And it also has the highest TCO due to rather obvious factors (immaturity, labor costs, cross-component requirements, etc.). Therefore for Trenitalia, the maintenance data may be housed in HANA for only the shortest of times, and then very quickly be migrated to a database with unlimited storage, or storage who’s price is not related to the size of the data. This will be challenging as, according to Trenitalia, roughly two terabytes of data per day will be collected. Because of this volume, I see a difficulty how HANA fits into to Trenitalia’s plans.
Later in this same video, the Head of Technical Division states that the system is processed by HANA. That is not technically accurate. It is stored in HANA. HANA is a database, so it is not processed as in analyzed by HANA.
Ahhh….the White Unicorn of Machine Learning!
If we look at machine learning, which is the new rage among buzzwords, how much machine learning is there currently implemented in companies. I ask because I don’t see any.
Now it is true that larger data sets and more powerful processors along with specialized logic provide more opportunities for machine learning. But machine learning is connected to AI, and AI goes back decades. And how many applications have we seen of AI? The most AI thing I have been exposed to is my Google Home unit. However, it seems like AI, but it has a rather limited number of pathways that it follows. But Google is far better positioned than SAP to bring out machine learning.
Then the description continues:
“SAP HANA Cloud Platform is the key strategic platform as a service infrastructure and provides framework for SAP Leonardo Innovation System. The figure below shows the key components of Leonardo – SAP Leonardo Foundation, SAP Leonardo Bridge and SAP Leonardo for Edge computing and how they tie together in SAP Cloud Platform or SAP HANA Cloud Platform framework.”
If that is true, then SAP Leonardo is not off to a good start. The SAP HANA Cloud Platform, which is now just called the SAP Cloud Platform as it never had anything to do with HANA, as is explained in the article Was The HANA Cloud Platform Designed for HANA Washing?
SAP loves to distribute Leonardo through their presentations because it allows SAP to promote virtually all of SAP’s solutions, as Leonardo is presented as a universal glue.
Leonardo is a toolkit that is used by very few SAP customers, and most of what SAP says about Leonardo is what SAP would like Leonardo to be, not what it is. SAP states that the SAP Cloud Platform will help companies leverage Leonardo, but there is no truth to this. SAP’s the website says that Leonardo is a significant benefit of moving to the cloud.
The Reality of SAP’s Cloud Platform
The SAP Cloud Platform has not received uptake very much, and it is a PaaS or platform as a service. There is a question as to whether it makes sense to use SAP as a PaaS as you can receive a more competent offering from AWS, Azure or even Google. But if SAP Leonardo ends up being the value-add that SAP says it will be, then there is no reason that it can’t be hosted at one of these PaaS vendors.
“SAP Leonardo Foundation provides Leonardo business services that enable you to build IoT applications through reusable application services and applying predictive algorithms, and Leonardo technical services to process high velocity data with ability to stream analytics and run predictive scenarios. The Leonardo business services are nothing but reusable microservices framework that allow you to rapidly build your IoT model and connect it with business contexts from back-end systems and by also leveraging configuration tools. Leonardo technical services leverages SAP Cloud Platform that provides end-to-end microservices for machine learning, analytics, big data connector, security, user management, and back-end integration APIs.”
So this paragraph has SAP marketing’s hands all over it. It is completely unrealistic and filled with buzzwords. BTW, this paragraph continued, but it simply progresses along the same line of describing SAP Leonardo as some infinitely complex Rube Goldberg device.
Leonardo Foundation as Development Environment
If I can paraphrase, SAP Leonardo Foundation is a development environment with a set of components where you can build IoT applications using analytics. Now we will get to the quotations about what SAP Leonardo “connects.” At SAPPHIRE 2017 Hasso Plattner called SAP Leonardo “a set of tools to build new-style applications.” Therefore, this means that SAP Leonardo is really a naming for a template on things that already existed before SAP Leonardo being named. SAP has HANA; they have Lumira, they now have PLAT.ONE. If you buy these different components from SAP, you can build an IoT system. And SAP has some ideas about how you should configure these components to capture and analyze IoT data.
What SAP Leonardo “Connects”
“Connected Products enable end-to-end visibility of product life-cycle operations and provide ability to connect, monitor and control large number of customer facing products, manage, control, and respond to changing conditions with a digital operations center for response.
Connected Assets allow us to track, monitor, analyze and maintain all fixed assets across the network. With connected production systems, assets, manufacturing and maintenance business processes, we can reduce operational and maintenance costs and increase the up time of assets.
Connected Fleet enables businesses and public sector organizations (owning fleet) to collect live telemetry and sensor data and integrate it with core business processes to improve services and safety for operators, improve visibility to logistics, and finally, provide a better service to their customers.
Connected Infrastructure delivers new forms of digital operational intelligence to transform physical-infrastructure systems. Leveraging real-time building insights, we can optimize energy consumption, maintain facilities and equipment and ensure improved customer satisfaction. We can manage end-to-end construction projects and optimize energy utilization by integrating processes and information.
Connected Markets enable innovation, production, deployment and business formation of local relevance at the right moment in time to meet challenges of tomorrow and transform it into opportunities for today. In this market we can interact in an all knowing digital or physical market place to provide an excellent all around personal experience.
Connected People will improve lives, work and health by connecting people and communities and providing better lifestyle experiences and opportunities for organizations to evolve into new business models. It can help workers stay safe, build a connected health network, and make home life more comfortable, and secure.”
So basically, SAP Leonardo, according to SAP, will allow one to connect various items and then analyze them. But actually, that can’t be accurate.
Findings or Repeating What You Were Told by SAP?
SAP Leonardo does not provide for the connections because those connections are enabled through the actual data collective devices. So SAP Leonardo allows the analysis of connected devices, and I consider that an important distinction.
At the bottom of the article, this is stated by the author.
“Information and views expressed in this article are based on my findings and I do not claim its accuracy and validity in any way.”
This can’t be right. Something is very wrong as an author when you write something like this. It is an abdication of your responsibility to fact check for the reader.
First, this article is not the author’s “findings.” This article is a restating of what SAP stated. You cannot use the term “findings” to describing copying something. The author of this article has what are quotations from SAP, but has not listed them as quotations in his article. This is a problem for many SAP consulting companies that are using SAP’s quotations, but without providing the source. These are the statements of SAP, and one may not claim its accuracy or validity. If one calls something findings, that means that you analyzed the information.
But at least the author admits what they do not know. Most people that write on SAP restate SAP’s statements and then never cover the fact that they don’t know if any of it is true. SAP states it, and in their mind at least, it must be true.
Criteria for Predicting the Success of an SAP Initiative
There are a couple of criteria I look for to determine if a new SAP initiative will be successful.
- Criteria 1: Previous Experience: Is what is being introduced something SAP has been successful with before or is it related to something SAP has been successful with before?
- Criteria 2: SAP’s Area Capabilities: Does SAP have capabilities over other vendors in the area aside from merely their size?
- Criteria 3: Ability to Use the Integration Argument: Can SAP use its control over the other applications a company uses to extend into this area?
- Criteria 4: A Logical Software Category for SAP?: Does the area that SAP is describing inherently make any sense? That is, does it hold together?
From that set of criteria, I then give each item a 1 to 10 rating with one being low or no and ten being high or yes. Let us see how SAP Leonardo scores on this system.
Criteria 1: Previous Experience
SAP has never been successful in anything similar to SAP Leonardo previously.
Previous Experience Score: 1
Criteria 2: SAP’s Area Capabilities
SAP has some of what SAP Leonardo describes with its analytics offerings. However, BW and Business Objects are again applications that aren’t worth porting to this solution. The best analytics SAP has is Lumira, but it apparently has all types of implementations limitations and is not seeing much uptake. That would be by choice to be part of SAP Leonardo, but SAP needs to build out its backend. However, outside of analytics, SAP does not have anything else that matches with what I see described here, aside from their acquisition of PLAT.ONE, which is an acquisition and was very small at the time it was acquired. SAP has never had anything predictive outside of forecasting. In forecasting, they have SAP DP which would not be useful to include in this overall design. The same applies to IBP which I covered in the article SAP’s IBP Open Questions and Opportunities.
So SAP is starting from scratch there. In machine learning, SAP has no prominence, and while I searched, I could not find any machine learning acquisition they had performed. In my reading, SAP has done little but issue statements that they are interested in machine learning and see it as the future.
SAP’s Area Capabilities, Score: 4
Score Reasoning (The things that SAP does have for Leonardo many other vendors have. The things that SAP needs, which are are more complicated to develop, SAP has no background in)
Criteria 3: Ability to Use the Integration Argument
SAP always has the advantage in SAP customers as it can often convince customers to use their offering as it connects to ECC or SAP’s ERP system. That allowed SAP to get into many areas where they had no background and poor quality offerings. But the issue is that are things like people and assets connected to the ERP system. Well in HR they have the records of people, but they are not connected to physical people. And SAP is moving away from HR in ERP to a stand along the solution. In vehicles, they aren’t. In other assets like factory equipment, they could be, but they aren’t. MES systems connect to the actual equipment in the factory, and MES systems are often connected to ERP. So it is a bit of a mixed bag. But this is SAP’s strongest play. They would need to get companies to see ERP as a way to connect all of their devices.
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 SAP Leonardo. This is in fact, likely why SAP Leonardo has been so pre-announced. There may be little to SAP Leonardo, buy SAP is signaling to their customers that they should be connecting devices to SAP ERP.
Ability to Use the Integration Argument Score: 4
Criteria 4: A Logical Software Category for SAP?
It is difficult to say.
Something that goes unmentioned is that companies drastically underuse the information they already collect. IoT creates haystacks of information that must be organized and analyzed. In the short to medium term, I would not see IoT as a big opportunity. If we take the example of factory equipment. Do companies benefit from knowing exactly what that equipment is doing at any time? So the milling machine is milling at a specific rate per hour, and that compares versus the specification as it is running 20% below capacity. I suppose there could be a benefit to knowing that, but there is also the question of analytical bandwidth. Developing what SAP is describing is a lot of work and will require many new areas to be developed. Some things like truck locations are already known by companies through GPS tracking.
Longer term, it is much more difficult to project as who could have imagined that you could have a computer in your pocket that you would use as a phone? And furthermore that everyone would have one? But it is difficult to see the vision of SAP Leonardo happening for some years:
A Logical Software Category for SAP Score: 2
Score reasoning (Based on the short to medium time horizon).
The average of these four scores is 1 + 4 + 4 + 2 = 11/4 = 2.75. I could correlate this to a probability, so a 27.5%, roughly of course, of SAP being successful with Leonardo.
SAP’s Neophyte IoT Status
If I offer to come over and bake you a cake for money, you should not accept my offer. Why? Well for one 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 SAP Leonardo. I am quite confident that if a customer were to purchase SAP 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. 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.
Get Customers to Commingle SAP with IoT in their Minds
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 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.
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.
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 have 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). Then they can 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.
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.
Financial Bias Disclosure
This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.
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