There seems to be a belief that the value lies in the data, the information as to what has changed or is happening, and that may be so, but surely the ‘sense’ part will only provide business value if coupled with a ‘respond’? It’s likely that this requires the IoT data to assessed, and then used as an input to start an existing internal, or Back Office, enterprise application set of processes.
The whole point of IoT is to create new, additional value to a business, and its operations, a point made in the previous blog entitled ‘Internet of Things; Enterprise Value = Integration, Automation and Scale’. The opening observation I this blog stated “Standalone IOT reporting Services have the same challenge as standalone online Web based ecommerce systems a few years back. Great for pilots and proof of concepts, but sooner, or later a victim of their own success and requiring proper integration into existing order systems”.
This blog then drew attention to the Salesforce approach to IoT integration as a ‘Front Office’ activity, best delivered within the integrated Front Office ‘services’ environment using Salesforce products and methods to ensure optimum Business alignment.
It’s an approach that makes perfect sense, certainly for a Service based industry sector where their own product will probably also be a ‘Service’. However that’s not right for every business as SAP were quick to point out in their pre Christmas briefing on the SAP approach with its focuses on a different set of industry sectors and business models.
SAP point out that there are a lot of Industry sectors with Business models that require the ‘respond’ to a fulfillment provided by a complex set of internal Enterprise processes; think of Manufacturing, Mining, or even compliance centric activities such as Insurance.
Again it’s an approach that makes perfect sense providing, as indeed does the Salesforce approach, because each offers something very different to cater for a very different business model. What this does show is just how careful an assessment is required of exactly what your business model is, and does requires in terms of functions, before considering the technology capabilities required.
This is most decidedly not making the case for everything to continue ‘as is’ with Business requirement management by IT in the familiar manner. But it is making the case for a more thoughtful approach to where and how an Enterprise IoT strategy will add value to the business model.
The topic of rethinking enterprise wide business functions in a genuine Digital Business model is a separate issue dealt with in the blog series; ‘Understanding your Digital Business Model by its Business Functional Requirements for Operational Technology’. In this blog the focus remains on out lining the SAP approach to IOT integration with Enterprise Applications, and of course ERP.
The opening statement reflected on the value of data coming from IoT sensing, and that for SAP means HANA, but it means more than the role of HANA as the classic provider of Big Data Business Intelligence.
In the mass of data that IoT sensors will pour into the enterprise lies a ‘real time’ challenge to process and sort out the ‘wheat from the chaff’, i.e. the valuable grain from the mass of straw.
SAP say that this is exactly what HANA is designed to excel in providing with its exceptional processing rates. In the IoT and Digital Business front office environment the goal for HANA is deliver ‘Smart Data’ meaning small highly valuable easily understood ‘triggers’ to people, or processes. The SAP integration model makes use of these smart data ‘triggers’ to both assess what applications and processes should be launched, as well as providing the data as the input to start the process. Now the existing internal ERP, or other applications can provide the enterprise ‘respond’ capabilities from the existing optimized capabilities.
SAP has some excellent case studies to show how their approach works when the requirement requires fulfillment from the enterprise ERP. Two excellent examples are; Real time operations management through integrating IoT to Back Office ERP integration at Hamburg Port Authority, or HPA, and transformation of manufacturing at Harley Davidson.
HPA use IoT to sense more than 400 critical points in their port operations, which are connected to their SAP Connected Logistics enterprise ERP package. The resulting understanding of exactly what is happening ‘on the ground’ around the port has resulted in significant gains in the through put time taken to handle containers passing through the port. The result is the ability to handle more revenue-producing container through put with the same port faculties.
But the real case study that should make any senior executive realize how a well-integrated Digital Business is transformed in both its competitive capability, as well as its output, is Harley Davidson. An iconic brand that is driven by purchasers wanting their customized dream motor bike.
Harley Davidson claims to be manufacturing 25% more Motorbikes with delivery times for custom builds down from 21 days to 6 hours by integrating IoT sensing of critical points with their SAP Connected Manufacturing application.
These SAP case studies, like those of Salesforce, illustrate the huge importance that IoT to making Digital Business a reality in terms of creating a genuinely new competitive landscape. They show IoT being applied in different industry sectors, in different businesses, and in different ways, but what they all have in common is a deep understanding of the role IoT with the other new technologies can play to transform competitive, or operational, capabilities.
Today there are a selection of Case studies available that reveal much about the need to fully understand what is meant by the Digital Business transformation, and its more, much more, than just adding a set of new offerings either ‘bolted on’ to the current ‘Back Office’ IT systems, or even as a standalone ‘digital’ business operation.