Business Models, IIoT, Interviews

Oliver Edinger, SAP: The future of IoT beyond its over-hype


Oliver Edinger
Vice President, Head of IoT/I4.0 Germany, SAP

Oliver Edinger serves as Head of Industrie 4.0 and Internet of Things at SAP Deutschland SE & Co. KG. Oliver and his team are responsible to engage with customers on their IoT and Industry 4.0 journey and bundle all the SAP expertise required to help customers succeed on their mission. His team of cross functional experts designs custom fit IoT/Industry 4.0 solutions — regardless whether SAP’s platform technology, applications or consulting expertise is required also incorporating the special domain expertise of external partners from the industry automation space, for example. In the interview Oliver discussed the impact of the industrial internet and its technologies with the Industry of Things World team.

Where do you see the IoT and its technologies creating the most impact?

The answer is twofold. The Industrial Internet of Things(IoT)/Industrie 4.0 will bring huge benefits to manufacturing companies in the areas of variability (e.g. lot size 1), product quality (e.g. correlation analysis to reduce scrap) and productivity (e.g. predictive maintenance to reduce unplanned downtime). From a product revenue perspective, the Internet of Things will be a key enabler to allow for new (digital) services (e.g. Energy Efficiency Management) and solutions (bundle of products and services). It will also be the foundation for any kind of company (not just manufacturing companies) to venture into new markets and/or augment existing business models (e.g. servicification).

How do you see the next 5 years evolving?

The public attention given to the topic will decrease (compared to today’s over-hype). But we will see a lot more IoT use cases with well-established companies that have leveraged IoT to broaden their addressable market and/or benefit from improved manufacturing and logistics processes. The general direction taken by these companies will depend on their overall strategy. Innovation leaders are more likely to focus on IoT for new/improved (digital) products and services. Cost and quality driven companies are more likely to start with projects in the area of the Industrial Internet of Things/Industrie 4.0. In addition there will be an increasing number of start-ups providing products and/or services based on IoT Technology. The number of IT and Operational Technology (OT) vendors entering the (Industrial) IoT market will keep increasing, before a significant consolidation will take place. We will see a significant amount of new partnerships between IT and OT vendors.

What are the most critical pieces missing today that will be needed to support this sort of computational ubiquity / connected world?

It is important that IoT applications are no longer created stand alone in silos. The entire “intelligent asset” to “smart data” to “business process” loop must be addressed. It is of little help to a company to know with 80% probability that a machine will break down within the next 48 hours. In a digital world, this information must seamlessly trigger a service order, a spare part reservation and a cost-based recommendation whether the predicted malfunctioning part should be repaired or replaced, for example. And if a skilled in-house service technician is not available, you want the system to automatically assign the case to a pre-qualified temp labour that is managed by outside agencies. IoT needs to be part of the overall digital process chain of a company – including customers and suppliers.

Will the IoT enable new business models or new business applications?

There is no either or here. IoT will certainly enable new business models which require specific applications in order to come to life. But in many cases — especially in the Industrial Internet of Things/Industrie 4.0 – business models might stay untouched, whereas huge benefits are created simply by providing a new class of applications that leverage data generated by the IT and OT layer of a company, its suppliers and its customers.

How are you at SAP implementing/taking advantage of IoT?

As a software vendor, we are taking advantage of the revenue potentials IoT has to offer by providing a big data capable in-memory IoT platform – cloud and on premise. It allows companies from any industry to develop highly specific, game changing applications that not only collect and visualize data from smart devices but also seamlessly integrate the (analytic) results with business processes. To reduce time to benefit, SAP also provides ready-made (Industrial) Internet of Things applications, like SAP Connected Manufacturing, SAP Predictive Maintenance and Service, SAP Connected Logistics and SAP Vehicle Insights, just to name a few. In addition to our activities as a software vendor, we are currently pursuing SAP-internal IoT evaluations in the areas of fleet management and predictive maintenance, for example.

What expectations do you have regarding the Industry of Things World? Which outcomes and benefits do you expect to gain from the exchange with the participants?

In order for organizations to best benefit from IoT software (platform and applications) it is necessary that leading IT and OT vendors collaborate more intensively than in the past. At SAP, we have started doing so by forging partnerships with companies such as SIEMENS, Deutsche Telekom, Ericsson, Jasper, ifm electronic, Intel, OSIsoft and others. I hope that SAP can leverage the Industry of Things World 2015 to get in contact with more market leading OT players to discuss areas of co-operation. In addition we are eager to understand from end-user companies how they want to leverage the (Industrial) IoT and how SAP can best support them in their endeavours.

Thanks Oliver Edinger for sharing your insights!

Interview Partners: Oliver Edinger and Elise Orhan