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SAP executives see internet of things as flesh on digital skeleton

SAP’s senior management are putting the internet of things at the heart of the enterprise software supplier’s digital transformation offer

SAP executives say the internet of things will give fresh impetus to their digital transformation story for customers in 2016.

Quentin Clark, the enterprise software supplier’s chief business officer, spoke to Computer Weekly on a visit to London, about what he sees as the significance of the internet of things.

“IoT is part of the corpus of information you will need to drive real-time analytics,” he says, giving an example of a fast-food outlet at a sports stadium getting sensor data that tells the business that spectators are about to flood by, thirsty for soft drinks and hungry for hot dogs.

“It is an important channel that is incredibly automatable and scalable.”

Does it also offer a way back in for a CIO under threat of being marginalised on the digital strategy of their company?

“Yes. It is one thing for a head of marketing to adopt a market engagement tool or a head of HR to adopt [SAP’s] SuccessFactors. It is another for the head of a product line to say, I really need this analytical technology to do a better job of my supply chain optimisation. That means a much deeper implementation project. So that is a way for CIOs to bring in another generation of value back to the business.”

Internet of things a digitisation catalyst

Clark’s immediate boss, CEO Bill McDermott, made a similar observation in a briefing at the supplier’s Select conference in Barcelona in November 2015.

“We’ve gone from being an applications to a platform to a cloud to a network company, but it has all come together with the internet of things,” McDermott said. “We now see the idea of moving a company – by which I mean an SAP customer – that has been dealing with data and reports to one that not only responds but predicts. And it is in the predictions and correlations that are now possible with the internet of things that new business models are being invented.

“This has made us more relevant, with the design thinking and the innovation that we do with customers. It makes a nice switch from a pure engineering approach of having a product in search of a problem to a framework of an internet of things that we can bring to them, and reimagine business with them.”

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In McDermott’s view, a consumer-to-business lens is the way to view IoT and business digitisation. “For example, banks need to realise that customers will want to engage with them how they want, and on a mobile device – which is part of the IoT. Personally, I’ve not done any banking on anything other than a mobile device for years.”

McDermott gave an example of an SAP customer which is looking at eliminating its call centre operation and replacing it with the customer self-serving on a mobile device. They did an analysis of customers’ experiences of the call centre and found them to be overwhelmingly negative, even when the right answer was delivered, he said.

Hybris and Hana

In relation to next-generation customer engagement, based, at least in part, on using internet-connected objects, McDermott said SAP’s competitive advantage lies in a combination of the e-commerce and omnichannel technology that came with the 2013 Hybris acquisition and S/4 Hana, SAP’s core ERP system built on and for its high-speed in-memory database platform Hana.

“You can make any promise you want on the front end of the sales curve,” McDermott said. “But on the back end you still have to manage the effective billing and administration of the relationship. And the logistics, the delivery, the supply chain. It is that combination that makes it happen. It’s probably 70% SAP and 30% Hybris. But S/4 Hana is the biggest innovation we have ever made. It can be so much more now than the back-office system of record.”  

McDermott recruited Clark from Microsoft, where he was the principal driver of SQL Server, in November 2014, as chief technology officer. Towards the end of 2015, he put him in charge of running corporate strategy, M&A and strategic partnerships.

“There are occasions where you think you know how the business technology world works,” Clark says. “Then you open a door and realise there is a whole new world out there. We now have a crucible for a whole new generation of enterprise software that changes how business fundamentally works. Things are going to be informed and automated as never before in human history, and we are just at the beginning of that.”

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