SAP Leonardo positioned as digital transformation catalyst

SAP’s leadership explains how it has devised Leonardo as a cloud-based product plus services concept for moving organisations beyond mode 1 IT to mode 2, drawing on AI, ML, IoT and blockchain

SAP used its 2017 Sapphire conference to advance a concept, dubbed Leonardo, made up of a “toolbox” of its internet of things (IoT), artificial intelligence (AI) and blockchain technologies whose purpose is to realise digital transformation at its customers.

The concept seems to be pitched more at business leaders, up to CEO level, rather than just at corporate IT. The supplier contends that it is also more than a portmanteau of software technologies because it is also a services play, involving other suppliers, such as systems integrators and consultancies, and also telcos.

SAP chief executive Bill McDermott (pictured above) told a group of Europe, Middle East and Africa (Emea) journalists at the conference last week that his own approach to companies or organisations that are trying to bring together “mode 1” IT – business as usual, core operations – and “mode 2” – in support of digitally transformative high-level strategy, is to start with a study of their strategy.

“It starts with their strategy,” he said. “I try to get deeply into that, using publicly available data, or their commentary. So, when I am going into a C-level meeting, I have a good feeling for what they are using, and for where they want to take their company.

“If you think about running a great operation in mode 1, S/4 Hana, the cloud line of business [software] we have for HR, sales and procurement is there. When you start talking about mode 2, you have to realise this is a team sport. C-level executives have to align.

“For example, there is a utility company's CEO who wants to digitise plants, processes and people by training them. That is the CEO’s vision. He wants to simplify 90 customer support processes. And when I spoke to him about Leonardo, that got him to bring along his CFO and head of strategy.

“We try to unify all the senior executives by means of [SAP’s] digital boardroom, where all the management team can act as a team, seeing the same information.

“Mode 2 is about business model innovation. Most companies that do not realise they need to be digital are almost too late. [Previously] you had leaders and followers, some faster than others. In this age there will be first movers, and no one else. All these leaders are asking: ‘how do I defend my core?’ That’s mode 1. And ‘how do I create the next generation business?’ Mode 2. And this is in every industry, and every geography in the world.”

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Franck Cohen, president of SAP Emea, said at Sapphire: “The first product that will benefit from machine learning will be our public cloud ERP. Leonardo is a set of tools that allows organisations to achieve digital transformation. Instead of having a prototype of IoT, and one of machine learning, and one of blockchain, you put them all together.

“Digital transformation will happen at the level of the CEO. It might be that the CIO will have a say, or may decide for some aspect of it. But if it is a real digital transformation at the company level, then I believe the CEO will lead. But we didn’t target Leonardo [exclusively] at the CEO, as such.”

Nils Hertzberg, global go-to-market lead for IoT at SAP, said: “We have invested significantly in IoT, and then we gave the baby the name of SAP Leonardo. And we’ve repositioned it to be more than IoT, so that it is an analytics platform for other business purposes. Leonardo will contain all the capabilities that will enable our customers to innovate: access to blockchain, to machine learning, and also basic things like access to prediction libraries and to a development environment to enable them to develop applications of their own.

“The story behind Leonardo in the grand scheme of things is that a lot of our customers believe in bi-modal [innovation and business as usual] IT.” The idea is that Leonardo belongs squarely in the realm of mode 2 – innovation.

Hertzberg said Leonardo entails SAP working with other types of partner than the usual systems integrators. “We are partnering with telcos now, for example, with connectivity,” he said.

“Leonardo is all you need, and with the cloud it is not so much about the ingredients separately. This is a comprehensive, forward-looking offer for enterprise customers who want to do innovation. It is a pre-integrated toolbox.”

The supplier has framed Leonardo as a technology set for the cloud. Darren Roos, president, SAP S/4 Hana Cloud, said cloud delivery makes Leonardo-type capabilities readily accessible.

“Take the invoice-matching machine learning capability that we shipped in the new release [of S/4 Hana],” he said. “That means processing invoices in 10 seconds instead of two minutes. Your on-premise competitor won’t get that for maybe another two years. It’s a tiny example of what can amount to a competitive advantage.

“Within the Leonardo ‘toolbox’, we [the S/4 Hana public cloud service] consume the machine learning, the analytics, and the SAP Cloud Platform, which is our extensibility layer”.

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