IoT And Connected Assets

Ken Pierce

The Internet of Things (IoT) involves connected products, assets, fleets, infrastructures, markets, and people. In this series of blogs, we’ll address each of these connected aspects in turn.

IoT promises to revolutionize the operation and maintenance of high-value, long-life equipment such as industrial machinery. The operators of these assets can use IoT data to optimize performance, uptime, costs, and business processes. The manufacturers and providers of service for these assets can use IoT data to optimize design, functionality, customer service, and business models.

But IoT data has remained separated from the context of business information and processes. For example, sensor data might tell you that an asset is operating outside its specifications. So you watch the asset for a period of time. If it seems like there has been an impact on production output, you send out a technician to inspect the asset. The technician estimates that the asset should be fixed and manually submits a request to maintenance. Maintenance creates a work order and procures a spare part. When the part comes in, the asset is scheduled for repair.

In the meantime, the asset fails, and production grinds to a halt.

But there’s a better way. In the past we worked to integrate the shop floor with the top floor. Now we need to integrate operational technology (OT) with information technology (IT). By capturing sensor data and combining it with other business data in real time, asset operators can achieve predictive maintenance and automated procurement of parts and dispatch of service. At the same time, manufacturers and service providers can continuously improve asset quality and even create new, more effective assets.

Three dimensions of IoT data

To achieve these outcomes, OT-IT integration needs to occur across three dimensions:

Fixed-asset insights: Companies must move from a reactive to a proactive approach to maintenance. They can achieve this through an integrated asset network that enables collaboration among manufacturers, service providers, and end customers. Fixed-asset insights let you achieve predictive maintenance and service, from identifying emerging problems early to automating parts procurement and maintenance scheduling. These capabilities can serve assets that are owned and operated by a company, as well as those that are installed at a customer site and covered by a service contract.

Manufacturing execution: Manufacturers need to gain real-time visibility across plants, suppliers, and machines. They can do this by connecting manufacturing IoT data within the business context of orders, quality, and performance. They can further connect IoT data with supply chain networks. The result is more flexible, scalable, cost-efficient, and tightly controlled manufacturing.

Manufacturing networks: Manufacturers need to identify and resolve problems across the supply chain to manage product introductions and changes, share process improvements, and improve on-time delivery. They can achieve this by combining IoT data with a collaborative B2B network. Among other advantages, they’ll be able to identify hidden production capacity and rapidly and cost-effectively scale production to respond to market demand.

IoT data, the new oil

Data in the 21st century has been compared to oil in the 19th century: a vast, valuable, and still largely untapped resource.

Some energy companies are taking that metaphor literally and realizing transformational results from integrating OT and IT. In one case, an energy company that operates numerous large gas turbines across several plants noted that 13 of those turbines needed constant maintenance. By linking data across plants, the company realized that the 13 turbines were all made by the same vendor. The new visibility can help it reduce costs for service and increase uptime. It also gives the company new options – for example, replacing the assets with turbines from another vendor or working with the original vendor to make design improvements.

Another energy company that has more than 70 plants worldwide discovered that the operational costs for its Malaysia plant are four times as much as expected compared to other plants. Integration of real-time IoT data with business data is helping the company home in on potential causes such as faulty equipment, over-maintenance, or culturally influenced approaches to plant operation.

IoT provided the data. Integration with business context delivered the insights. The good news is that the technologies and capabilities now exist to achieve this integration.

Effective IoT connectedness requires a unifying foundation. SAP has addressed this need by introducing SAP Leonardo Internet of Things portfolio, innovative solutions designed to help organizations digitally transform existing processes and evolve to new digital models. Learn more by reading about real-world use cases, visiting, attending our flagship event Leonardo Live this July 11–12 in Frankfurt, and following us on Twitter at @SAPLeonardo.


Ken Pierce

About Ken Pierce

Ken Pierce is the global leader of the Internet of Things (IoT) for the Energy and Natural Resources Sector (which includes oil and gas, chemicals, utilities, mill products, and mining) at SAP. He helps customers define their IoT and digital transformation strategy, bringing to the table over 25 years of experience serving as a trusted advisor to business and IT executives. Ken focuses on understanding their challenges, establishing a solution vision, and building compelling value propositions that produce business results.

Differentiating Products With Data-Based Services

Don Gordon

Ever since Steve Jobs revealed the first iPhone, people have come to associate big tech launches with physical products. So when SAP chairman Hasso Plattner, Prof. Dr. h.c. mult., unveiled the new SAP digital innovation system last month, many people in the SAPPHIRE NOW audience reflexively looked around for a nonexistent device.

The fact is, value and differentiation are migrating away from physical products like devices and toward data-based services that fundamentally change the way consumers interact with those products. For consumer products (CP) companies, adapting to this change is imperative because today, even new and highly sought-after products become commoditized more quickly than ever before. For CP companies, this means they need to:

  • Innovate ways to be more efficient using IoT and analytics across lines of business (for example, in manufacturing and supply chain operations to increase efficiency as a way to lower costs)
  • Create innovative data services around products – for example, by building sensors into products. In this case, the data is what allows for differentiation. It’s what makes the product more valuable to the customer. And it’s how CP companies can increase market share, customer retention, and margins.

So where does a digital innovation system come in? It is, as Plattner explained, a “digital innovation system that enables customers to rapidly innovate and scale that innovation to redefine their business for the digital world.” You might think of it as a digital services innovation platform that brings together the power of machine learning, IoT, analytics, and Big Data in ways that were previously not possible.

With all of these technologies unified, it’s much easier to harness data to drive process, value, and customer experience transformation. Consider this: When customers – both B2B and B2C – purchase and use connected, self-aware products, they can passively send product and usage data in the course of daily activities and work (for example, usage levels, wear and tear rates, maintenance information, and functionality used and not used).

This data can be used to inform every aspect of the product value chain. For example, when a customer purchases a smart refrigerator, they agree to passively stream product and usage data from that refrigerator on a continuous basis. Sensors can be built into it to capture and send performance and operations data useful to every player in the product value chain. As an interactive product, the refrigerator can send data (or alerts) when compressors are overheating, vibrations or temperatures are exceeding desired maximums, or Freon levels are low.

The value of this data can extended to a CP manufacturer’s entire extended value chain. For example, a refrigeration manufacturer with commercial and consumer product lines could include B2B traditional suppliers that enable the manufacturer to make better products, as well as involve other providers of data-based services around the product to expand the customer value proposition, as shown in the illustration below.

transformation of the refrigeration value chain

Transformation of the refrigeration value chain

So from this perspective, the future of CP lies in harnessing new kinds of data – and IDC appears to agree. In a May 2017 Analyst Connection, Simon Ellis, program vice president at IDC, forecasted that 90% of the growth in the CP industry over the next decade will go to companies that successfully engage directly with consumers. “While this may mean direct-to-consumer selling, it is most likely to be about a ‘brand relationship.’ The successful engagement will be one that turns data and information from consumers into product and service offerings that meet or even exceed consumers’ expectations. The 90% is a projection, of course, and the actual results may be higher or lower, but the point is that to succeed in the future, CP companies will need to engage with their consumers in a new way.”

I invite you to read Ellis’ paper, “Using Data to Digitally Transform Consumer Products,” He provides valuable insights into how untapped digital technologies have the potential to harness data to drive new capabilities and data-driven services, deliver totally new insights into the changing behaviors and needs of customers, and more.



Don Gordon

About Don Gordon

Don Gordon leads global Consumer Products industry marketing for SAP. Previously he led global Retail industry marketing for IBM. He lives in Philadelphia, considered by many to be the finest city on earth.

Your Walls Can Talk – Find Out What They’re Saying

Stephanie Reshel

The growing use of technology and its resulting data are having a significant impact on energy and utility companies worldwide. In fact, the utility sector is forecast to experience 93% data growth since 2015, with 84% of it being unstructured, according to the SAP and IBM paper “Digital Transformation in Energy and Utility Companies.”

Industry convergence is playing a big role in the increased use of data. Converging industries and disruptive technology are redefining multiple industries globally and forcing the creation of innovative business models. The energy and utility sectors are experiencing this through the increased use of smart appliances, energy monitoring systems, net metering, mobile technology, cognitive applications, the Internet of Things (IoT), and cloud computing.

If your walls can talk – what are they saying?

The marriage of technology companies with traditional energy and utility companies is creating fascinating systems that enable operating technology (OT) systems and information technology (IT) systems to automatically talk to each other. Until recently, these systems could not share information or communicate with one another.

So in essence, now your walls really can talk thanks to wall-mounted smart-grid metering – and what they’re saying is that cognitive computing will change the future of the energy and utilities sectors even more. When OT and IT systems share a common database with near-real-time cognitive computing and data utilization capabilities, they can provide a stronger understanding of what is currently happening and what is most likely to happen in the future.

Innovative real-world examples

Here are some practical examples of how innovative technology is redefining traditional energy and utility procedures:

  • Asset responsiveness: Equipment sensors (OT) can set off a high-temperature alarm, which can automatically send a work order (IT) to a technician’s mobile device
  • Information accessibility: Service orders can be more efficient when cognitive computing provides data about customers, work orders, equipment details, and site history to field technicians
  • Predictive maintenance: Solutions using IoT sensors, predictive analytics, and even weather forecasts can be used to help predict maintenance patterns, schedules, and potential damage to equipment

What else is altering the energy and utility landscape?

Disruptive technology is just one of the elements contributing to the considerable transformation in the energy and utility industries. According to the SAP and IBM paper, the following three elements all play a role:

  • Evolving markets
  • Changing customer expectations
  • Disruptive technology

Evolving energy and utility markets, changing customer expectations, and disruptive technology are all creating a perfect environment for new business models such as self-service and subscription-based models that enable new revenue streams.

Business innovation lead by “prosumers”

Alternative energy sources like geothermal, wind, and solar are also driving an increase in the number of “prosumers” – companies or individuals that act as both consumers and microsuppliers of energy. As renewable energy gains popularity, more people are using and providing energy in this way, and, as a result, their impact on the utility market increases and new business models emerge.

Not only that, smart devices enable greater control over energy consumption, so technology is also making it easier for consumers to make smarter choices about how they use energy. These efficiencies are making it harder for energy companies to maintain the same amount of revenue per customer. As a result, traditional energy and utility companies are being pushed to provide a more personalized experience by offering more connected home products and a more retail-like customer experience. CenterPoint Energy is one example of an energy company that has made significant digital changes to create a more personalized customer experience.

Using data to your advantage

The energy and utility industries are not the only sectors undergoing massive digital transformation. Whether your business is in the energy sector or not, you can use cognitive solutions and data utilization to your advantage. Here are some steps you can take to make significant progress on your digital journey:

  1. Assess your company’s current digital readiness
  1. Develop a digital strategy and reimagine business models and processes
  1. Assess and prioritize opportunities based on value, benefits, ROI, and total cost of ownership
  1. Develop a roadmap that considers cloud and cognitive technology, services, and user experience
  1. Use design thinking to refine, explore, and prototype solutions
  1. Implement solutions on time and on budget
  1. Maximize investments with continuous innovation

The blend of technology with any type of traditional company can create opportunities for innovative business models and emerging revenue streams that could prove to be very lucrative going forward. How can you reimagine your business?

Learn more about Digital Transformation in Energy and Utility Companies.

Find out more about Digital Transformation with IBM and SAP.


Stephanie Reshel

About Stephanie Reshel

Stephanie Reshel is senior director for Strategic Ecosystem Marketing at SAP. She drives joint marketing strategies globally with the top strategic services partners. Follow her on @SReshel.

Taking Learning Back to School

Dan Wellers


Denmark spends most GDP on labor market programs at 3.3%.
The U.S. spends only 0.1% of it’s GDP on adult education and workforce retraining.
The number of post-secondary vocational and training institutions in China more than doubled from 2000 to 2014.
47% of U.S. jobs are at risk for automation.

Our overarching approach to education is top down, inflexible, and front loaded in life, and does not encourage collaboration.

Smartphone apps that gamify learning or deliver lessons in small bits of free time can be effective tools for teaching. However, they don’t address the more pressing issue that the future is digital and those whose skills are outmoded will be left behind.

Many companies have a history of effective partnerships with local schools to expand their talent pool, but these efforts are not designed to change overall systems of learning.

The Question We Must Answer

What will we do when digitization, automation, and artificial intelligence eject vast numbers of people from their current jobs, and they lack the skills needed to find new ones?

Solutions could include:

  • National and multinational adult education programs
  • Greater investment in technical and vocational schools
  • Increased emphasis on apprenticeships
  • Tax incentives for initiatives proven to close skills gaps

We need a broad, systemic approach that breaks businesses, schools, governments, and other organizations that target adult learners out of their silos so they can work together. Chief learning officers (CLOs) can spearhead this approach by working together to create goals, benchmarks, and strategy.

Advancing the field of learning will help every business compete in an increasingly global economy with a tight market for skills. More than this, it will mitigate the workplace risks and challenges inherent in the digital economy, thus positively influencing the future of business itself.

Download the executive brief Taking Learning Back to School.

Read the full article The Future of Learning – Keeping up With The Digital Economy


Dan Wellers

About Dan Wellers

Dan Wellers is the Global Lead of Digital Futures at SAP, which explores how organizations can anticipate the future impact of exponential technologies. Dan has extensive experience in technology marketing and business strategy, plus management, consulting, and sales.


Why Millennials Quit: Understanding A New Workforce

Shelly Kramer

Millennials are like mobile devices: they’re everywhere. You can’t visit a coffee shop without encountering both in large numbers. But after all, who doesn’t like a little caffeine with their connectivity? The point is that you should be paying attention to millennials now more than ever because they have surpassed Boomers and Gen-Xers as the largest generation.

Unfortunately for the workforce, they’re also the generation most likely to quit. Let’s examine a new report that sheds some light on exactly why that is—and what you can do to keep millennial employees working for you longer.

New workforce, new values

Deloitte found that two out of three millennials are expected to leave their current jobs by 2020. The survey also found that a staggering one in four would probably move on in the next year alone.

If you’re a business owner, consider putting four of your millennial employees in a room. Take a look around—one of them will be gone next year. Besides their skills and contributions, you’ve also lost time and resources spent by onboarding and training those employees—a very costly process. According to a new report from XYZ University, turnover costs U.S. companies a whopping $30.5 billion annually.

Let’s take a step back and look at this new workforce with new priorities and values.

Everything about millennials is different, from how to market to them as consumers to how you treat them as employees. The catalyst for this shift is the difference in what they value most. Millennials grew up with technology at their fingertips and are the most highly educated generation to date. Many have delayed marriage and/or parenthood in favor of pursuing their careers, which aren’t always about having a great paycheck (although that helps). Instead, it may be more that the core values of your business (like sustainability, for example) or its mission are the reasons that millennials stick around at the same job or look for opportunities elsewhere. Consider this: How invested are they in their work? Are they bored? What does their work/life balance look like? Do they have advancement opportunities?

Ping-pong tables and bringing your dog to work might be trendy, but they aren’t the solution to retaining a millennial workforce. So why exactly are they quitting? Let’s take a look at the data.

Millennials’ common reasons for quitting

In order to gain more insight into the problem of millennial turnover, XYZ University surveyed more than 500 respondents between the ages of 21 and 34 years old. There was a good mix of men and women, college grads versus high school grads, and entry-level employees versus managers. We’re all dying to know: Why did they quit? Here are the most popular reasons, some in their own words:

  • Millennials are risk-takers. XYZ University attributes this affection for risk taking with the fact that millennials essentially came of age during the recession. Surveyed millennials reported this experience made them wary of spending decades working at one company only to be potentially laid off.
  • They are focused on education. More than one-third of millennials hold college degrees. Those seeking advanced degrees can find themselves struggling to finish school while holding down a job, necessitating odd hours or more than one part-time gig. As a whole, this generation is entering the job market later, with higher degrees and higher debt.
  • They don’t want just any job—they want one that fits. In an age where both startups and seasoned companies are enjoying success, there is no shortage of job opportunities. As such, they’re often looking for one that suits their identity and their goals, not just the one that comes up first in an online search. Interestingly, job fit is often prioritized over job pay for millennials. Don’t forget, if they have to start their own company, they will—the average age for millennial entrepreneurs is 27.
  • They want skills that make them competitive. Many millennials enjoy the challenge that accompanies competition, so wearing many hats at a position is actually a good thing. One millennial journalist who used to work at Forbes reported that millennials want to learn by “being in the trenches, and doing it alongside the people who do it best.”
  • They want to do something that matters. Millennials have grown up with change, both good and bad, so they’re unafraid of making changes in their own lives to pursue careers that align with their desire to make a difference.
  • They prefer flexibility. Technology today means it’s possible to work from essentially anywhere that has an Internet connection, so many millennials expect at least some level of flexibility when it comes to their employer. Working remotely all of the time isn’t feasible for every situation, of course, but millennials expect companies to be flexible enough to allow them to occasionally dictate their own schedules. If they have no say in their workday, that’s a red flag.
  • They’ve got skills—and they want to use them. In the words of a 24-year-old designer, millennials “don’t need to print copies all day.” Many have paid (or are in the midst of paying) for their own education, and they’re ready and willing to put it to work. Most would prefer you leave the smaller tasks to the interns.
  • They got a better offer. Thirty-five percent of respondents to XYZ’s survey said they quit a previous job because they received a better opportunity. That makes sense, especially as recruiting is made simpler by technology. (Hello, LinkedIn.)
  • They seek mentors. Millennials are used to being supervised, as many were raised by what have been dubbed as “helicopter parents.” Receiving support from those in charge is the norm, not the anomaly, for this generation, and they expect that in the workplace, too.

Note that it’s not just XYZ University making this final point about the importance of mentoring. Consider Figures 1 and 2 from Deloitte, proving that millennials with worthwhile mentors report high satisfaction rates in other areas, such as personal development. As you can see, this can trickle down into employee satisfaction and ultimately result in higher retention numbers.

Millennials and Mentors
Figure 1. Source: Deloitte

Figure 2. Source: Deloitte

Failure to . . .

No, not communicate—I would say “engage.” On second thought, communication plays a role in that, too. (Who would have thought “Cool Hand Luke” would be applicable to this conversation?)

Data from a recent Gallup poll reiterates that millennials are “job-hoppers,” also pointing out that most of them—71 percent, to be exact—are either not engaged in or are actively disengaged from the workplace. That’s a striking number, but businesses aren’t without hope. That same Gallup poll found that millennials who reported they are engaged at work were 26 percent less likely than their disengaged counterparts to consider switching jobs, even with a raise of up to 20 percent. That’s huge. Furthermore, if the market improves in the next year, those engaged millennial employees are 64 percent less likely to job-hop than those who report feeling actively disengaged.

What’s next?

I’ve covered a lot in this discussion, but here’s what I hope you will take away: Millennials comprise a majority of the workforce, but they’re changing how you should look at hiring, recruiting, and retention as a whole. What matters to millennials matters to your other generations of employees, too. Mentoring, compensation, flexibility, and engagement have always been important, but thanks to the vocal millennial generation, we’re just now learning exactly how much.

What has been your experience with millennials and turnover? Are you a millennial who has recently left a job or are currently looking for a new position? If so, what are you missing from your current employer, and what are you looking for in a prospective one? Alternatively, if you’re reading this from a company perspective, how do you think your organization stacks up in the hearts and minds of your millennial employees? Do you have plans to do anything differently? I’d love to hear your thoughts.

For more insight on millennials and the workforce, see Multigenerational Workforce? Collaboration Tech Is The Key To Success.