How Manufacturers Can Kick-Start The Internet Of Things In 2018

Tanja Rueckert

Part 1 of the “Manufacturing Value from IoT” series

IoT is one of the most dynamic and exciting markets I am involved with at SAP. The possibilities are endless, and that is perhaps where the challenges start. I’ll be sharing a series of blogs based on research into knowledge and use of IoT in manufacturing.

Most manufacturing leaders think that the IoT is the next big thing, alongside analytics, machine learning, and artificial intelligence. They see these technologies dramatically impacting their businesses and business in general over the next five years. Researchers see big things ahead as well; they forecast that IoT products and investments will total hundreds of billions – or even trillions – of dollars in coming decades.

They’re all wrong.

The IoT is THE Big Thing right now – if you know where to look.

Nearly a third (31%) of production processes and equipment and non-production processes and equipment (30%) already incorporate smart device/embedded intelligence. Similar percentages of manufacturers have a company strategy implemented or in place to apply IoT technologies to their processes (34%) or to embed IoT technologies into products (32%).

opportunities to leverage IoTSource:Catch Up with IoT Leaders,” SAP, 2017.

The best process opportunities to leverage the IoT include document management (e.g. real-time updates of process information); shipping and warehousing (e.g. tracking incoming and outgoing goods); and assembly and packaging (e.g. production monitoring). More could be done, but figuring out where and how to implement the IoT is an obstacle for many leaders. Some 44 percent of companies have trouble identifying IoT opportunities and benefits for either internal processes or IoT-enabled products.

Why so much difficulty in figuring out where to use the IoT in processes?

  • No two industries use the IoT in the same way. An energy company might leverage asset-management data to reduce costs; an e-commerce manufacturer might focus on metrics for customer fulfillment; a fabricator’s use of IoT technologies may be driven by a need to meet exacting product variances.
  • Even in the same industry, individual firms will apply and profit from the IoT in unique ways. In some plants and processes, management is intent on getting the most out of fully depreciated equipment. Unfortunately, older equipment usually lacks state-of-the-art controls and sensors. The IoT may be in place somewhere within those facilities, but it’s unlikely to touch legacy processes until new machinery arrive. 

Where could your company leverage the IoT today? Think strategically, operationally, and financially to prioritize opportunities:

  • Can senior leadership and plant management use real-time process data to improve daily decision-making and operations planning? Do they have the skills and tools (e.g., business analytics) to leverage IoT data?
  • Which troublesome processes in the plant or front office erode profits? With real-time data pushed out by the IoT, which could be improved?
  • Of the processes that could be improved, which include equipment that can – in the near-term – accommodate embedded intelligence, and then communicate with plant and enterprise networks?

Answer those questions, and you’ve got an instant list of how and where to profit from the IoT – today.

Stay tuned for more information on how IoT is developing and to learn what it takes to be a manufacturing IoT innovator. In the meantime, download the report “Catch Up with IoT Leaders.”

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Tanja Rueckert

About Tanja Rueckert

Tanja Rueckert is President of the Internet of Things and Digital Supply Chain Business Unit at SAP.

Building An IoT Foundation For The Future

Tanja Rueckert

Part 3 of the “Manufacturing Value from IoT” series

In my last blog, I talked about characteristics of manufacturing IoT innovators that help them outperform others in the industry. Here, I will talk about the short-term and long-term investments your company needs to bring your IoT transformation to fruition.

Interest in the Internet of Things (IoT) among manufacturers has reached a fever pitch. Executives in every sector recognize opportunities to improve quality, speed, security, and costs by applying smart devices to operations and plant processes.

Unfortunately, hoping for IoT benefits isn’t enough to achieve IoT success – especially when a company doesn’t have the network infrastructure and information technology (IT) to deploy IoT solutions. Yet many executives simply don’t realize how complicated and far-reaching an IoT transformation will be.

  • Vision, strategy, and leadership: An IoT deployment will link many functions and fiefdoms within an organization; to make sure that connection leads to collaboration, senior executives must offer strategic guidance and commitment. That’s a problem at most companies, because only 11% of manufacturers have implemented an IoT strategy for operations. Even worse, 10% of manufacturing executives “don’t know” who leads their company’s IoT strategy. It’s no wonder that the biggest IoT challenge in operations is “identifying opportunities/benefits of IoT” (44% of manufacturers).
  • Skills and experience: Industries as diverse as consumer goods, chemical processing, and textile milling can leverage the IoT – if they have the smarts to do so. The IoT requires new skillsets within plants and among suppliers. The ability to incorporate high-tech electronics into products – including commodities such as concrete, fabrics, rubber, etc. – will be new to most manufacturers. More than a third of manufacturers report that skills/talent to leverage data/intelligence is an IoT operations challenge.
  • Network capabilities and capacities: Antiquated technology is the biggest IoT headache that manufacturers encounter in capturing, communicating, and leveraging data from operations. Only 10% have network infrastructures capable of machine-to-machine communications, and just 13% have networks capable of machine-to-enterprise communications. A quarter of manufacturers report that network capacity is a problem, too. And even when technology and bandwidth are available, cooperation among operations technology (OT) staff in the plant and IT staff in the business is often limited, hindering transfer and optimization of IoT data.

Manufacturers can achieve game-changing competitive advantage with the IoT – but few are ready. Most still need to develop networks, systems, and applications that transform data into insights. That will require short-term upgrades (e.g., update antiquated equipment, sensors, and controls; apply IoT intelligence to pressing problems, such as safety and data security) and longer-term investments and change (e.g., connect enterprise and supply-chain data streams; combine IoT intelligence with business analytics for improved forecasting, planning, and decisions).

Can your IoT infrastructure deliver on the promise of the IoT?

Stay tuned for more on how your company can increase productivity and profitability with IoT, analytics, machine learning, and artificial intelligence. In the meantime, download the report “The IoT is Delivering the Future – Now” to learn more about the complexity of an IoT transformation.

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Tanja Rueckert

About Tanja Rueckert

Tanja Rueckert is President of the Internet of Things and Digital Supply Chain Business Unit at SAP.

8 Must-Ask IoT Connectivity Questions

John Candish

The Internet of Things (IoT) holds incredible opportunities for businesses, their partners, and end users, and much of its promise hinges on connections that exchange data and automate processes without human intervention. Cellular connectivity plays a key role with nomadic devices enabling a wide range of IoT technology.

By 2020, approximately 252 million healthcare devices will record patients’ respiration, blood pressure, and other vital signs. On our highways, 965 million automotive devices will collect information about vehicle maintenance, the nearest gas stations, traffic, and even pedestrians entering walkways. Smart city devices, the number of which is expected to reach 7.5 billion, will monitor water systems, traffic congestion, sidewalk damage, and pollution.

Connectivity among people, machines, and things is increasing exponentially. Enabling communications among billions of people and things represents a tremendous opportunity. However, for an enterprise to take advantage of the IoT and to build a thriving ecosystem, they must begin by asking themselves the right questions.

Eight must-ask questions:

  1. Are you prepared to scale?
  2. How will you manage operator contracts and connections?
  3. Is the last mile of the IoT rock-solid reliable?
  4. Can you IoT ecosystem connect to disparate networks?
  5. Can your network affordably handle additional traffic?
  6. What is your security and data protection plan?
  7. Can you support a global IoT strategy?
  8. Can you integrate connectivity management across any type of environment?

The value of IoT is undeniable, but so too is the potential cost, risk, and complexity of enabling the vast ecosystem. An honest assessment of these questions is critical to not only survive but to thrive in the world of Internet of things.

I will further explore some of these questions in detail through my subsequent blogs. Meanwhile, for a deeper dive into these eight questions, I invite you to read the SAP Digital Interconnect whitepaper “Best Practices for Bridging the Physical and Digital Worlds of the Internet of Things”.

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John Candish

About John Candish

John Candish leads the global business for SAP IoT Connect 365 for the SAP Digital Interconnect organization His goal is to make connecting IoT devices globally simpler for all enterprises. John has worked in both technical and commercial roles. Prior to his current position, John headed the global business for SAP IPX 365 mobile service for SAP Digital Interconnect.

Human Skills for the Digital Future

Dan Wellers and Kai Goerlich

Technology Evolves.
So Must We.


Technology replacing human effort is as old as the first stone axe, and so is the disruption it creates.
Thanks to deep learning and other advances in AI, machine learning is catching up to the human mind faster than expected.
How do we maintain our value in a world in which AI can perform many high-value tasks?


Uniquely Human Abilities

AI is excellent at automating routine knowledge work and generating new insights from existing data — but humans know what they don’t know.

We’re driven to explore, try new and risky things, and make a difference.
 
 
 
We deduce the existence of information we don’t yet know about.
 
 
 
We imagine radical new business models, products, and opportunities.
 
 
 
We have creativity, imagination, humor, ethics, persistence, and critical thinking.


There’s Nothing Soft About “Soft Skills”

To stay ahead of AI in an increasingly automated world, we need to start cultivating our most human abilities on a societal level. There’s nothing soft about these skills, and we can’t afford to leave them to chance.

We must revamp how and what we teach to nurture the critical skills of passion, curiosity, imagination, creativity, critical thinking, and persistence. In the era of AI, no one will be able to thrive without these abilities, and most people will need help acquiring and improving them.

Anything artificial intelligence does has to fit into a human-centered value system that takes our unique abilities into account. While we help AI get more powerful, we need to get better at being human.


Download the executive brief Human Skills for the Digital Future.


Read the full article The Human Factor in an AI Future.


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Dan Wellers

About Dan Wellers

Dan Wellers is founder and leader of Digital Futures at SAP, a strategic insights and thought leadership discipline that explores how digital technologies drive exponential change in business and society.

Kai Goerlich

About Kai Goerlich

Kai Goerlich is the Chief Futurist at SAP Innovation Center network His specialties include Competitive Intelligence, Market Intelligence, Corporate Foresight, Trends, Futuring and ideation.

Share your thoughts with Kai on Twitter @KaiGoe.heif Futu

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Finance And HR: Friends Or Foes? Shifting To A Collaborative Mindset

Richard McLean

Part 1 in the 3-part “Finance and HR Collaboration” series

In my last blog, I challenged you to think of collaboration as the next killer app, citing a recent study by Oxford Economics sponsored by SAP. The study clearly explains how corporate performance improves when finance actively engages in collaboration with other business functions.

As a case in point, consider finance and HR. Both are being called on to work more collaboratively with each other – and the broader business – to help achieve a shared vision for the company. In most organizations, both have undergone a transformation to extend beyond operational tasks and adopt a more strategic focus, opening the door to more collaboration. As such, both have assumed three very important roles in the company – business partner, change agent, and steward. In this post, I’ll illustrate how collaboration can enable HR and finance to be more effective business partners.

Making the transition to focus on broader business objectives

My colleague Renata Janini Dohmen, senior vice president of HR for SAP Asia Pacific Japan, credits a changing mindset for both finance and HR as key to enabling the transition away from our traditional roles to be more collaborative. She says, “For a long time, people in HR and finance were seen as opponents. HR was focused on employees and how to motivate, encourage, and cheer on the workforce. Finance looked at the numbers and was a lot more cautious and possibly more skeptical in terms of making an investment. Today, both areas have made the transition to take on a more holistic perspective. We are pursuing strategies and approaching decisions based on what delivers the best return on investment for the company’s assets, whether those assets are monetary or non-monetary. This mindset shift plays a key role in how finance and HR execute the strategic imperatives of the company,” she notes.

Viewing joint decisions from a completely different lens

I agree with Renata. This mindset change has certainly impacted the way I make decisions. If I’m just focused on controlling costs and assessing expenditures, I’ll evaluate programs and ideas quite differently than if I’m thinking about the big picture.

For example, there’s an HR manager in our organization who runs Compensation and Benefits. She approaches me regularly with great ideas. But those ideas cost money. In the past, I was probably more inclined to look at those conversations from a tactical perspective. It was easy for me to simply say, “No, we can’t afford it.”

Now I look at her ideas from a more strategic perspective. I think, “What do we want our culture to be in the years ahead? Are the benefits packages she is proposing perhaps the right ones to get us there? Are they family friendly? Are they relevant for people in today’s world? Will they make us an employer of choice?” I quite enjoy the rich conversations we have about the impact of compensation and benefits design on the culture we want to create. Now, I see our relationship as much more collaborative and jointly invested in attracting and retaining the best people who will ultimately deliver on the company strategy. It’s a completely different lens.

Defining how finance and HR align to the company strategy

Renata and I believe that greater collaboration between finance and HR is a critical success factor. How can your organization achieve this shift? “Once the organization has clearly defined what role finance and HR must play and how they fundamentally align to the company strategy, then it’s more natural to structure them in a way to support such transformation,” Renata explains.

Technology plays an important role in our ability to successfully collaborate. Looking back, finance and HR were heavily focused on our own operational areas because everything we did tended to consume more time – just keeping the lights on and taking care of our basic responsibilities. Now, through a more efficient operating model with shared services, standard operating procedures, and automation, we can both be more business-focused and integrated. As a result, we’re able to collaborate in more meaningful ways to have a positive impact on business outcomes.

In our next blog, we’ll look at how finance and HR can work together as agents of change.

For a deeper dive, download the Oxford Economics study sponsored by SAP.

Follow SAP Finance online: @SAPFinance (Twitter)LinkedIn | FacebookYouTube

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Richard McLean

About Richard McLean

Richard McLean, regional CFO for SAP Asia Pacific Japan, oversees all key finance and administrative functions for field and regional headquarters, supporting more than 16,000 employees. He has more than 20 years of experience in senior finance roles with leading global companies across a range of industries, including financial services, investment banking, automotive, and IT. He joined SAP in 2008.