Internet of Things

August 13, 2008 by Velin Velkov, SAP Research Communications

“In the Internet of Things, the digital and physical worlds come together,” says Zoltán Nochta, who leads work in this research field at SAP. He points out that the talk is not only about smart devices equipped with radio frequency identification (RFID) tags but that the concept goes far beyond that. “Augmented physical objects will be connected over the Internet and will rearrange the whole pattern of occupancy and mobility within the physical world, including the structure of enterprise software systems,” Nochta explains.

Business value of the Internet of Things

As a key aspect of the next-generation Internet, the Internet of Things is expected to have a dramatic impact on almost all sectors of the Web-based service economy. The world market for Internet of Things-related technologies, products, and applications alone will increase significantly from U.S.$2 billion today to more than U.S.$11.5 billion in 2012, with average annual growth rates of almost 50% (source: Forrester Research, Global Extended Internet Forecast, 2006–2012, September 2006). More aggressive forecasts predict a market volume of more than U.S.$27 billion in 2011 (source: ABI Research, RFID Market Update, 2006). Nochta adds, “The Internet of Things will enable tremendous efficiency gains, especially in the retail, manufacturing, logistic, and energy sectors.”

A chance for the service industry

The Internet of Things will also shape the future of the services sector in all knowledge-based economies. This will be a market opportunity, especially for start-ups, and could lead to the creation of high-qualified jobs.
One practical dimension already being considered is a global brand protection service (GBPS). Product counterfeiting, smuggling, and other illegal trading practices are evolving as fast as emerging trends and technologies worldwide and are increasingly finding their way into other business sectors, from the pharmaceutical industry to aircraft and automobile spare parts manufacturing. A GBPS is one of many possible use cases that will help participating brand owners protect their original products along the whole supply chain.

Research to experiment and experience

SAP Research has already pioneered two “living labs” – the Future Retail Center in Regensdorf, Switzerland, and the Future Factory in Dresden, Germany, where exploration of the Internet of Things directly involves users and selected SAP customers. These labs are the two most high-profile examples of SAP Research projects concerning the Internet of Things. They provide an opportunity for end users and SAP customers to get involved with SAP’s research explorations.

The Future Retail Center showcases SAP Research’s joint work with key partners from retail, consumer products, and high-tech industries in next-generation retail focusing on a streamlined retail process based on RFID technology. It features three scenarios: shopping, logistics, and retail strategies.

The Future Factory Initiative is the culmination of the efforts of SAP Research to explore innovative ways to improve manufacturing processes using IT. It is a joint effort of SAP Research and academic and industrial partner organizations (including HP and Intel) to foster research and development for the manufacturing industry. It is active in the following three areas:

  • Future Factory Lab: a living lab for tests and demonstrations,
  • Real World Test-bed: a distributed manufacturing scenario,
  • a setting for communication among manufacturing experts within and outside of SAP

To help spearhead the topic, SAP Research also sponsored the first ever Internet of Things conference in March 2008 in Switzerland.

Recent SAP Research projects in the Internet of Things area:

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