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What is Internet of Things?

June 23, 2015 by Susan Galer 5

Exclusive Interview: Stefan Krauss, General Manager for Discrete Industries at SAP, on what manufacturers need to do right now to harness the power of digital transformation.

Digital transformation is fundamentally changing the business models of manufacturers in every discrete industry. In this exclusive interview with SAP News, Stefan Krauss, General Manager for Discrete Industries at SAP, explains how manufacturers can maintain leadership in the dynamically changing digital era.

Stefan Krauss, General Manager for Discrete Industries at SAP

Stefan Krauss, General Manager for Discrete Industries at SAP

SAP News: When it comes to digitization and internet of things (IoT), what unique challenges do companies in the discrete manufacturing industries face?

Krauss: The customers of discrete manufacturing companies are more and more demanding. They expect individualized solutions with a combination of products and services. To understand their customers’ unique requirements, companies have to capture and analyze real-time data from products through embedded software. Manufacturers are responding with cloud-based platforms. With output and throughput relevant across the entire product and customer life cycles, manufacturers can serve customers in new and more cost-efficient ways, expanding their business opportunities.

Can you summarize SAP’s vision for manufacturers?

SAP’s vision is to help our discrete industry customers run, grow and transform their business networks so they can better serve their customers in a digitized world. Our customers need to maintain their core business while transforming to deliver new offerings in a rapidly changing market, effectively becoming service providers. The business network is crucial because collaboration across the value chain – from OEM to suppliers and customers – has become a standard component of world-class manufacturing.

What are the top three steps discrete manufacturing companies need to take right now?

The first step is for the CEO to define the company’s digital strategy. This can’t be delegated to IT because it encompasses the entire organization. The second step is to define which departments are most relevant to this strategy and need transformation, including product development, manufacturing, supply chain management and after-sales service. The third step is execution, infusing the strategy into the DNA of every employee, department and project. Digitization changes how people work and business operates to create value via networks of innovation.

What are the must-have technologies?

Digitization includes business networks and communication, as well as internet of things, using software to collect data via sensors for insights and action. Networks foster collaboration between manufacturers, suppliers, partners and customers. Centralized platforms bring together people, interactive product and sensor data and analysis for meaningful outcomes. This is why we have expanded our SAP portfolio to deliver not only applications for end-to-end process coverage, but also SAP HANA as an innovation platform and business network connecting businesses, devices and people to drive unparalleled collaboration and productivity.

Can you provide examples of how companies are changing business models with IoT?

Many SAP customers are transforming business models with IoT. Let me give you three examples. Using the SAP HANA Cloud Platform and supply chain management solutions including production planning and shop floor management, Harley Davidson increased output by 25 percent by creating an end-to-end connected manufacturing operation from customers to shop floor. Delighted customers can now configure a customized motorcycle up to six hours before final production versus the previous time of 21 days.

Another example is how Kaeser transformed its business model. Instead of compressors, Kaeser now sells cubic meters of compressed air through their “Sigma Air Utility” service. Sensors on its compressors at customer sites capture and transmit real-time air metering and quality data for faster error resolution, minimizing downtime. Kaeser is working with SAP on a predictive maintenance solution for its equipment.

A third example is GEA, one of the world’s largest suppliers for the food processing industry. GEA is using SAP Predictive Maintenance & Service and SAP IoT connector on the HANA Cloud Platform to help remote technicians monitor machine performance in real-time, identifying and solving problems faster while reducing downtime and increasing product quality.

What can manufacturing companies expect this year from SAP?

We’re committed to helping customers operationalize on SAP S/4HANA. Having already delivered SAP Simple Finance, we plan to release SAP Simple Logistics later this year. We’re working on SAP CPQ to help customers streamline the entire Configuration, Pricing and Quotation process incorporating SAP solutions like hybris in an omnichannel environment. We also want to help our customers simplify the management of the processes impacted by software that’s embedded in products. IoT changes how departments function from product development through manufacturing, supply chain and sales and support. That’s why we’re delivering IoT solutions like SAP Connected Assets, SAP Connected Logistics, SAP Connected Manufacturing and SAP Augmented Reality Solutions on the SAP HANA Cloud Platform, with more IoT scenarios to come. SAP has long been at the forefront of the discrete manufacturing industries. We are extending our commitment to help companies stay ahead of the latest evolutions, ensuring their leadership in the digital era.

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