Business Resilience with IoT-Enabled Cloud ERP

Like many children, I was fascinated by how technology worked when I was a kid. I was big on LEGO Technic and, in many ways, it felt like magic. Fast-forward a few decades, and you could be forgiven for having the same feeling in the average smart home in 2021.

The difference is that as adults, we know it’s not spells and charms, but a whole web-like community of devices called the Internet of Things (IoT) that connects us to engage with each other and with the devices. And nothing makes this more relevant than now — a time when collaboration across virtual locations is being constantly redefined by an ongoing pandemic that has managed to turn the world on its head.

COVID-19 has become a classic case study in what happens when businesses undergo an unprecedented crisis and recognize the need to respond with agility and speed to ensure business continuity. In order to build resilience and accelerate the return to normal operations, companies have accelerated their automation strategies, which include the Industrial Internet of Things (IIoT) and Industry 4.0. This strengthens the need for plant automation and deeper integration with their manufacturing execution systems, maintenance systems, quality management systems, and field service management, as well as logistics, warehousing, and transportation. In addition, companies need to increase transparency relating to key parts of their businesses in order to optimize production, save costs, and improve product quality while at the same time detecting new customer requirements.

To empower our customers to benefit from Industry 4.0, SAP has a dedicated strategy, Industry 4.Now, that combines business expertise, software solutions, enablement technology, and a partner ecosystem to make data-driven applications, decision-making, and operational excellence available to the entire enterprise.

IIoT and Edge Computing

At the edge of the landscape are business-critical processes, applications, and services that need to be delivered with reliability and low latency. SAP Internet of Things and SAP Edge Services enable our customers to collect, store, transform, enrich, analyze, and act upon IoT sensor data at the edge and in the cloud.

SAP IoT offers an end-to-end, managed cloud solution for Industry 4.0. This solution generates business outcomes by combining real-world usage data from sensors and devices with business semantics such as master and transactional data. SAP IoT enriches applications with real-world IIoT context to respond to critical events and assist decision-making proactively and intelligently. SAP IoT business services are consumed by SAP applications as well as by customer and partner applications and complemented by other services on SAP Business Technology Platform. For instance, SAP Digital Supply Chain solutions such as SAP Predictive Asset Insights provide customers with integrated capabilities for advanced analytics and machine learning — enabling, for example, anomaly detection, failure prediction, and predictive maintenance.

Power-generation leader Ansaldo Energia manages complex projects around the world. But sub-optimal, siloed processes were limiting operational visibility — making project planning and delivery more difficult. To address these issues, the company is rolling out SAP S/4HANA. At the same time, it is enabling predictive asset service with SAP Business Technology Platform, resulting in a dual digital transformation that will also help Ansaldo streamline manufacturing and improve its offering.

Today the company has a 75% reduction in paper-based quality controls, greater process integration across lines of business and group companies, and 80% less time and effort to onboard new customers on the services portal. SAP S/4HANA connects back-end systems for manufacturing, product life-cycle management, and warehousing, while SAP Internet of Things and SAP Edge Services enable predictive plant maintenance and service.

SAP’s strategy for IIoT for cloud and edge stands on three pillars while providing customers with choice via interoperability options and avoiding lock-in with cloud providers:

  • Embed IIoT insights into line-of-business and industry business applications
  • Extend line-of-business and industry business applications with IIoT
  • Enable critical business processes to run at the edge for low latency execution and business continuity

Let’s look at a few of the most recent examples of innovation in these three core areas.

Embed IoT Insights into Handling Unit Management

The handling units (HUs) are an approach in SAP S/4HANA to model physical units of packaging material and the goods that are contained in it.

Imagine you are a warehouse manager who needs to monitor if sensor-equipped HUs were exposed to sudden shocks, drops, or other critical conditions. A classic example here would be the high-voltage battery, which is the most expensive and sensitive part of an electric vehicle. Sub-optimal state of charge during material storage decreases its energy capacity and the expected lifespan.​ In addition, incorrect charging cycles or storage temperatures can damage the battery cells and increase the risk of explosion and fires.

It is a tall ask made easy with the IoT-enabled handling unit management, which embeds IoT insights into SAP S/4HANA and allows shipping specialists or warehouse clerks to act proactively in case the state of charge reaches a critical level. In this way, we can help businesses prevent their customers from receiving and using products in sub-optimal conditions, resulting in superior customer experience.

Extend Replenishment with IoT Sensors

Many SAP customers in the food processing, chemical, pharmaceutical, and other industries produce material and store them in either silos or containers, which are then shipped to their customers. They often face challenges in stock keeping and stock tracking, where manual observation of the fill-level in a silo can lead to outdated stock accuracy in enterprise resource planning (ERP), low stock availability, and production down times. This is where SAP IoT can step in to leverage real-world data from fill-level sensors attached to receptacles to turn replenishment into an automated data-driven process. SAP IoT enables monitoring the fill level of receptacles in real time.

When customers embed IoT insights into SAP S/4HANA, it allows them to trigger a purchase order automatically, as soon as the fill level falls below a predefined value. This approach leads to just-in-time replenishment, higher stock availability, and process efficiency due to the increased automation of process steps, thereby proving how intelligent enterprises using the latest technologies can turn insight into action across their business in real time.

Run It at the Edge but Orchestrate It in the Cloud

Manufacturers in the era of IIoT and Industry 4.0 require solutions that are intelligent, networked, and predictive. The advantage of edge computing lies in executing the business processes locally in real time, eliminating latency. SAP’s offering for the edge includes IoT data processing but it goes far beyond that. For many years, SAP Edge Services provided services to ingest, persist, and analyze IoT data as well as locally execute predictive analytical models and run mainly ERP business processes at the edge.

With SAP Digital Manufacturing Cloud for edge computing, customers can deploy business-critical application components in manufacturing execution to edge appliances running in manufacturing plants. At the same time, they keep in sync with their companion applications in the cloud. This helps ensure resilience, low latency execution, and business continuity where production would otherwise be exposed to the risk of disrupted operations due to connectivity issues in the cloud. At the same time, software life-cycle management for edge and the required business configuration is orchestrated centrally from cloud, thereby supporting low total cost of ownership.

To become an intelligent enterprise, manufacturing companies need to re-think their business models and start their Industry 4.Now journey now. Intelligent technologies such as IIoT and edge computing are no longer just nice-to-haves, they are fundamental to the continued success of a business; the more data a company can collect, store, and analyze, the better it can compete.

At the end of the day, we need to continue to play our role in empowering our customers in their decision-making processes and enabling them in dynamic self-management and continual adoption of innovation. The link between imagination and innovation isn’t just an invisible creature hiding within your smart device — it’s proving how amazing things can happen when we connect the unconnected.


Jan Gilg is president of SAP S/4HANA
This piece also appeared on LinkedIn.