IBM and SAP Partnering to Help Industrial Manufacturers Thrive in the New Service-Based Economy

Industrial manufacturing companies are dealing with significant economic challenges, changing customer demands, increased digitalization, new competitors, and complex global supply chains. These challenges have been amplified during the pandemic, forcing industrial manufacturing companies to focus on building resilient operations and optimize and automate their existing business processes.

However, to sustain and grow their business, industrial manufacturing companies must develop new business models that address an economy that is moving to outcome-based and sustainable solutions.

The IBM Institute for Business Value and Oxford Economics recently published the results of a survey, based on interviews with 500 executives. According to this survey:

  • Sixty-six percent of industrial manufacturing companies are already focusing on new service business models and increasing revenue share from services
  • Five to 10% yearly growth is forecasted in services revenue against two percent in selling new equipment
  • EBIT margin generated by service-based models is three to seven times higher compared to new equipment sales
  • Twenty-two percent growth is expected in outcome-based services

IBM Cognitive Enterprise Solutions Enable Intelligent Workflows for Industrial Manufacturers

In this time of constant and accelerated change, industrial manufacturing companies must adapt quickly to optimize their existing business and develop new service models for growth. They have to manage complex processes across their entire enterprise and systems. So they are looking for out-of-the-box integrated business applications, which support modular processes that solve specific industry problems, be flexibly consumed, and have intelligence embedded in the processes.

The IBM Cognitive Enterprise solution, jointly developed by IBM and SAP, provides the intelligent workflows that support these data-driven processes: Intelligent as they are embedded with artificial intelligence to predict outcomes; workflow as they follow the natural flow of work, from one employee to the next, tapping into application data along the way and making appropriate decisions — whether it means capturing customer feedback to further personalize the next client interaction or leveraging machine data to increase the productivity of the production line.

We are grateful for the feedback that the SAP Global Industry Advisory Council for Industrial Machinery & Components shared with our joint teams. This input was leveraged as the blueprint of the now available end-to-end intelligent workflows.

The teams, under the umbrella of the SAP/IBM Evolution Partnership, have delivered four differentiating intelligent workflows — lead-to-order, plan-to-manufacture, order-to-cash, and maintain-to-resolve (aftermarket) — that include new capabilities focused on improving specific business metrics. Key capabilities include intelligent Ssles, cognitive pricing, outcome-based business model, connected manufacturing, and connected asset, which help clients improve win-rates, reduce lead-to-order cycle time, improve customer experience, improve worker safety, and improve overall equipment effectiveness, as well as other key performance indicators (KPIs).

Scale Your Transformation

These intelligent workflows are built on IBM’s Essentials® platform. This platform helps with technology adoption and modernization by individualizing the orchestration of these industry-specific intelligent workflows into our client environments. It enables seamless deployment into heterogeneous landscapes that globally distributed organizations are characterized with, along with a modern architecture that allows for integration with existing applications. It provides possibilities to modernize applications, without disturbing the end-to-end process orchestration, while providing process visibility and control through embedded intelligence and automation.

This helps our clients to deploy and scale innovations, and supports them on their journey to become intelligent enterprises by:

  • Accelerating implementations and reducing time to value
  • Lowering the cost of implementation through reduced need for customization
  • Providing the ability to rapidly adapt the preconfigured workflows to each clients’ specific needs
  • Allowing different solutions to be incorporated flexibly via a consumption model

We are pleased to report early successes in various life-cycle stages of clients in this industry. These include

  • Lead-to-order at an European engineered appliances manufacturer
  • Outcome-based business model at a leading European packaging machinery manufacturer
  • Connected manufacturing at a leading defense equipment manufacturer in the Middle East
  • End-to-end industry capability model at a leading Japanese machine tools, automation, and textile machinery manufacturer

Ready for the Next Transition

We continue to listen to our customers, and our current focus areas include incorporating sustainable and carbon metrics through the design-to-operate process as well as a control tower, which will provide additional data-driven insights to co-ordinate agile and responsive supply chains.

To read more about the solutions see the Industrial Manufacturing Solution Sheet: https://www.ibm.com/downloads/cas/ZRBEEBZ1

To get more information on IBM’s partnership with SAP and additional solutions visit www.ibm-sap.com/digitaltransformation


Georg Kube is global vice president of Industrial Machinery and Components at SAP.
Manish Chawla is general manager of Global Chemicals, Petroleum & Industrial Products Industries at IBM.