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SAP Leonardo: Agility Engine for Companies

Feature Article | November 21, 2017 by Andreas Schmitz

The digital innovation system SAP Leonardo can help companies innovate faster. SAP experts Martin Elsner and Glenn González explain how companies can best get their innovation projects under way.

Q: A report by German SAP user group DSAG has found that not many companies realize that SAP Leonardo is a portfolio of technologies designed to make their digital transformation easier. Why is that?

Elsner: Many companies are already using SAP Leonardo without knowing it. They already deploy products that were around before SAP Leonardo was introduced; for instance, SAP Cloud Platform, machine learning, augmented reality, Big Data scenarios, and the analytics portfolio. That is a challenge but also the rationale behind SAP Leonardo, the digital innovation system, that provides customers a framework for creating innovation. SAP Leonardo helps make business processes possible and scalable, either from the digital core or through agile and flexible innovation processes. It is a shame that SAP users don’t fully understand SAP Leonardo, but maybe it’s just because the name is fairly new.

Can you describe a typical SAP Leonardo project?

Elsner: MAPAL, a precision-tool manufacturer, is a good example of what SAP Leonardo is capable of. MAPAL uses IoT and SAP Cloud Platform to manage its tools digitally. For instance, when machine-tool parts, such as milling, boring, or turning heads, wear out quickly, a company can soon run out of replacements. Predictive analytics can flag up when to order them and how many to order so that there are always enough in stock. This business case came about even before SAP Leonardo got that name in July 2016.

Glenn, you spend a lot of time with customers. How do you describe SAP Leonardo to them?

González: SAP Leonardo is a digital innovation system comprising SAP Cloud Platform and other technologies such as machine learning, Internet of Things, blockchain, analytics, and Big Data. The system also includes data intelligence and SAP Data Hub. And much more besides. Many companies just launch into things, like building a data-to-dashboard scenario, only to realize further down the line that you have to think innovations through. At the end of the day though, an invoice has to go out, a technician has to be assigned, or master data has to be retrieved. This real-world experience has led us to vastly expand the SAP Leonardo portfolio and our special offerings have helped customers innovate faster. A structured approach is just as important as the innovation system itself.

What is this structured approach exactly?

Elsner: When looking at technology and innovation, you first have to decide what you want to achieve. And that could be anything. Many people in business, including DSAG members, have spent recent years working mainly on topics like SAP ERP, SAP R/2, SAP R/3, SAP SRM, and SAP CRM. In these domains, SAP has defined the standard process and how it is used. That approach isn’t going to work with innovative, agile solutions.

What does this mean in practice?

Elsner: We worked with steel producer Klöckner to build a sales cockpit. It was ready in just six weeks. We hadn’t set out to do that. We had simply started throwing ideas around without any particular outcome in mind. The new cockpit contains a map so that users can plan routes. And it displays a list of open orders along ten kilometers of a truck’s route. Since trucks often left the yard half-full, the challenge was to work out how they could carry more load. Now, load planners and sales reps know where the trucks are going and what capacity they have. And goods arrive at their destination sooner. SAP Cloud Platform, the reports, the integration with the backend – SAP Leonardo combines information from the ERP system with digital services such as the map. That is one innovation scenario that cannot be realized within the constraints of a rigid standard. Before the project got underway, we held a design thinking workshop with Klöckner to brainstorm, explore ideas, and filter out the best ones. After two days, we had a clear scenario. Two days later, the mockup was ready. Soon after we had a decision to go ahead with the project with the company’s management. SAP Leonardo projects are often about scenarios that can really scale, and that also evolve with the business.

How are SAP Leonardo projects different from purely machine learning or IoT projects?

Elsner: Through SAP Leonardo we want to make services that are not part of the digital core as fast and as flexible as possible. That is why we describe SAP Leonardo as an agility engine. Conventional goods movements, generated customer orders, manufacturing processes, and financial and management accounting processes, remain in the stable digital core so that they run cleanly end to end. Take machine learning as an example. If you want to automate and optimize invoice matching, which is a standard process in SAP software, then it would not be a SAP Leonardo project. I would see it as getting the most out of SAP Leonardo technologies in a business context. The business context is where SAP’s strength lies. A good example is a jewelry company offering an image recognition service. If one of their products breaks, let’s say a glass ornament, all the customer has to do is take a photo of it and upload the photo onto the company’s platform. From the entire product catalog, the system recognizes which product it is, identifies its material number, and sends a message to a member of the service team. You can’t do that with core processes alone. In a typical SAP Leonardo project, you not only need the technology but a well-thought-out approach as well.

Not all companies are open to the latest innovations. What concerns do you hear?

González: It’s crucial to know where your company is at right now and where you want it go. Sure, some companies tell us that they are still rolling out SAP ECC and can’t imagine embarking on other projects at the same time. But it is not SAP driving digitalization. It is the market. If we don’t address digitalization, then we let our customers fall behind. I tell them that innovation topics and a rollout really can go hand in hand. It’s called bimodal IT.

What’s the first step a company should take?

González: The very first thing it should do is to identify who is open to innovation and then invite these people to a design thinking workshop, like we did with Klöckner. That creates an atmosphere that helps spark new ideas. Fischer, a major manufacturer, sent us some of their building kits beforehand. One of our developers had the Explorer robot, which came fitted with sensors. He connected it to SAP Cloud Platform, used an iPhone to control it, and added image recognition so that it could recognize an individual. Because that was so easy to do, the ideas flowed from there. What would happen if we added software to our products through the Cloud? Now the robot can recognize images, can we use it in quality control?

What do you say to IT bosses whose companies do not yet have agile structures?

González: A CIO at one of our recent workshops had no infrastructure even for basic innovations like a configuration app for a trade fair. He had to tell the business that he couldn’t deliver something that simple. Why not? Because most people in his department spent all their time on core processes. So he adopted a bimodal approach and assigned a couple of employees to work on these innovation topics. But he still needed a platform, plus coaching and a methodology. In other words, SAP Leonardo. That then got the innovation ball rolling. Not everything has to happen as fast as Usain Bolt runs one hundred meters. Taking that first step is what counts. Through SAP Leonardo, they now have the technologies in place for other, agile projects, and can still integrate the backend.

Martin Elsner is head of presales and a member of the management team of SAP Deutschland SE & Co. KG
Glen González is digital transformation lead at SAP

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