SAP and IoT: cloud integration for smarter companies - Part I

31245016_mAs Thomas Saueressig, leader of the SAP Product Engineering area and global responsibility for all business software applications, says, "SAP did not do a good job explaining how the entire portfolio comes together. To explain how the pieces fit together actually, in a product context (…) we believe that if we combine all the assets, that is the differentiating strengths that SAP has.

But also, in a down to earth manner, because I sometimes believe SAP was always great in talking about nice strategies for the next couple of years, but not what did we achieve.What are the next steps in the next one or two quarters? It is a balance between vision and reality". 

At Linke we are pleased to share this new series of blogs created by our Executive Director and Business Development Manager, Mario de Felipe, with an extensive background and connection to the SAP world. During this posts we will understand how SAP has integrated its IoT solutions and applications into cloud services (AWS ans Microsoft) to enable a smarter and digitized company

Importance of Integration

SAP has so many applications and inter-dependencies that it is a full-time job to ensure their alignment and strategy. It is a solution architect job, even if they work internally at SAP, an SAP partner, or an SAP customer.

That is a new figure in the IT world, the Solution Architect. Usually, solution architects often come from the development world, when a software IT vendor possesses "senior-devs-with-business-knowledge-and-multiple-product-skills" it's offered as a SA.

As Thomas said, you need high expertise to explain SAP in a holistic way that sometimes not even SAP can do. One of the most significant demands from the community to SAP is to clear the way and to help in the Integration between all the products.

Integration is one of the most critical topics SAP has ahead; SAP last cloud companies' acquisitions came with different data structures. The acquired products came with an out of the box integration out of the box, but it's not enough, along with Automation, the offered Integration must be clear and straightforward.

For this, given that today's business processes pull from multiple (cloud) applications, user groups like DSAG are calling on SAP to provide an API-first strategy for SAP's application functions and data.

APIs matter, but they are not the promised land. APIs are how different products communicate one to each other, but SAP should be a company providing that seamless Integration, at least on its products. This Integration is what is being delivered. Right now, if a buyer owns several products from SAP, the expectation is that they come already integrated, via a plug-in, add-on or Flow. It should not be the customer's effort to integrate either from a technical point of view. Also, it extends to third party integrations - even with competitors' products or cloud services.

As cloud-native developments shape today's SAP world, the increasing importance of the cloud and cloud-native infrastructures for companies in the SAP ecosystem is shown by the upcoming digital transformation. New topics that most companies have to address today and will increase exponentially include artificial intelligence and machine learning, Industry 4.0, IoT, RPA, or virtual/augmented reality. A common characteristic characterizes these modern applications: They are developed in a cloud-native way, with service-based architecture, API-based communication, container-based infrastructure, and DevOps processes. Cloud-native application development is one of the two essential components for the SAP environments of the future.

When deciding on a hybrid cloud platform, SAP customers should make sure that it supports a uniform, cloud-native application development on any infrastructure. Buyers need to be aware that it's not open sea, there are ways SAP limits, guides, its customers to consume such services. To go through them we will separate the offerings around four topics, as:

  • IoT, 
  • Big Data 
  • Data Analytics
  • AI / Machine Learning.

The mix of on-premise, private and public cloud services, for both SAP and non-SAP Workloads, drives the discussions today. Concerning SAP, in addition to S/4HANA, customers can obtain additional SAP applications both as SaaS and in containerized form. 

This architecture inevitably increases the complexity that can be handled with the right toolsets for the provision of end-to-end services in such environments. Still, not much information is available on how to connect existing SAP services to Amazon or Microsoft cloud services.

Open APIs are the key. They provide the basis for a uniform and modern technical basis required to connect and integrate existing applications and services. Open APIs, which are the basis for networking data, applications, and devices, play an important technical role in modern infrastructure.

Modern API management solutions are modular, highly scalable, and compatible with the APIs of the SAP Cloud and any reliable third-party IT system. Open API solutions also avoid vendor lock-in and automate processes across company and cloud boundaries, which provide phase 1 of Robotic Process Automation (RPA) adoption.

SAP couldn't turn the back to IoT because it's fundamental today for Manufacturing and Financial companies, the core of the SAP customer base. The petabytes of data that a manufacturer generates through test drives is valuable information for automotive partners and suppliers and can't be ignored. These companies now produce a significant portion of their sales across APIs through APIs.

But SAP not always aligns with the cloud licensing model, and products follow different (if not mixed) licensing option;

  • Perpetual – For on-prem mainly but with Annual Maintenance as an extra subscription (preferred SAP Cloud option) with a term typically 3 to 5 years.
  • Annual subscription fee based on estimated use and includes support consumption for selected cloud offerings such as SAP Fieldglass.

IoT / Edge

It starts with IoT because, unlike other trends like AI or blockchain, the IoT is already in full swing in the industry. It's a story of today.

The pandemic has accelerated digitization. Everyone should agree with the statement that digitization has significantly changed both the way we work and how we should design business processes and business models. Everything that can be digitized is being digitized, and it's fast. Most companies are already using IoT when developing their digitization strategies, but what does that mean specifically in the business environment?

Every machine, every system, every component, every container, every means of transport and every product is digitalized, that digitalization involves how the data is delivered, and how it's received.

This operational data is obtained along the entire supply chain and must be used to make it more flexible, faster, and more efficient. But it is not only the data of a customer supply chain that is valuable; it is also worth looking beyond the company assets to include the processes in connection with the suppliers and customers in the considerations.

The uninterrupted, digital exchange of information across company boundaries focuses on the entire extended supply chain and manufacturing process, including raw material purchasing and the delivery of manufactured items. This means that the use of IoT has already reached the second level of quality. With the extended supply chain, there is further potential to accelerate the flow of information with IoT, to use the information to control the process flow, or to react automatically to events.

The technical possibilities for networking the data, in the form of sensors, small computers, GPS, or cell phone modules, are continuously becoming cheaper, more powerful, and reachable. And on the side of modern IT architectures, integrating these devices in the cloud is becoming more necessary, but the complexity arises as more technologies adapt to it at the same time and the nature of a non-mature market over-provisions with devices that use protocols and languages that are taken from an innovation perspective, with risks.

SAP and IoT development

SAP is investing hard on it, and although this topic is still present around its "Innovation Centers," IoT has been around the SAP world in the last seven years since they introduced it through SAP's "Real-Time Data Platform".

Today, with a S/4HANA and the SAP Plant Connector or the SAP Cloud Platform, the scenarios around IoT can be primarily implemented in the on-premises and cloud-based without costly developments and increasing customer references. Problems are others.

Another aspect is already coming into focus thinking about data-driven business processes: in the future, it will no longer be sufficient to collect and use only the business processes' operational data. To start to understand, the IoT is the foundation to embrace other technologies such as artificial intelligence or machine learning, in summary, the way is to make processes or entire companies intelligent.

The Internet of Things is the foundation of the trendy "Intelligent Enterprise." It shapes the data and takes advantage of data that nowadays, it's just being stored and not analyzed. Although we will speak about technologies and products, let's go to the ground.


Source: SAP


As a foundation of the newly introduced “Business Technology Platform”, the term Intelligence extends around 4 pillars: Database / Data management, Analytics, Intelligent Technologies and Application Development / Integration.

Intelligent Technologies term includes (among other technologies) RPA, Artificial Intelligence / Machine Learning, or IoT and Edge computing.

To embrace under a unique name these intelligent technologies, SAP created Leonardo*.

SAP Leonardo is the umbrella brand for SAP innovations focusing on digital business transformations. It is a collection of software and services that organizations can use to develop digital transformation applications. Firstly, introduced it as a brand for its IoT applications, SAP Leonardo has been growing as the name for other next-generation technologies like Artificial Intelligence (AI), Machine Learning around IoT, AI/ML, RPA, and blockchain.

*If the reader has knowledge about SAP Cloud Platform Internet of Things for the Cloud Foundry Environment, it’s embedded into Leonardo IoT. It serves as the runtime environment for SAP Leonardo IoT.

Source: SAP

SAP Leonardo, to explain it the hard way, it's a suite of products and services (SAP calls it technologies) to provide a built answer for customer on their need for solutions around:

  • Big Data
  • Analytics
  • Machine Learning
  • Data Intelligence
  • BlockChain
  • Internet of Things
  • Business Process (applications), such as Products and Inventory, Manufacturing and Assets, Transportation and Warehousing or Finance, among others.

Technically, SAP Leonardo is on top of the SAP Cloud Platform in the form of Microservices and APIs.

From SAP's perspective, it's natural to use SAP Leonardo with the new SAP Business process, as many of the delivered business processes from the new suite of products from SAP are directly integrated to the SAP Cloud Platform. Becoming what the industry calls "Intelligent," that is, to transform raw data from the system of record, to cooked data (intelligent) shaped in the cloud with algorithms or enriched with analytics.

But, the public cloud giants Amazon Web Services, Google, and Microsoft (after they embraced the open-source) are the preferred infrastructure to deploy NoSQL databases that have been designed for IoT, such MongoDB, Redis, DynamoDB or CosmosDB to name a few.

It's natural then that IoT projects ingest, stream data in the cloud while the customer might be interested in maintaining Financial consolidation or an Analytical consumption of the processed records from the SAP "System of Record".

SAP Leonardo IoT brings intelligence to the enterprise by offering four paths to innovation:

  1. Embedding device and telemetry data into SAP LoB applications (e.g. S/4 HANA, C/4 HANA, Digital Supply Chain) for an IoT enabled Intelligent Enterprise Suite.  
  2. Extending existing SAP business processes by gaining information and insights from previously unconnected devices (e.g. machines, products, assets).
  3. Evolving core business processes stable while creating new IoT enabled business models, in the context of SAP business systems.
  4. Extending the business processes to the Edge, orchestrated from the cloud. SAP Leonardo IoT helps running business transactions correlated with device data, close to the source of IoT data, at the Edge.

Based on the customers' needs, at the beginning of 2019, SAP announced an extended partnership with Microsoft and AWS for IoT. With this approach, SAP Leonardo IoT integrates with Azure and AWS IoT services providing customers with the ability to contextualize and enrich their IoT data with SAP business data.

More technically speaking, SAP Leonardo IoT leverages services from Azure IoT, like Azure IoT Hub and Azure IoT Edge, to provide access to secure connectivity at scale, device management functionality, and edge computing support.

Customers have been provided with the ability to intelligently combine business data to offer industrial IoT capabilities and services to be consumed by SAP business applications. 

Source: Microsoft

Also, customers can seamlessly extend their SAP solution-based business processes to the Azure IoT Edge platform using SAP Essential Business Functions (EBF) from SAP Leonardo IoT Edge. Customers can opt for Microsoft Azure IoT Edge as a runtime environment for SAP Leonardo IoT Edge Essential Business Functions. 

SAP Edge Services EBF (e.g., Field Service Management) is planned to run in an AWS IoT Greengrass, but not released yet. 

AWS IoT Greengrass it's a software that extends cloud capabilities to local devices. Solution Accelerators help build solutions for industrial, consumer, and commercial use cases using AWS IoT Greengrass. Customers can check out how this is adopted by others such as Novartis in this blog.

Source: Amazon Web Services

With a market where 40% of Manufacturing companies are already driving IoT projects, the approach brings a more mature solution, more experience consultants, and better products. How does it work? 

In the next article we will talk in detail about the IoT bases for project deployment. Stay tuned to our blog to know the step by step!

And if you are thinking to integrate your data that is currently hosted on your SAP systems into a cloud environment, download our white paper to find out more about our solution AWS Connector for SAP. 

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