SAP Leonardo Enterprise Wide IT/OT Integration

  • December 19, 2017
  • Feature
SAP Leonardo Enterprise Wide IT/OT Integration
SAP Leonardo Enterprise Wide IT/OT Integration

By Bill Lydon, Editor,

If we needed further evidence of IT/OT integration - as a result of the digitalization of industry and the marginalization/elimination of middleware in manufacturing and process automation - attending the SAP Leonardo event in Chicago provided just that. Taking place from November 2-3 2017, the event put a spotlight on SAP’s IT/OT real-time transaction processing and integration of manufacturing controls and automation for their customers. More than that, however, the event emphasized SAP’s goal to facilitate customer transformation into effective intelligent real-time digital enterprises, not just in technology, but in its core thinking.


Inside SAP’s Efforts in Real-Time Transaction Processing

SAP has significant industry presence with 76% of the world’s transaction revenue touching an SAP system. The company boasts over 365,000 customers in 180 countries, with 80% of users classified as Small and Medium Enterprises (SME). As part of this effort, SAP has transformed batch ERP to a real-time transaction processing system, with the SAP HANNA platform for real-time computing.  Further, the SAP Leonardo architecture now includes cloud and edge processing that is in step with Internet of Things(IoT) concepts. All of these SAP efforts are designed to facilitate and enhance real-time transaction processing; a requirement in so many industries, including manufacturing.

Keynotes included a stimulating conversation with Walter Isaacson author of a book about Leonardo da Vinci.

These new architectures are leaning out system configurations - by eliminating the need for middleware software such as MES, factory floor historians, and HMIs - increasing efficiency and reducing lifecycle costs.   In the past, the constraints of computing costs and networking bandwidth dictated these system configuration; but recently these low-cost high-bandwidth communications, edge computing, and real-time enterprise architectures have been changing the game.  The SAP real-time enterprise architecture, in particular, works to lower the high lifecycle cost of maintaining middleware by delivering improved economic efficiency with the new leaner architecture.


SAP Embraces OPC UA

As we at continue to closely follow the rise of OPC UA, it is worth noting that SAP has embraced it, with SAP Chief Product Owner for manufacturing, Veronika Schmid-Lutz, serving as an OPC Foundation board member.   For the last few years, at Hannover Fair, SAP has displayed it’s Distributed Manufacturing platform; part of the SAP Leonardo portfolio with functional distributed manufacturing systems which leverage OPC UA and integrate edge devices.  The demonstrations have helped illustrate Industry 4.0 concepts in action, integrating design, supply chain, production, and logistics.


Design Thinking- Facilitating User Transformation with an Empathetic Approach

One of the more interesting things that I learned about at SAP Leonardo, was SAP’s growing emphasis of Design Thinking methodology. Mike Flannagan, the Senior Vice President of SAP Analytics and SAP Leonardo - and a member of SAP's Senior Executive Team - discussed how important Design Thinking methodology is for organizations to improve performance.  SAP has embraced Design Thinking methodology as a means to engage differently with a customer; to help identify high-value problems that are really worth solving and developing new solutions. Design Thinking in business focuses on using the designer's sensibility and methods to match people's needs with what is technologically feasible; specifically what a viable business strategy can convert into customer value and market opportunity.  Part of the methodology is to go through the design thinking process and create quick prototypes on those problem-solving ideas, incorporating them into a business case to evaluate the potential ROI.  That idea is that, if it's a great idea, that’s great! Let's do it at scale. But if it turns out that it's not a great idea, that’s fine too, let's just fail quickly before making major investments.

At a high level, SAP’s design thinking methodology includes three main phases:

  1. Discover
  2. Design
  3. Deliver

During the Discover phase, problems are identified. The insights gained from this are then used in the Design phase, which is solution-finding. Finally, in the Deliver phase, the focus shifts to implementing the potential solution. The entire process is highly iterative with many feedback loops throughout. The aim is to yield a feasible and viable solution that produces a tangible and quantified outcome linked to the organization’s objectives.


The Journey to Design Thinking

The journey to SAP’s Design Thinking methodology started 13 years ago. Back in 2004, SAP co-founder Hasso Plattner was captivated by a BusinessWeek article about design thinking. He felt that SAP had strayed from its roots and remembered how he and his fellow founders had originally focused on end users to create a groundbreaking suite of business applications. As a result, he agreed to fund the Hasso Plattner Institute of Design at Stanford University (the Plattner then brought 35 design thinkers into SAP to help make this focus a strategic priority, and subsequently drove innovation across the entire organization. Once teams and executives saw the power of the problem-solving and empathetic approach, Design Thinking spread across many internal groups. In 2012, SAP made a big move to scale Design Thinking - as a way to help customers drive business outcomes - by reframing their problems, finding personal meaning for technology, and focusing on the user experience. Since then, SAP has conducted numerous customer-design thinking workshops and engaged in many co-innovation projects focusing on topics that touch all of SAP’s digital pillars: customer experience, workforce engagement, supplier relationships, the Internet of Things (IoT), and the digital core. “We are using Design Thinking to gain empathy for our customers and help you realize your future through technology so we can help the world run better and improve people’s lives,” SAP CEO Bill McDermott told his customers.


Bill’s Thoughts & Observations

It is impressive to see the conscious effort that SAP has made to reinvent itself using Design Thinking methodology and to use that knowledge and know-how to facilitate companies in their digitalization transition.

I asked SAP leaders how far down the manufacturing hierarchy will the Leonardo architecture penetrate  and they were clear about not pursuing factory and process closed loop control systems.

Having already gone through such a major transformation, SAP appears to understand the gravity of such a transformation, as well as the necessity. Organizational competitiveness can be very much at stake.  Companies that do not take advantage of the relevant innovations, which are disrupting so many other industries, are likely to become stagnant and be quickly outpaced by more advanced competitors.  In contrast, the companies that leverage these innovations can position themselves to become leaders, in both thought and product, for their industry.  History is rife with examples of  people and companies who take the risk to leverage innovative thinking and technology to revolutionize not only their business, but the industry at large. Of course, it’s also full of plenty of companies we don’t remember, because they fell behind the times and fizzled out.  

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