First solutions for Industrie 4.0 in November 2014

SAP on the Internet of Things (IoT) and on Industrie 4.0

Thomas Ohnemus, responsible at SAP for global marketing in the extended supply chain, met with Ulrich Sendler in the SAP headquarters in Walldorf for a discussion that formed the basis of this article. SAP is not only the world's leading provider of software for enterprise resource planning, the Company also supplies a variety of software systems that support companies in the management of almost all value chain processes from product strategy and innovation management through to service.

Ohnemus was initially responsible for solution marketing of SAP product lifecycle management (PLM) but today is Vice President of Solution Marketing for the extended supply chain, this designation being chosen so that it includes the areas of PLM, manufacturing, sustainability, asset management and the supply chain. The name chosen – and the content – is intended to show clearly the requirements placed on SAP by its customers. Realization that all value-added processes must be closely linked to each other is growing in companies involved; and therefore the expectation that software vendors such as SAP will support them in this integration process is also increasing.

The Internet of Things (IoT) and Industrie 4.0 are of such strategic importance to SAP that the Company has set up a special department to handle these aspects. SAP, however, does not need to look for possible applications within industry; it is actually the other way round – it is the customers who are asking SAP for a solution. The first applications will enter the market in November 2014, and in 2015 SAP will make available an own platform for IoT.

Industrie 4.0 and IoT – in great demand by customers

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(Thomas Ohnemus, photo SAP)

Industrie 4.0 the German Federal Government’s project of the future – and part of its high-tech strategy – has already been deployed to considerable effect. In this way the cross-linking of “things” via the Internet and its importance to the industrial nation of Germany has very quickly become apparent to a large slice of the public. As Thomas Ohnemus notes “in industry boardrooms people are talking about this in a different way than they would have done if the Industrie 4.0 project didn’t exist and if key industry associations weren’t involved in the Platform I 4.0.”

Here, SAP does not have to convince customers of the virtues of a new technology. On the contrary, it is the customers who are bringing up their problems and who want solutions. SAP has, in the last two years, already responded to these needs with pilot projects that have been (and will continue to be) set up and realized together with customers. These sometimes make the rounds as showcase examples, with others still being company confidential. Two of these examples will be here examined in somewhat more detail. Both form the basis for new solutions that will be soon be provided on the market by SAP as standard solutions.

The first of these is a change in the business model at Kaeser Compressors, the other being a logistics program at the Port of Hamburg. Both examples show very well how linking systems via the Internet creates new opportunities – opportunities that complement existing schemes, approaches that permit completely new business models and innovative breakthroughs in product development, manufacturing and service.

SAP sees itself confronted with challenges that include an extension of existing solutions as well as the development of entirely new systems. Customers approach SAP and present ideas that they cannot realize with the software solutions currently available. They then work out what they need together with SAP. According to Thomas Ohnemus “there are many topics, such as the connection of machines and their sensors via the Internet, which we have not in the past focused on because there was no demand. Now the technological prerequisites are present and demand is also there. On the other hand, there are subjects that we have previously treated separately, such as customer relationship management and PLM, but which must now be integrated with each other to make Industrie 4.0 work.”

From compressor to compressed air – as a service


(left: marketing photo Kaeser Compressors)

Kaeser Compressors offers products, services and complete systems that provide industrial enterprises with compressed air. The system solutions also include the production, processing and distribution of the compressed air. In addition to the development and manufacture of compressors, service plays an important role in this market. The failure of a compressor operating in adverse conditions can lead to costly downtime. Kaeser therefore always wants to know as much as possible about the status and operating conditions of the equipment it delivers.

As well as the desire to have, if possible, service available on site before the failure of a compressor, there are other good reasons to learn more about the equipment during operational use. The better the information available about the application, the environmental conditions and the risks, the better products can be designed and produced that ensure secure and fail-safe operation while at the same time guaranteeing the lowest possible lifecycle costs.

In 2012 Kaeser began with a SAP project intended to secure this information. It will be available in November as a custom predictive maintenance solution based on SAP HANA. The compressor manufacturer has equipped his products with additional sensors that provide a vast amount of data on air currents, temperature flows, energy consumption and device states during operation. SAP in its turn, making use of the possibilities of in-memory HANA technology, provides extremely fast analysis of the collected data. HANA can temporarily store large quantities of data in memory and make this available for evaluation without having to output it to hard disk.

With the aid of outstanding customer examples, Kaeser was able to demonstrate in a relatively short time that this approach also offers significant advantages for customers. The wastewater treatment in Moundsville, Virginia is an example – long-term measurements had shown that a constant oxygen supply in a sewage tank was on occasion far too much, but sometimes too little. The addition of a second tank connected to the first one, a new fan and permanently installed measuring sensors let the small town save USD 50,000 to USD 60,000 per annum in energy costs. The exact amount of oxygen is now supplied precisely where it is needed.

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Moundsville Wastewater Treatment Plant (photo Kaeser)

This pilot project with SAP resulted in Kaeser not only satisfying customers and improving service. The compressor manufacturer immediately thought ahead and began developing a new business model. If Kaeser understands exactly how its devices might be used, then it is simple to draw conclusions regarding the range of services to be offered. The customer is not buying a compressor, but the availability of compressed air – with the guarantee that Kaeser will pay the costs if the availability of almost one hundred percent is not maintained. Customers are more than willing to pay a premium for this. The new service not only relieves them of the effort of monitoring equipment, it also prevents downtime and lowers energy costs.

Something else of interest took place internally at Kaeser that the outside world does not see. Product developers now spend about a quarter of their time with service specialists. This is because it is the service department that delivers the data that permits conclusions to be drawn concerning potential improvements that can be directly used for future developments or for changes to existing product lines. If service has become Kaeser’s main business, then product development is directly interested in the optimal functioning of the equipment across its lifetime. Previously, such interest was directed towards the sale of the product, after which the product development team had almost nothing more to do with the products. Those days are well and truly over.

"The most advanced example of the Internet of Everything"

Together with T-Systems and the Hamburg Port Authority, SAP has in recent years also developed a solution designed to optimize the traffic flow of the trucks bringing containers to and from the port. This is based on networking almost all of the key participants. The dispatcher at central dispatching has at all times information on the current position of the vehicle and cargo, received via tablet computers and smartphones positioned in the truck drivers’ cockpits. The driver is correspondingly informed about traffic blockages and free parking lots.

This solution is used to disentangle and ease the flow of port traffic and reduce delivery times by giving only that information important to the participants at that specific moment. Currently, 200 trucks from various trucking companies participate. According to a blog by Carsten Knop in FAZ.NET on May 25, a further boost for this project will be supplied in the fall of 2014.

On October 1, the German daily “Süddeutsche Zeitung” published an interview with Cisco CEO John Chambers under the title "Germany can be world leader", in which he observes that “according to our calculations, Germany, given an ongoing shift towards Industrie 4.0, can profit to the tune of about 700 billion euros within the next ten years. That would represent an additional growth of the economy by two percent annually during these ten years.” He cites the logistics project of the Hamburg Port Authority as an example.

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air photo of the Port of Hamburg (source homepage Hamburg Port)

Chambers continues “This is the most advanced example of the Internet of Everything in the world. 10,000 ships a year enter and leave the port, and all processes must be networked together over the Internet. Both the Port Authority and the politicians responsible have understood how great the change can potentially be.”

As a result of this project, SAP is bringing an application called Connected Logistics to the market. What works in the port of Hamburg is transferable to other logistics areas such as airports and freight marshalling yards. Thomas Ohnemus notes that “from software that was developed and field-tested in a pilot project based on customer requirements, we have created a standard software solution – one that we would not have thought of five years ago.”

Big Data and Cloud are becoming more important

For SAP, Industrie 4.0 and IoT are also significant drivers of the major topics of big data and cloud, both of these having a close relationship to one another. The more data we have about products via networked things and people, the greater is the need for solutions that require a timely, economically meaningful analysis and evaluation – as the examples of Kaeser and Hamburg harbor show. Such big data solutions can be operated very well on the basis of SAP HANA, and the two applications announced for November are also a good example.

But where data becomes big data, meaning that it possesses both a large volume and a wide variety while at the same time having to be analyzed simultaneously and very quickly – if not in real-time – the question of whether it makes sense to keep space available for these datasets or whether to go for a cloud solution also arises very quickly.

Thomas Ohnemus reports from the USA that you can see a real run on switching from conventional licenses to cloud operation much more quickly than anything taking place in Europe “from experience, technologies like these are implemented earlier in the US, but we are prepared for this trend to become evident in Europe and Germany, albeit with a little delay.”

Innovation that results from service

Industrie 4.0 and IoT evidently change the way in which industry implements innovation, as the above examples very clearly show. In the beginning this does not necessarily have to be an idea for a new product. Breakthrough innovation can to some extent come from the end of the traditional value chain, from service. The interconnection of products – and also of the manufacturer and his customers – results in the roles of the market participants changing.

As Ohnemus comments “the influence of the customer is increasing. All manufacturers and suppliers of products and services look closely at what the customer does with the products, how he uses them, how they behave and what weaknesses they exhibit. And conclusions about changes to the products or future products and services are derived from this.”

SAP sees the needs of the industry with regard to systems engineering and model-based system development methodologies growing, because the greater the role of networking, the more important the interaction of the disciplines of product development will be. But these needs do not yet have top priority, which is rather improvement in service, logistics, customer relationships and the developing of new business models.

According to Ohnemus, this development in its entirety plays into the hands of SAP. “We have a holistic approach to IT support of industry. And the more IoT becomes reality, the clearer also for our customers will be the need of a holistic approach in order to meet market demands.”

SAP has responded with the establishment of a separate business division for Industrie 4.0 and IoT. And also with a new platform that will allow customers to develop their own product- and company-specific applications for the Internet of Things. This IoT platform, based as the above applications on SAP HANA, has been announced for availability in 2015.

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