SAP(UK) and the Internet of Things

SAP (UK) and
the Internet
of Things
August 2016
Narjisse Benjine | Kavyashree GC | Desiree Özgün
This white paper was produced by Lancaster University students as part of a research
project with SAP and is not an oficial SAP publication.

| EXECUTIVE SUMMARY
EXECUTIVE SUMMARY
Today’s technological advancements are inevi-
table. With cheap hardware acquisitions, wide-
spread connectivity and digitisation, adopting
technology becomes a must.
While the buzz is focused on IoT currently, the
novelty of its oferings resides in the ecosystem it
creates. he aggregation of smart ‘things’ leads to
the generation of valuable data –which if lever-
aged, takes the value proposition of organisations
to a new level.
It introduces them to strong service and custom-
er centricity. For that, the governing command-
ments of the digital era revolve around the deliv-
ery of user experiences.
Taming uncertainty and enjoying lexibility are
also a must. Despite IoT’s hype being acknowl-
edged across industries, its relevance varies per
sector. It heavily depends on irms’ readiness in
terms of technology infrastructure and organisa-
tional mindset.
Moreover, with currently dissolving industry
boundaries, emergent cooperation and opportu-
nities need to be watched out for. Based on these
factors, six industries were chosen for a detailed
review of their potential business process changes
in IoT, together with the beneits and challenges
the latter brings on.
Subsequently, the importance of value webs
arose, highlighting how crucial the interconnec-
tion between vendors and clients becomes in an
agile unpredictable IoT context. Bonds must cer-
tainly be fostered -through the reliance on co-cre-
ation and co-opetition, leading to the delivery of
unique solutions –where custom development is
at the lead.
his white paper was produced by Lancaster Uni-
versity students as part of a research project with
SAP and is not an oicial SAP publication.

TABLE OF CONTENTS
EXECUTIVE SUMMARY..................................................................................................................2
BEHINDTHEHYPE...........................................................................................................................4
IoT AND ORGANISATIONS............................................................................................................5
he IoT Ecosystem.....................................................................................................................5
IoT and the Digital Era.............................................................................................................6
Planning for IoT.........................................................................................................................7
ADOPTING IoT...................................................................................................................................8
Transforming Business Models & Processes..........................................................................8
Relevance of IoT in Industries..................................................................................................10
Retail..............................................................................................................................11
Healthcare.......................................................................................................................12
Maintenance...................................................................................................................13
Automotive.....................................................................................................................14
Utilities............................................................................................................................14
Sports...............................................................................................................................15
IoTBeneits andChallenges...................................................................................................16
SAP & COMPETITORS......................................................................................................................17
From Value Chains to Value Webs.........................................................................................17
Solution Providers – Current and Emergent.........................................................................18
SAP SOLUTIONS & SERVICES.....................................................................................................19
Current Oferings......................................................................................................................19
SAP’s Current Diferentiating Factors.....................................................................................20
Impact on Services....................................................................................................................20
CONCLUSION....................................................................................................................................23
Summary...................................................................................................................................23
Recommendations....................................................................................................................23
METHODOLOGY...............................................................................................................................24
AUTHORS...............................................................................................................................27

| BEHIND THE HYPE
BEHIND THE HYPETechnology has rapidly gained more rele-
vance and has changed the way we live, learn
and take actions. Technological advancement
has been happening very fast in recent times.
Internet of hings (IoT) is one of those de-
velopments that has been creating a lot of
buzz amongst academics and industry practi-
tioners. IoT was born about a decade ago and
has been called as one of the emerging tech-
nologies by Gartner over the years. Gartner’s
hype cycle has seen IoT from “technological
trigger” to “plateau of productivity” and has
hit the Hype Cycle’s “peak of inlated expecta-
tions in 2014 [23]
.
Gartner’s Hype Cycle (2015) features technol-
ogies that are a focus of attention because of
particularly high levels of interest and have
the potential to impact. It elucidates that
IoT is at the peak of this cycle in the midst
of other emerging technologies. he report
also forecasts that the number of connected
devices will reach 20.8 billion by 2020. With
this enormous scale of devices connected, it
is crucial to recognise the new opportunities
for innovation, driven collaboration and par-
ticipation with customers and other partners.
he economic impact and beneits of IoT will
be huge. he 6 major beneits that IoT brings
are [1]
:
• Tracking behaviour for real-time marketing
• Enhanced situational awareness
• Sensor-driven decision analytics
• Process optimisation
• Optimised resource consumption
• Instantaneous control and response in com-
plex autonomous systems.
Internet of hings brings many advantages in
an individual’s life. he beneits can come in
many forms including healthcare, safety, i-
nancially and everyday planning. he integra-
tion of IoT into the healthcare system could
prove incredibly beneicial in monitoring vital
signs of the patient. IoT can also function as
a tool to people within their households. he
smart home setup through IoT will allow in-
dividuals to communicate with their home
appliances remotely and control them in an
eicient way.
here’s a lot of exciting potential out there.
For the irst time, appliances can be better
informed about when to run so they avoid
peak-hour pricing. We are in the early stages,
but we’re already seeing consumers seeking out
these beneits.
Senior Category Manager, Smart Homes [8]
Figure 1: Gardner Hype Cycle

| IoT AND ORGANISATIONS
IoT AND ORGANISATIONS
Adopting technology in organisational settings
has always been the norm. Automating processes,
developing applications in-house or implement-
ing enterprise systems became a irm’s routine
long time ago. Today’s hype is all about the In-
ternet of hings (IoT). Although the buzz around
it has indeed stabilised, embracing it is another
story. Everyone is busy digging for tangible best
practices before diving into the unique transfor-
mation IoT seems to suggest.
Is IoT a new concept? No. It is a combination of
existing elements, resulting into a novel ecosys-
tem.
he exponential technological progress has been
witnessed for ages now, complying with Moore’s
law and its predictions [3].
he latter reinforced
by cheap hardware acquisitions, coupled with a
prevalent digitisation helped blur the boundar-
ies between physical and virtual worlds. With-
in interconnected settings, the incorporation of
sensors and chips in every other passive device
helped create an interactive environment, where
humans and machines are not only communicat-
ing, but also collaborating.
Connecting sensors and devices, providing access
to the meaningful data they are intercepting, to
then leverage them and act upon them, is in sim-
ple terms what an IoT ecosystem ofers. he val-
ue is therefore generated from these newly smart
‘things’, capable of sensing the outside world and
reporting in real-time on its state. he advantage
is then granted by the live integration, agility and
autonomy embedded in an environment of fos-
tered interdependencies.
From self-driving cars, to remote patient monitor-
ing –several science iction use cases were turned
into reality. Innovation has always been the basis
though, and technology is only its enabler.
Despite the novelty being acknowl-
edged across various industries,
IoT is indeed perceived as a blend
of existing elements –for being al-
ready ‘used’ at such an early stage
of the hype.
he IoT Ecosystem
Figure 2: Current Perception of IoT Use

In bridging the organisational understanding of
technology and the technical advantages ofered
by IoT, the following architecture in Figure 3 can
be used.
he edge represents the sensor and gateway net-
work layers of a standard IoT architecture. To
draw it closer to an organisational understand-
ing, it is simply the location of physical objects,
providing information about items of relevance
to a certain business. In a manufacturing context,
machines with temperature sensors on them can
notify users about a potential overheating, trig-
ger the shutting down of an interrelated system,
or keep a plain live update with regards to the
state of use and condition –when no malfunction
is in the horizon.
he continuous sensing and actuation are in
fact source of meaningful data. he platform is
where the latter are stored, iltered and analysed
to generate valuable insights to the organisation.
he analytics can in turn be of several types (Fig-
ure 3) – descriptive, diagnostic, predictive or pre-
scriptive [24]
, leading to the establishment of mea-
sures and improvements to be undertaken either
in the present or in the future, beneiting both in-
ternal and external stakeholders to the company.
Leveraging smart connected things and running
analytics is not a joyful random process. It is gov-
erned by key business rules found at the heart of
the irm maintaining such ecosystem. Models,
processes and applications are all found within
the enterprise.
IoT and the Digital Era
Figure 3: IoT Architecture - Layers in an Organisation

As it has been the case for any technology adop-
tion within competitive sectors, leveraging the
new opportunities ofered by IoT is a must. How-
ever, smart objects require a smart strategy. In-
deed, embracing IoT is not simply choosing
between a vanilla and a customisation type of im-
plementation –as it was the case with robust yet
rigid ERP solutions.
Given the potential embedded within IoT’s novel
ecosystem, rigidity is indeed not even an option.
he need for implementation needs to emanate
from an organisation willing to revisit its business
model toward service and customer centricity,
and intending to embrace agility for the long run.
his in fact falls within the current digital era’s
commandments [4]
.
“he better you are organised today, the harder it
will be to become agile (…)”
Abiding by the digital commandments while
adopting IoT spurs does not stop at a revision of
business model and strategy. It gets cascaded all
the way down to ways of working: business pro-
cesses. he way the latter are designed currently
is equally not compliant with IoT oferings. Put-
ting event-processing and ad-hoc executions at
the heart of process executions requires organi-
sation to trade the linear processes from lexible
self-coniguring ones [19]
.
While the excitement around IoT is out of con-
trol, taming the latter’s capacities is urgent. Tech-
nological growth indeed awaits no one.
Customers decide
User experience govern
Flexible companies lead
Uncertainty is constant
Nowadays, organisations are acknowledging the
advantage behind IoT. Usage is either current or
prospective (Figure 3, Figure 4).
However, as highlighted before: with IoT, rigid-
ity is not an option. A business understanding
is a must. he latter is meant to guide potential
transformations, distinguish between qualifying
industries –worth the investment.
Planning for IoT
Figure 4: Value of Data in IoT [24]
Figure 5: Is IoT in the Roadmap?

| ADOPTING IoT
ADOPTING IoT
Adopting IoT is not a simple plug and play game.
It is a mindful exercise each transformation-pro-
spective organisation needs to go through. Start-
ing with their strategies and business models,
irms need to irst establish themselves in terms
of service and customer centricity. Following that
comes the incorporation where IoT best its.
Embracing IoT may not necessarily be a radical
top-to-bottom change making organisations un-
dergo a holistic shit. It might as well be a pro-
gressive journey, where irms target their core
functions worthy of investment before they could
expand such novel IoT-adoption on all levels.
In seeking a glimpse of expected beneits among
various parties, analytics, remote control and
automation are found at the forefront together
with process optimisation and cost saving (Fig-
ure 6). his explains in turn why the processes
prone-transformation are expected to be the op-
erational ones (Figure 7).
Transforming Business Models & Processes
Figure 6: Expected Benetis from IoT

| ADOPTING IoT
he beneits mostly praised by various current
and potential IoT adopters can apply to all in-
dustries. However, the latter are found at difer-
ent stages of their relationship with technology.
While some sectors are heavily reliant on auto-
mation and digitisation, some others are over-
whelmed with bureaucracy and have not neces-
sarily shited to a strategy/technology alignment
in their development. Moreover, the complexity
handled by an IoT ecosystem might no necessar-
ily exist in the irst place – within a business, for
which no organisational need might have trig-
gered a heavy technological dependence.
By taking into consideration all these factors, fo-
cus needs to be drawn on industries, which are
not only worth an IoT investment but also infra-
structure and mindset ready for it.
As a transformational journey, it is meant to open
up new revenue streams and prepare robust or-
ganisations for the coming – ininite, hypes.
Figure 7: IoT Relevance per Process Type
With IoT, we will have new business mod-
els to analyse, design, innovate and execute.
his afects our key resources, channels, cus-
tomer relationships and includes all dimen-
sions of business. It’s not necessarily just the
technological aspects, it will also include op-
erational and managerial aspects.
Solution Architect

|ADOPTING IoT
In order to exemplify how IoT might afect in-
dustries from a process perspective, the following
six were chosen: Retail, Healthcare, Maintenance,
Automotive, Utilities and Sports his choice was
irst supported by survey results (Figure 8). Ad-
ditionally, the development of IoT will dissolve
industry boundaries, creating unexpected links
between certain sectors, spurring us to look
into those with several bonds. For instance,
Sports was judged prominent for becoming part
of healthcare through IoT. Similarly, retail and
transport sectors do collide.
he Internet of things requires mind-set change.
IoT opens up a wide range of capabilities and op-
portunities for businesses to create and capture
value diferently. In industries that are becoming
connected through IoT ecosystem-diferentia-
tion, cost and focus are no longer mutually ex-
clusive, rather they should mutually reinforce in
creating and capturing value.
he initial step towards creating new business
models for IoT is by encouraging customers to
opt for IoT solutions. his can be ensured by col-
laborating, identifying their requirements and
deining suitable solutions, and making sure they
understand the beneits of incorporating IoT in
their business models.
Relevance of IoT in Industries
Table 1: Changes in IoT Business Models, based on[14]

|ADOPTING IoT
Retail
Implications of IoT on Business Processes
1. Forecasting Customer Needs
he eiciency of real-time data processing can
improve accuracy to facilitate better forecasting
and replenishment of products. his can be used
to identify demand-inluencing factors (DEFs)
that are uncertain and unpredictable.
2. Dynamic Workforce Allocation
Retailers can plan their workforce better with
the Internet of hings. Retailers can gain insights
on store conditions, number of customers, peak
times and plan their workforce for the store.
3. Supply Chain Management
IoT has many advantages in this area which in-
clude monitoring storage conditions along supply
chain, product tracking for traceability purposes
and payment processing based on location [1]
.
In retail, the focus so far has been for
companies to connect with their business
networks such as customers and suppli-
ers, and make sure it’s seamless. However
now that we have everything connect-
ed, the retailers really want to make use
of data that is available (…) to come up
with smarter decisions and give custom-
ers personalised experience.
Solution Architect
4. Optimised Replenishment
Technologies like store-heat mapping can help
in understanding customer behaviour within the
store and predict their potential purchases. his
helps retailers not only engage continuously with
vendors in making real-time decisions, but also
in adapting their promotions and product prices.
Figure 8: IoT Relevance per Industry

|ADOPTING IoT
Use Cases
1. Smart Shelves
Smart Shelves are wireless inventory control sys-
tems that are itted with weight sensors. hey cre-
ate added value by providing automatic replen-
ishment alert, misplaces item alert, item position
transparency, expired date notiication, customer
interest notiication and added product informa-
tion for customers [29]
.
2. Smart Fitting Room
Smart itting rooms are facilitated with mirrors
that provide customers with a range of extra ser-
vices such as 360-degree views of outits, alter-
native lighting conditions and also personalised
compliments [6]
.
Healthcare
1. Patient Monitoring
IoT facilitates improved patient monitoring, pa-
tient identiication information and easy access to
medical history [13]
.
2. Drug Management
he expense of creating and managing drugs is one
of the biggest issues facing the healthcare industry
today. Adding RFID tags to medication contain-
ers will help producers, consumers and regulators
have greater conidence in the drug supply chain
[13]
.
From a patient centric point of view, IoT
devices collect patient data and analyse
it, which will help detect the anomalies
(…). hat detection will trigger an in-
tervention by a person, who may then
telephone, email or contact GP. Further
steps into prediction -part of the analysis
might be predicting the likely outcomes
that provide more information for prac-
titioners. his would support their inter-
vention with patients.
Business & IT Security Manager
Figure 9: Smart Shelves, adopted from [29]
Figure 10: Smart Fitting Room, adapted from [17]

|ADOPTING IoT
Use Cases
1. Smart Pills
Smart pills include microchips, which commu-
nicate with other devices. hereby, a consumer,
physician or some other stakeholder can provide
information about their journey and employment
through a user’s body. his real-time monitoring
and communication can facilitate dynamic chang-
es in treatment towards the consumer who swal-
lows a smart pill [30]
.
Maintenance
1. Automatic review of machine condition
Predictive aspects of IoT open up new innovative
possibilities in maintenance. Data from sensors
monitor machine condition and automatically
identify any patterns that indicate machine fail-
ure [2]
.
2. Self-diagnosis & Self-adjusting
IoT technologies can prevent emergencies. hey
enable preventive maintenance, self-diagnosis
and self-adjusting through networked devices
which exchange information and can take inde-
pendent actions without any human assistance
[15]
.
3. Process Integration Across Departments
IoT integration across departments enables lower
costs, reduced time of repair, and new business
models and revenue opportunities to meet com-
petitive advantage in the digital market [22]
.
4. Learning Systems
his can help avoid unplanned downtimes, rec-
ognise corrective measures to plan and introduce
most efective ways. Systems can use information
on past problems to predict future events [2]
.
Use Cases
1. Battery Condition
Batteries are the most important and sensitive
elements in electrical trucks or any electrical
equipment. herefore, monitoring the battery
conditions in machines/equipment is an import-
ant task. he IoT solution for this task is to devel-
op a self-sensing technology and capture the data
coming from the batteries. swallows a smart pill.
2. Machine Usage
Once the machine is switched on, an event is cre-
ated. Upon that, sensors attached to the machine
start capturing data, recording its usage and gen-
erating a subsequent invoice.
Figure 11: Smart Pill, based on [30]

|ADOPTING IoT
Automotive
1. Digital Supply Chain
Monitoring supply chain eiciency by integrat-
ing, securing and optimising data low inside
the enterprise, as well as throughout the supply
chain.
2. Customer Behaviour Monitoring
Customers’ behaviour can be monitored. Gen-
erated insights can be used to understand their
requirements and plan solutions for future pro-
duction and improvements.
3. Responsive Manufacturing
Increased visibility over customer requirements
enhances manufacturing operations, optimises
production and supply chain processes. he latter
are indeed lexible and can be adjusted according
to changing market conditions. his in turn helps
keep short lead times and reduces costs.
Use Cases
1. Connected Car
It is forecasted that by 2020, connected car will
be the top connected application [12]
with an in-
crease in global market value of components and
services to €170 billion from just €30 billion cur-
rently. Connected cars are vehicles capable of op-
timising their own operations, maintenance, con-
venience and comfort of passengers using sensors
itted in them and Internet connectivity [20]
.
A car has always been there -where it has
changed is the connectivity to the outside
world. IoT ecosystem connects service pro-
viders, manufacturers and third parties
with this connectivity. he issue in the car
can be diagnosed remotely and let the cus-
tomer know that the car needs to be ixed.
Solution Architect
Utilities
1. Automated energy consumption and monitor-
ing
Control devices and various sensors are used to
identify parameters and transfer related data.
his helps limit the maximum energy consump-
tion and automatically terminate or re-connect
energy supply to any customer remotely.
2. Asset Management
Utility industry involves assets like transmission
lines, distribution lines, power plants that need
to be managed. With IoT solutions, assets can be
Figure 12: Connected Car

|ADOPTING IoT
managed eiciently through forecasted overload
situations, improved maintenance strategies, de-
vice failure prediction, as well as replacing or re-
pairing.
3. Customer behaviour –learning process
IoT allows for the generation of patterns out of
customer habits. Using a multichannel platform
that seamlessly connects customer interactions
across all channels (online, mobile, call centre &
local sales), advanced analytics in utilities can en-
hance service quality, lower costs, preserve and
deepen customer relationships [21]
.
Business process in IoT has more variety
than earlier. We have more decision points
with detailed data on assets and custom-
ers which can be used to come up with
new solutions, reactions, marketing cam-
paigns for diferent customer segments.
Solution Expert
Sports
1. Coaching management
With IoT, data about the players is made available
for coaches, fans and broadcasters. Additionally,
motion tracking through wearable sensors on e.g.
shank, thigh, pelvis etc. enables proile creation.
Lastly, player records and information are lever-
aged in the generation of patterns, serving their
need for both performance enhancement and in-
jury management.
Use Cases
1. Smart Meters
Smart meters measure energy consumption, col-
lect information like values of voltages, phase an-
gle and frequency in real-time, and communicate
this information. hese meters can help monitor
and control home appliances remotely. Data col-
lected by smart meters are unique meter identii-
ers, timestamps and electricity consumption val-
ues [32]
.
2. Instant analysis
he Connected Athlete uses sensors in shoes or
boot, and then connects that up to the stadium’s
Wi-Fi network or even a low-powered cellular
phone transmitter so that teams can monitor it.
his data can also be shared with the fans [25]
.
We are seeing convergence of health and
lifestyle technology with IoT. he way
sports are layering these diferent technol-
ogies together is changing coaching, the
way fans view sports and even how sports
clubs are run.
Consultant
Use Cases
1. Self-teaching and improvement
In golf clubs, players can wear a sensor in their
shirt, on their wrist, shoe or racquet, which can
help monitor their swings and improve them [25]
.

|ADOPTING IoT
IoT Beneits & Challenges
Beneits
Challenges

| SAP & COMPETITORS
SAP & COMPETITORS
From Value Chains to Value Webs
When a new disruptive innovation enters the
market, time is needed for users to adopt this
innovation. According to Everett and his theo-
ry “difusion of innovations”, also known as the
S-Curve, every innovation goes through ive dif-
ferent stages until all users have adopted the in-
novation:
• Innovators
• Early adopters
• Early majority
• Late majority
• Laggards
Factors that speed up the adoption of a technolo-
gy are: [26, 27]
• Innovation
• Communication channels
• Time
• Social system
his shows that not only the innovation itself
plays an important role in spreading solutions
fast, but also factors that can be inluenced like
communication. Due to the nature of IoT, which
aims to build a global ecosystem with connecting
large numbers of devices and data in real-time,
it becomes even more important to move from a
value chain to a value web where an interconnec-
tion between organisations and solution vendors
exists.
In order to achieve this integration of the IoT and
maximise its beneits, co-innovation is a useful
principle, where new ideas and approaches from
various internal and external sources are integrat-
ed in a platform to generate new organisational
and shared values.
In an early stage it is important to bring as
many stakeholders into the “SAP IoT Eco-
system”, to dissolve industry boundaries and
establish a vertical infrastructure. here is no
need at an early stage of an innovation in the
market to compete, as the market irst needs
to grow but to co-innovate to achieve growth.
hese three principles need to be followed for
building up an open, connected ecosystem [25]:
Co-Creation: Feedback from customers and
partners build back into solutions
Collaboration: Inter- and intra-organisational
collaboration, e.g. suppliers, partners outsourcing
irms, distributors
Co-Opetition: Cooperative competition, joint
work
Figure 13: Innovation S-Curve

| SAP & COMPETITORS
SAP HANA IoT Cloud
Platform
Oracle IoT Cloud Service
Microsot Azure IoT
IBM Watson IoT (IBM &
Cisco)
Start-ups play an important role in the IoT-Eco-
system, as they are agile and oten specialised in
a speciic service. Big players could be “hunting”
for start-ups in order to expand their ecosystem
and proit from their ideas, customer centricity
or agility. here is also an impact on SAP’s ser-
vices seen as acquiring start-ups changes the way
solutions are ofered to end-customers and used
by them.
I think the big diference between SAP and its competitors
is: SAP has now a package, a combination of SAP HANA
database and applications. In total it’s a framework, which
is very powerful. Most of the competitors either have a
database, or an application only. SAP is now among the
only ones, who have actually both in place a database -an
in-memory database, and very good applications with all
the business processes in place. hat’s because having only
one of these parts is not the killer-application, but rather
having all of these together - the business processes and the
advantages of a new in-memory database. his is the big
diference, the big additional beneits of SAP right now.
SAP Consultant
“Big Players” vs. Startups
Solution Providers - Current and Emergent

| SAP SOLUTIONS & SERVICES
he current solution portfolio by SAP includes
the areas of Discrete Manufacturing, Transporta-
tion & Logistics, Energy & Natural Resources and
Consumer Industries [31]
.
Similar or competitive industry-solutions by oth-
er members of the ecosystem can be seen in the
various sectors.
SAP SOLUTIONS & SERVICES
Current Oferings
Figure 14: SAP Product Portfolio (adopted from [31]
)
SAP’s Solution Portfolio
Competitors Industry Solutions

SAP’s Current Diferentiating Factors
• SAP HANA Cloud Platform for IoT
• hird party solutions build based on SAP
HANA
• Interfaces, extension of standard solu-
tions via e.g. partners, APIs
• Combination of hardware and applica-
tions & close interaction between hard-
ware and solutions
• HANA as a whole framework (e.g. analyt-
ics engine, predictive engine, geo-data)
• Edge – Platform – Enterprise: Focus on the
core rather than data collection – i.e. being able
to process, analyse, visualise
• Custom development: Building customer feed-
back and requirements back into standard
solutions, closer it between customer needs
and functions, sharing development costs
• Connecting with and learning from customers,
partners, (e.g. Sapphire world SAP forum, de-
sign thinking approach)
Impact on SAP Services
he use of IoT leads not only to task automation,
improved operational eiciency and performance
optimisation through re-design of current busi-
ness processes of an organisation, but also inno-
vation of new business processes in terms of new,
connected products and services. Especially in
the knowledge economy innovations include new
products and processes, which are becoming an
important factor of competitive advantage of or-
ganisations [10, 7]
.
he IoT can be an enabler to generate value out
of data, transformed business processes and busi-
ness models. SAP’s customers do not only require
services for implementing hardware, but also ser-
vices to transform their business and gain value
from the connected, real-time exchanging Inter-
net of hings.
“IoT services are the real driver
of value in IoT, and increasing
attention is being focused on
new services by end-user organi-
sations and vendors.”
Business Analyst
“IoT has the potential to drive the largest
segment of growth in new business value
with the right solution infrastructure. SAP
can help you know where opportunities ex-
ists, evolve your business processes to take
action, and create new business value and
ecosystem advantages.”
Solution Architect
Figure 15: Data to Wisdom Pyramid (based on [9]
)

he IoT turns organisations – and SAP – into ser-
vice organisations, because this is what the IoT
enables and is an opportunity for revenue. Gart-
ner estimates, that the IoT will increase service
spending by 22% between 2015 and 2016 up to
$235 billion [11]
.
Enterprise Systems customers were asked in a
survey, what they expect from a vendor of IoT
solutions (shown in Figure 8). More than 60%
of the respondents see “Flexibility with solutions
(adding functions, adding 3rd party sotware)”
(63%) as the most important point, followed by
“Providing Expert knowledge” (61%) and “Imple-
mentation Support” (53%).
To value of data is increased depending on the
state of data and how it is used. SAP can use ser-
vices ofered to customers in order to increase the
value gained from data.
he service areas and opportunities of SAP can be
divided in the following streams:
a. Custom development: he IoT goes against
having packaged standard products, as within
the IoT scenarios there is an increased number
of end-points, quickly changing markets and var-
ious custom-speciic business processes. here-
fore, the importance of ‘Custom Development’
increases.
he purpose of custom development is to custom-
ise SAP standard sotware according to customer
requirements. At SAP, custom development is
built into the standard SAP methodology.
he custom development team works in cooper-
ation with consultants and solution architects to
feed process knowledge iteratively into standard
solutions and consulting. his approach enables
SAP to get quickly into the market with new fea-
tures that exactly it to the customer needs, which
is beneicial in a fast changing IoT-ecosystem.
“It’s not yet time for us to start thinking of
standards, and also depending on the sen-
sors they have, end points they have, the use
cases of speciic customers, there would be
certain custom development scenarios. CD
teams play an important role in this.”
Solution Architect
Figure 16: Service Expected from IoT Provider
Figure 17: Value Funnel (Solution Architect)

b.) Consulting – Premium Support – Education:
SAP has “Design hinking Workshop”- it’s for
ideation to creating ideas, it’s an interactive
using white board, post-it’s to get the cus-
tomers to complete the part of ideation pro-
cess. We have experts who are good at design
thinking, customers can understand what the
most relevant use cases for the business.
Solution Architect

| CONCLUSION
CONCLUSION
he Internet of hings connotes hyper connectiv-
ity and agility. he ecosystem it ofers as
a novelty is built around self-adaptive intercon-
nected devices and sensors, which continuous-
ly feed back to systems meaningful information
about the physical world. As the latter beneits
from digitisation, capitalising on data becomes an
asset. heir analytics turns into a powerful tool,
guiding innovation, initiating opportunities and
instructing improvements.
Although IoT reveals itself appealing for acqui-
sition and implementation, organisations cannot
aford diving into it without revising their strat-
egy and business models irst. A shit towards
service and customer centricity is a must, for IoT
requirements to emerge from their internal set-
tings. Indeed, the lexible nature of such solutions
makes it mandatory for a business to know what
they want. here is no ‘one-size-its-all’ standard
ofering.
IoT prospective adopters can belong to diferent
sectors. However, the type of transformations un-
dertaken by irms from diferent industries can
vary. Indeed, while some are ready to embark in
a full transformation, others can only undertake
progressive small changes –starting at their core
irst.
From a vendor perspective, knowledge and sup-
port is key to this IoT environment where nearly
everyone is novice –in one way or the other.
Before the buzz escalates, the following recom-
mendations are found at the heart of a successful
solution and service provision:
Leveraging current authority in estab-
lishing a strong name in IoT
Bridging the existing gap between what is
done internally (i.e. IoT proactive inno-
vation delivery) and the perception cur-
rent or old ERP customers may have (i.e.
associating SAP to robustness – but also
to rigidity)
Initiating a lexible mindset in-house to
then ofer lexible solutions to clients
Capitalising on packages where HANA is
core without undermining the possibility
of third-party sotware and cloud inte-
gration
Partnering with growing players as
co-opetition is essential.
Bringing custom development to the
forefront in oferings.
Summary Recommendations

| METHODOLOGY
METHODOLOGY
he research presented was conducted by students
2015/16 of the ITMOC programme (MSc. Infor-
mation Technology, Management and Organisa-
tional Change) as part of a collaboration between
Lancaster University Management School and
SAP UK. It stretched over a 10-week period and
conclusions were drawn from primary and sec-
ondary data sources. Sources included interviews
with SAP-internal expert knowledge (e.g. solu-
tion experts, solution architects, business trans-
formation experts) to get insights about IoT with-
in the SAP ecosystem. External stakeholders were
interviewed as well, varying from professionals
met in ITMOC workshops to previous employ-
ers or contacts from conferences, helping us con-
struct a client perspective on the topic. Addition-
ally, the gathered data was supported by academic
literature, whitepapers and a survey conducted
with Enterprise Sotware customers about their
knowledge and expectations around IoT.
Used Main Sources
Interviews: 16 interviews were conducted with
SAP internal and external experts.
• 8 Internal Sources, including: Solution Archi-
tects in various industries, Business Transfor-
mation Experts, Consultants
• 8 External Sources, including: Strategic
Business and IT Advisors, Head of Tech-
nology, Change and Improvement Leaders,
CEOs, Business and IT Security Managers,
Free-Lancers, Business Innovation Oicers
Survey: A survey was conducted with 53 respon-
dents of various industries and positions, both
SAP-customers and non-SAP users.
Figure 18: Used Sources
Figure 19: Industries of Survey Participiants

| METHODOLOGY
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|AUTHORS
Authors
Narjisse Benjine
Narjisse is a postgraduate student, currently inalising her dissertation for the completion of the MSc Informa-
tion Technology, Management and Organisationa Change (ITMOC) at Lancaster University. She also holds a
computer science bachelor degree from Al Akhawayn University in Morocco.
Narjisse has previously worked for a year at UCB, in Human Resources Technology, where she acted as a
liaison between HR and an IBM IT team. Her role revolved around reining requirements, managing system
improvements as well as designing and testing solutions – on both SAP HR and SuccessFactors. She was also
in charge of global processes –such as compensation and workforce planning.
Kavyashree GC
Kavya is inalising her studies for MSc in Information Technology, Management and Organisational Change
(ITMOC) at Lancaster University and holds a Bachelor’s Degree in Computer Science with a specialisation in
Sotware Development from Visveswaraya Technological University, India.
Kavya has worked for more than two years as an E-Commerce Application Developer for a multinational or-
ganisation. Understanding client requirements and analysing the scope of development was an essential part
of her role. She was involved in design, development and implementation of an online shopping website for a
global fashion brand Calvin Klein, which was later released in the UK and 12 European countries.
Desiree Özgün
Desiree is currently completing her MSc. in Information Technology, Management and Organisational
Change (ITMOC) at Lancaster University Management School. She holds a BSc. degree in Business Informa-
tion Systems from Baden-Wuerttemberg Cooperative State University Stuttgart in Germany which included
an internship programme.
Desiree has worked for two years as a certiied SAP FI-CO Consultant at a SAP partner, contributing in a
team of consultants and programmers to the success of international SAP implementation projects with me-
dium-sized customers. Her role revolved around understanding customer requirements, implementing these
into the system, training users and supporting go-live.

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