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Value Creation through Digitization SAP’s Strategy for Industrial Machinery & Components Companies

Georg Kube Global Vice President Industrial Machinery & Components Regensdorf, 29.9.2015

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How many things are connected to the Internet? Today: ~25bn (3.5 per every person on earth)

2020: ~50bn (6.5 per every person on earth)

2006: More things connected than humans

2012: More traffic generated by non-humans than by humans source: CISCO

What is the size of the M2M business? Today: ~$121bn

2020: ~$948bn source: CISCO

How well is Industry 4.0 known and understood? 40% of all decision makers in the german industry do not know the term

84% feel that they don‘t fully understand the chances and opportunities source: FAZ

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Digitization– does it matter?

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Digitization– does it matter?

Missed the IoT trend: German Company lays off 1600 employees Source: http://www.maschinenmarkt.vogel.de/themenkanaele/konstruktion/antriebstechnik/articles/474171/?cmp=nl-97

http://www.maschinenmarkt.vogel.de/themenkanaele/konstruktion/antriebstechnik/articles/474171/?cmp=nl-97








It‘s not enough to be „good“

Source: Die Welt, 11.05.2015

Of all tested products…

40%

8%

30% Are rated „satisfactory“

Receive a „good“ rating

Are rated „not satisfactory“

http://upload.wikimedia.org/wikipedia/de/7/7f/Stiftung_Warentest.svg

Requirements in a

Digitized World


https://www.youtube.com/watch?v=xJ-1psHSTbI


SOLUTION

COMPLEXITY

Extreme Variability Multi-faceted configuration and highly variable demand with regional and localized requirements

SOLUTION

INDIVIDUALIZATION

The Market of One Customized offerings to meet the unique customer needs. Increase variants and reduce costs

DIGITIZATION &

CONNECTEDNESS

Mechatronic Design and Produce cross domain components into one solution (design, electronic, software,…).

Requirements in a digitized world

Add the need for speed and compliance

PAY PER USE

BUSINESSMODELS

Sharing Economy Build solutions in a way that they create a clearly measurable output.

The Digital

Manufacturer

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SAP Point of View:

The Digital Manufacturing Company

Digital

Core

Sourcing

Sourcing

Digital

products

Intelligent products

Embedded software

Internet of Things

Solution business

Digital content

Suppliers

and partners Collaborative R&D

Supply networks

Networked

procurement

Solution provider

network

Customers

Segment of One

Omni-channel

engagement, sales,

and service

IoT-based

engagement

Workforce Workforce

engagement

Mobility

Collaboration

Contingent labor

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R&D Sales Manufacturing Aftermarket

Service Supply Chain

Digital Core

Value Creation through:

Adaptive logistics

Resilient production

Energy management

Predictive

maintenance and

Service

2. Process Innovation

Serving the “Segment of

One”.

Performance and usage

based contracting and

billing.

3. Business Model Innovation

I4.0 enabled products

and solutions.

Extended product and

solution portfolio.

1. Product Innovation

Smart

Products

Track &

Trace

Connected

Logistics

Performance based

Contracting (BRIM)

Configure,

Price, Quote Connected

Manufacturing

Energy

Management

Predictive

Quality

New Business Scenarios

Remote Service

Management

Predictive

Maintenance

Augmented

Reality Apps

Digitization along the Value Chain

Value creation through deep process and data integration


Smart Products:

Company

Solution

Technology Innovation

Benefits

ifm electronic, an industrial automation technology manufacturer and producer of sensors

Situation: intention to grow the business through built-in SAP integration

• SAP Plant Connectivity (PCo), embedded in the ifm product Connectivity Port

• Providing integration to SAP solutions like

• SAP MII/ME

• SAP Business Suite

• SAP HANA

• Business model: OEM

• Add value to the technology offering

• Expand the business through innovation

Sensors

Connectivity

IFM-Products

LR-Agent LR-Agent LR-Agent LR-Agent

Line Recorder

Efficiency

Observer

SMART

Observer

Setup

Station Machine

SAP-Products

Connectivity Port (PCo)

Plant

Enterprise

SAP MII SAP

ME

SAP

EWM

SAP

NetWeaver

SAP ERP

SAP

HANA

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Cloud for Industry:


Company

Solution Benefits

Siemens AG (industry sector), the leading global producer of Industry Automation and Drive Technologies

Situation: Siemens wants to offer an open cloud-based platform as a basis for an industrial ecosystem. This will enable OEMs, application developers and customers to integrate devices and to offer data based services.

• Siemens Industrial Service Backbone (ISB)

• HANA Cloud Platform for the Internet of Things

• SAP analytical tools and apps

• IoT apps from Siemens and partners

• Business model: OEM PaaS

• Combine the best of both worlds

• A unique, end-to-end and global IoT offering for OEMs, app developers and industrial customers

• Set a new industrial standard to access and make sense of machine data

Technology and Business Innovation

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SAP Solutions for the Internet of Things

SAP Predictive Maintenance and

Service

SAP Connected Logistics

SAP Connected

Manufacturing

SAP Augmented

Reality


SAP HANA Cloud Platform / IoT Services

The Product Perspective


Software

Mechanics

Electronics

System Thinking

Mobile Comms

Services

Source: Adapted from „Software gibt den Takt vor“, C.Kühnl in „Mechatronic & Fertigung“, 2010

Mechanics

Electronics

SW

It all starts with a culture of “System Thinking”


The biggest inhibitor today:

Disconnected value chains and multiple solution models

Sales Sourcing Production Service Design

Engineering BoM

Mechanical

Electronical

Software

Services

Sales Configurator Purchased parts lists Manufacturing BoM As installed /

as maintained BoM


SAP Point of View:

Seamless collaboration on one common solution model

Sales Configurator

Sales decides which options to expose to customers as sales options and valid configurations.

2

1

Engineering BOM

R&D develops the basic product structure with configuration options, new and re-used parts.

Sourcing Purchased parts list

Sourcing will decide on strategic suppliers and alternative parts.

3

As-built / As-maintained BOM

During installation and life of the product, parts will be changed, augmented and improved leading to yet another view of the product structure.

5

Working together seamlessly

All aspects of creating, managing and changing the solution model have to be done in a controlled and collaborative way. No strict serialization of processes.

6

4

Manufacturing BOM

In order to do the actual manufacturing the product structure is re-built to reflect the manufacturing strategies and process.


Sales Configurator

Sales decides which options to expose to customers as sales options and valid configurations.

2

1

Engineering BOM

R&D develops the basic product structure with configuration options, new and re-used parts.

Sourcing Purchased parts list

Sourcing will decide on strategic suppliers and alternative parts.

3

As-built / As-maintained BOM

During installation and life of the product, parts will be changed, augmented and improved leading to yet another view of the product structure.

5

Working together seamlessly

All aspects of creating, managing and changing the solution model have to be done in a controlled and collaborative way. No strict serialization of processes.

6

4

Manufacturing BOM

In order to do the actual manufacturing the product structure is re-built to reflect the manufacturing strategies and process.

Comprehensive Solution Portfolio:

SAP has invested significantly over the course of the last 18 months

Solution Selling:

SAP Configure, Price, Quote SAP hybris Billing

Strategic Sourcing:

Ariba Supplier Network Collaboration

Manufacturing Operations:

Connected Manufacturing Product Structure Synchronization Visual Manufacturing Planner Shopfloor Dispatcher

Operations and Aftersales Service:

Asset Intelligence Network Remote Monitoring and Diagnostics Predictive Maintenance and Service AR for Service Technicians

Process Orchestration:

SAP Project System (ERP) Engineering Change Management (ERP) JAM Collaboration Project & Portfolio Management

Collaborative Product Design:

SAP Innovation Management SAP Engineering Control Center SAP Product Lifecycle Costing SAP Engineering Product Suite


IDC Point of View: Find a balance between managing complexity and complication

Complexity:

Inherent technical complexity of products

Needed to fulfill customer requirements

Driven by digitization

CAD centric PLM Strategy

Complication:

Extended enterprise (suppliers, customers)

Fragmented business processes

Inconsistent data structures

ERP centric PLM Strategy

Source: IDC Whitepaper „PLM Selection in SAP Environments“ by Bob Parker and Jeff Hojlo, 2015

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The competition is not always where you think it is

thank you

Georg Kube

Global Vice President

Industrial Machinery & Components

SAP SE

[email protected]

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