Germany-based business software maker SAP’s Indian subsidiary has been working with enterprises such as Amazon, as well as government agencies, including Niti Ayog, to focus on tech-enabled solutions using artificial intelligence, machine learning, data analytics and blockchain. With global revenues of €5.59 billion for the third quarter of 2017, it is looking to grow its business of disrupting business processes across sectors with its customised innovative solutions under the Leonardo platform. In a conversation with TechCircle, SAP India’s head of innovation and digital strategy group, Neeraj Athalye, explains how innovations assisted by Leonardo will change the world of technology-based business solutions. Edited excerpts:
What is SAP’s Leonardo platform?
SAP Leonardo is a digital innovation platform offering software and micro-services to enable customers leverage new technologies such as the Internet of Things, machine learning, blockchain, analytics and Big Data.
It is like a programme library, which provides customised solutions, or accelerators, to core areas of our services, such as enterprise resource planning (ERP), customer relationship management (CRM), enterprise resource planning (ERP), product lifecycle management (PLM), supply chain management (SCM) and supplier relationship management (SRM), to digitally transform entire business processes or a certain aspect of a business.
The platform is part of SAP’s innovation strategy. Since most firms are looking at digitally transforming themselves to benefit from the advancements in AI or blockchain, SAP wants to help these firms disrupt their business processes to achieve considerable savings, either by way of stopping wastage or through predictions on maintenance.
What are accelerators?
While the Leonardo portfolio includes design thinking methodologies, data intelligence tools and benchmarking, to speed up time and value for customers, SAP Leonardo accelerator packages are tailored to specific industries and core functions, such as IoT.
Let me simplify this: SAP Leonardo has solutions for 23 different industries, including automotive, pharma, aerospace, retail, manufacturing, consumer products, textiles, engineering and construction, mining and logistics.
Since we work with a variety of clients, we have identified use-cases of newer technologies in these industries and we understand that some of these cases will be in demand for most customers in that space. These use-cases led us to develop specific solutions which are readily available for consumers to buy. These solutions are called accelerators.
The consumer also has the choice to either opt for the platform or buy these accelerator as and when needed. An example of an accelerator is FastCash, which helps companies deal with payment or settlement problems or tasks. FastCash uses machine learning to automate larger processes. Another example is PDMS, or predictive data maintenance services, which can be used at manufacturing units to monitor machines so that they are serviced at the right time and breakdowns do not happen.
You said Leonardo depends on design thinking methodology? How is it different from any other out-of-the-box problem-solving approach?
Most players, including SAP, had been looking at ‘out-of-the-box’ solutions to a problem, but the approach had to change when we are talking about innovation. Design thinking methodology tries to provide a more empathy-based (or customised) solution.
For instance, if there is a particular problem with a newspaper vendor, the methodology suggests that the solution providers along with the person (newspaper vendor) facing the problem has to be in the same room to find the best possible solution.
Earlier, SAP would come up with the best solution, drawing from its array of experience with different clients. But when someone is innovating, it is impossible to know the next best process or solution without getting all the parties to the table and at the same time. Once the solution is arrived at, we check if there is an accelerator available that can be readily deployed. If not, then we design or develop one, or if possible, work on another similar existing accelerator to finally deploy the solution.
Let us be a little more specific. For instance, how would a Leonardo-based solution help an industrial internet of things (IIoT), or Industry 4.0, company?
The implementation of newer technologies to streamline operations and increase efficiency is redefining entire business functions. SAP Leonardo-based solutions can help find an end-to-end management solution to that disruptive transition process.
For example, if a company manufacturing tyres and selling on a per-unit basis or in sets, decides to sell its product in terms of kilometres, that is, say, a purchase contract of 90,000 kilometres. If the tyres do not survive the decided range in terms of distance, the company will replace the tyres. To achieve this, the monitoring of the tyres can be done through our vehicle insights product, which will send information to the edge server in the truck and later to the company server with information, such as geo-location and air pressure. This in turn could be enough to come up with a predictive model that can determine if the tyre is going to survive for the said distance.
Once the company has this data, it can take an intelligent decision on the number of tyres to manufacture eliminating other evils such as large unsold inventory management and wastage of raw material, among others. To get this working, the IoT data has to be fed into processes such as ERP, CRM or SCM, which SAP already offers as a solution. This example only explains the connected product scenario of things. There are four others – connected people, infra, assets and markets.
Last year, you had opened up an innovation centre in Bengaluru, which is by far the biggest outside your home base. What kind of operations are being run from the unit?
The innovation centre at Bengaluru, frankly speaking, has been behaving like an Inox theatre for us. It is running four houseful shows daily and in the past 40 days, or so, we have done some 35 days of innovation training or exercises. We kind of run three functions from the centre. In one of the areas, we are displaying our accelerators. So, when a guy sitting at a manufacturing plant in Indore visits the facility and sees the product, multiple possibilities or ideas of implementation opens up in front of him that could be implemented at his own plant.
The second function it serves is to bring all parties required for an innovation to the same table. Typically, what happens on an innovation day is that either customers place direct orders for accelerators or ask us how they can make their business processes more efficient or both. Now every company has over 8,000 business processes and maybe only 10 are the best suited for it. The centre helps the company arrive at those processes and determining those 10 big tasks. Once selected, the centre in collaboration with academia comes out with new solutions.
The third function is that of a co-innovation lab, which tries to draw the expertise of a company, enhance it with technology and launch a new product in the market jointly. For example, if there is a biscuit-maker who is well-known, then the lab determines how can SAP partner with the firm to launch new biscuits in the market.
The co-innovation lab also involves startups and acts as an incubator. If a startup is able to design solution to a problem, they get to earn revenue out of it directly. What we essentially provide is an infra-platform and expert guidance.
How is the Leonardo platform evolving and who is looking into its development?
The Leonardo development team is spread across different centres across the world. The only thing is that these teams are divided into categories and employees from different categories sit together out of a centre. Having said that, we are also supplying the list of innovation problems we get to our partners called ‘medallion partners’ who take the problem and solve it using Leonardo. There are certain sets of problems that SAP itself takes up to design solutions.
We have also partnered with Accenture, which is helping our customers go through the transition process by offering management consultancy services to look at the new process projects and see that they are finished and deployed.
How does Leonardo generate revenue, and where does it figure in revenue-generation for the company?
Leonardo is basically a cloud service or rather a platform-as-a-service (service). So, just like most of our products, such as Ariba or Hubris, the billing to customer follows a pay-as-you-go or use model. The accelerators are also treated like applications and, hence, their billing is also done based on usage of services.
In terms of Leonardo’s role in revenue, the platform is one of the seven identified pillars that the company wants to focus on over the next few years. We expect more than 50% of our revenues to come from innovation in the next few years.
The Indian government has been very vocal about pushing new technologies across sectors such as health and education. Are you working with the Centre to help it develop AI or blockchain-based solutions?
We have been working with many government agencies on several projects. One of the most interesting projects is the infusion of AI to create a solution for agriculture. Just two months back, our global CEO met Prime Minister Narendra Modi in Dubai to discuss the project and we have deployed a huge team to develop the solution that will help farmers with better information on soil quality, weather and irrigation requirements, among others. We have already been working on agri projects in Brazil and some African countries. We will localise the solution for India, building on the experience we have had from those nations. Other projects include ventures such as SAP’s participation in the Atal Innovation Mission to help with tinkering labs at schools.