Thought Leaders in Internet of Things: David Parker, Global Vice President, SAP (Part 4)

David Parker: Number two is, these industries like manufacturing, CPG, automotive, mining, oil & gas are the primary industries that we’re seeing a lot of traction from our customers across the globe, irrespective of the initiative that’s coming out of Germany. The main reason for that is that they envision that there must be a new commercial revenue opportunity by taking some of the consumer market. What they mean by that is that everybody has some kind of a mobile device. You know the stats.

The executives at these organizations such as Siemens, Honeywell, GE are looking at this market and saying, “How do we capture more consumer share? How can we improve our products and services by enriching the data that we already have with data that we don’t have currently – data coming from devices, data coming from sensors, data coming from machines. To augment that data with our business data, we model that data by using predictive algorithms that are industry-specific. As soon as the data comes in, it automatically determines the value of that data. From that value, I can tell you what new products I may need to build, how I need to change existing products, and how I need to devise new services that I can take to market.

A prime example is Kaeser Compressor. They’re a SAP customer. They were approached by their customer to say, “We want to move our operating model and how we buy services and products from you.” They wanted to move from a CAPEX model to an OPEX model. So, moving from upfront large investment costs to a more monthly subscription cost. What this company was able to do is put sensors on all of their machines that they would sell. These are compression components – the large ones that go into industrial offices and factories right down to the small ones that are used for road repair. They monitor that in real time and get a really good understanding on the health state of those components to the extent that they can remodel their service agreement. What they’re able to do is as opposed to selling the equipment, they now lease the equipment. They can actually lease the amount of air that’s being consumed by that equipment.

Now, they’ve completely changed their business from being a product company that’s selling these heavy duty compressor units to being a service company. I’ll allow you to subscribe SaaS with a monthly subscription fee, and I will look after the servicing of this component for you. All I’m going to charge you for is the air on a monthly leasing cost. It completely revolutionized the way they address their customer base because it is a concern that was being raised by their customers. That is an Internet of Things story because we’re actually taking the data that’s been collected from the sensors, analyzing that data with predictive models, to now allow them to re-imagine their business, and come up with new business models.

This segment is part 4 in the series : Thought Leaders in Internet of Things: David Parker, Global Vice President, SAP
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