Thought Leaders in Internet of Things: David Parker, Global Vice President, SAP (Part 5)

Sramana Mitra: How pervasive would you say is the adoption of Internet of Things? Do you have sensors’ use cases in each of these segments that you brought up? It sounds like manufacturing and industrial automation is one of the early adopters. Is that 100% penetrated? What are we talking here?

David Parker: The irony is that a lot of these industrial firms have had sensors on a lot of their machines for a number of years. They capture the data in batch mode and are not doing much with that data. When a machine fails, I know that it failed because it failed. I don’t need to get a report on it. I would categorize it as much as around 55% of manufacturing firms are already in that state. They’re already connected. They’re already acquiring data but don’t do much with it. The technology now has moved on in terms of capturing it real time and processing it either on the edge or at a core data center, or in the cloud.

As much as 40% of that 55% is now about collectively, in real time, looking at that data and doing some predictive analysis on that data. The remaining 45%, probably the 20% of those are still in the analysis phase. Does it make sense to put sensors on all of our equipment? What does that mean? We get back to, “Is it intrusive?” It is intrusive, but what value am I going to get from that? Is it worth taking a risk to have it intrusive knowing that I would improve my bottomline by some 4% or 5%. Those are the models that we work with in engineering teams and business consultants to figure out what the ROI is before they engage in these projects.

The remaining 60% of the 45% are not that inclined today. They are looking to see what these other first movers are doing. They’re not too concerned today about losing market share no matter how you implore that they are losing significant revenues. They’re taking a back seat because they consider IoT immature, at least, for them and their line of business. The other businesses that are significantly moving their bottom line in a positive direction by embracing IoT or this world of what we call digital transformation, offering new business models not just for internal purposes in terms of reducing cost, but more importantly, in how can they channel that back to their external customers to offer them new service models, which they can now control because they now have more real time visibility.

Sramana Mitra: Those numbers are probably not the numbers in retail. I think retail is not as far along. Retail is taking a much more cautious look at the adoption of IoT.

David Parker: Retail is a lot more pervasive because you now engage directly with the end consumer. The only true value that the retail’s going to get is from the consumer or customer persona and the demographics of the customer. In this case, IoT is very invasive and pervasive. What I mean by that is you have to utilize customer data to gain true insights. You could only do that if the customer opts into your program.

This segment is part 5 in the series : Thought Leaders in Internet of Things: David Parker, Global Vice President, SAP
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