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Author's profile photo Susan Galer

How Digitization Transforms Manufacturers into Service Providers

/wp-content/uploads/2015/06/digitalmanuscn_730420.jpgDigitization is a hot topic, generating over 7 million hits in my latest Google search, and internet of things (IoT) is even hotter, erupting with over 700 million results. Everyone may be buzzing about the transformational vision but to understand the actual opportunities, companies in every industry have to separate the facts from the hype. Nowhere is this more apparent than across discrete manufacturing industries like automotive, high tech, industrial machinery & components and aerospace & defense. I recently spoke with Stefan Krauss, General Manager for Discrete Industries at SAP, to find out what digitization means to manufacturers and their customers.

“Digital transformation for companies in the discrete manufacturing industries represents a fundamental business model evolution and expansion from selling products to selling products, software and services which mean companies evolve into real solution providers,” said Krauss. “Of course this is significantly influenced by the internet of things, enabling greater value and services by exchanging data between machines, products or devices and manufacturers or service providers for better insights leading to improved usage and efficiencies.”

According to Krauss, the way to become a successful service provider is by collecting and analyzing real-time, accurate information. Connected networks, what some call Industry 4.0, powers the digital economy, making platforms and software the transformational engines. “Digitization includes business networks and communication, as well as internet of things, which consists of sensors that collect data for insights and action. This requires platforms and makes software much more important,” said Krauss. “That’s why we’re committed to deliver solutions on SAP S/4HANA because these will help our customers gain the flexibility and speed to take massive amounts of sensor data from machines or social networks and turn them into insights for better business outcomes.”

Of course, what’s fueling the hype are increasingly demanding customers who want what they want, when they want it. To stay ahead, organizations need usable data they can act on immediately. “Speed is what matters today, combined with high quality and cost-efficiency. Companies need to have very flexible solutions for their customers,” said Krauss. “At the same time, they have to accelerate delivery capabilities and improve product usability making it easy for end-users to quickly realize the greatest outcomes for return on investment.”

Examples of what’s possible

In my interview with Krauss, he explains how several global companies are transforming business models with IoT. Here are some excerpts.

Harley Davidson increased output by 25 percent by creating an end-to-end connected manufacturing operation from customers to shop floor using the SAP HANA Cloud Platform and supply chain management solutions, including production planning and shop floor management.

Instead of compressors, Kaeser now sells cubic meters of compressed air through their “Sigma Air Utility” service. Sensors on its compressors at customer sites capture and transmit real-time air metering and quality data for faster error resolution, minimizing downtime.

GEA, one of the world’s largest suppliers for the food processing industry, is using SAP Predictive Maintenance & Service and SAP IoT connector on the HANA Cloud Platform to help remote technicians monitor machine performance in real-time, reducing downtime and increasing product quality.  

Manufacturers share the same overarching objective, whether producing customized motorcycles on demand, managing millions of data points to deliver air that maximizes factory operations, or remotely monitoring machines to head off problems before they arise. They are translating the promise and vision of digitization into business outcomes. This is what every company needs to do right now. 

Follow me @smgaler

Related content:

What is Internet of Things

SAP Manufacturing Industries Forum 2015, June 23-25, 2015, Chicago, IL

Why manufacturing companies need to transform into digital enterprises now  

SAP Unveils SAP HANA Cloud Platform for the Internet of Things

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