Transcript Blog: SAP’s Industry Cloud Special Edition- Industrial Machinery and Components

Hear about the open innovation platform for SAP, our partners, and our customers, and learn specific Industrial Machinery and Components solutions in this episode of Industry Insights by SAP. Josephine Monberg interviews Gaurav Garg, Strategic Sales in EMEA, Member of IBM Industry Academy and Patrick Lamm, Program Lead for SAP’s Industry Cloud in Industrial Machinery and Components.

Josie (00:09):

Hello, everyone, and welcome to this episode of our podcast. If you’ve tuned into some of our latest episodes, you’ll know that we’ve been talking a lot about SAP’s newly launched Industry Cloud. Why have we been doing that? Well, that’s really because this is our new approach to innovation. With companies transforming their core business, we see next generation business process and innovation at the vertical edge evolving. Together with our ecosystem and building on our business technology platform we’re providing cloud native software services in an open innovation environment. This means that our partners and our customers are now able to develop these industry cloud solutions based on open data and process models, APIs, and shared business services. All applications are delivered in one industry cloud, allowing customers to mix and match solutions. What we want to do on this episode is to talk more about a specific industry in the context of Industry Cloud. And today the industry is the industrial manufacturing industry. To do this, fortunately, I have two experts with me who will help us understand the industrial manufacturing industry much better. Today I am joined by Patrick Lamm. He is from SAP and is the program lead for Industry Cloud in Industrial Manufacturing. And I am also joined by Gaurav Garg who is from IBM and he’s a member of the Industry Academy representing Manufacturing Industries. First of all, thanks for being on the show, both of you. And, secondly, Patrick, can I just start off with you and have you tell our audience a little bit more about what you do at SAP?

Patrick (02:07):

Yeah, I’m happy to do so. My name is Patrick Lamm and I am part of the industry business unit for Industrial Manufacturing and Components Companies at SAP. In our department, we drive the SAP Innovation Portfolio for our industry and support strategic customers. In my current role, I am leading the Industry Cloud program for Industrial Machinery and Components companies at SAP. My experience is I have been working in discrete industries for nearly 25 years, mainly around SAP.

Josie (02:45):

Strong industry background! Glad to have you, Patrick. And, Gaurav, how about you?

Gaurav (02:52):

Alright, thanks, Josie. Nice to meet you. I’ve been with IBM for over 20 years and I am part of the industrial sector in IBM. Work across a discreet and process manufacturing companies. I have been leading the Industrial Manufacturing process automation segment for over five years now, working very closely with SAP and, overall, 20 plus years working with the manufacturing industry.

Josie (03:18):

Wow, well, impressed by your backgrounds. Now let’s get into it. But before we start talking specifically about SAP’s Industry Cloud, I’d love to just take a look at the industry from a more high-level perspective. I know that the way that industrial manufacturers interact with their customers was already changing before the pandemic. I’d love to know what are the key strategies that industrial manufacturers are now using to thrive in 2021, perhaps starting off with you, Patrick?

Patrick (03:52):

Thank you, Josie. I think this is a super great question. The pandemic hit industrial manufacturing companies pretty hard and based on my insights from various conversations with Industrial Machine and Components companies, there are two major topics for 2021. Let’s look into this number one now overcoming the shortcomings, the short-term issues, managing the disrupted material flow in the supply chain, the manufacturing and the assembly line, and mainly companies look also beyond 2021. They would like to accelerate the digital transformation and industrial manufacturing companies have to become Intelligent Enterprises. And I would like to briefly talk about what we understand about an intelligent enterprise. There are multiple aspects I would like to touch base on three customer centricity and the segment of one. Moving from a product centric to a solution centric to a customer centric enterprise, what does this mean? This means offering solutions that contained the equipment, software and service it’s at scale additionally, including customer sentiments in the actual execution of the business processes. For example, taking customer sentiments about equipment into the product innovation or providing a better customer experience in sales, account executives can react faster to lower rate customer feedback after the customer meeting. And number two, for example, digital smart products here embedded software is key to manage the digital twin and increase the connectivity of assets. This is the basis for offering new digital services, for example, software-based equipment improvement services or tapping into new business models. For example, enabling the outcome-based economy and finally digital supply networks and smart factoring moving from a regional based to a global supply network and here industrial manufacturing companies will establish practices for planning and execution to drive global sourcing strategy. The key here is to balance between customer service level and total delivered costs.

Josie (06:26):

It’s really about putting the customer at the center and digitizing the core to be more effective. How about you, Gaurav? What are you seeing?

Gaurav (06:35):

Great points brought in by Patrick. But I think sometimes we get lost in the buzz words that we hear, right? During this pandemic period, we actually went and spoke to a lot of our customers. We conducted a survey of around 500 industrial companies with hopeless CXOs and there are some very interesting findings that came out. One is three and five executives. They agreed that the traditional business models are no longer sustainable. And they’re clearly seeing a shift from a product-based who experienced an outcome-based requirement from their customers. We also found a very interesting trend that almost 20% of the respondents, they had a very well-defined service strategy. They excelled both on customer satisfaction and the cost-of-service delivery. We sort of called them service superstars. There was a clear sort of difference between the services superstars and the rest of the cohort. Like they were like 14% higher in their net promoter score. They were having a 40% lower cost of service delivery. We thought, why not just learn from these service superstars and understand what they are doing differently? We could look at six points that really established why they were service superstars. The first was they had a very well-defined strategy, which was aligned across the organization. It was not just the service department, but the whole organization that was aligned on this service strategy. Second, they were focused on the customer experience. Everything that they did was about creating that experience that the customers are looking for. They were all collaborating with the ecosystem, right? They were not just trying to do things by themselves. They believe that when this helps the ecosystem, that’s when they can really transform the business. They weren’t really leveraging digital. Everything that they were doing the back of it was digital. Fifth, they were using a lot of data and analytics and insights to really make decisions and address their customer needs. We can say that data and AI are at the heart of whatever was they were doing in service delivery. And finally, I think they all build a very strong team, and it cannot be emphasized more. I think this was a great insight that we got, and we are now bringing that into our engagements and solutions to the market.

Josie (09:03):

Those were all great insights. Thank you, Gaurav. I think that if you are out there listening and you are in the Industrial Manufacturing Industry can only strive to be a service superstar. I’m also really glad that one of the things that you touched on, which really allows companies to be a service superstar is about collaboration. That’s really what SAP’s Industry Cloud is all about. I’ve kind of touched on it, but Patrick, I’d love you to elaborate a bit more on this. What do you think about our current climate that really requires this new approach to innovation?

Patrick (09:40):

Excellent, Josie, I’m happy to do so. The answer is very straightforward. Industrial manufacturing companies want to run intelligent end to end processes like the lead to cash or the designed to operate processes. SAP’s objective is to enable exactly that: providing end to end solution capabilities that meet the need of industrial manufacturing companies with the SAP Industry Cloud for industrial manufacturing companies, SAP is offering even more industry specific solutions. The SAP Industry Cloud solutions augment the SAP Intelligence Suites, which you all know that is comprised of enterprise management, digital supply chain or customer centricity. The reason why I believe the SAP Industry Cloud is absolute relevant for industrial manufacturing companies are multi-fold. Let’s look into this a bit. Number one, industrial manufacturing companies want to implement intelligent processes. We from SAP called them next processes. Building in intelligence to accelerate the execution of the business processes like supporting service processes, we have started to build a new SAP Industry Cloud solution to enable asset centric services. The idea will be analyzing the condition of an industrial equipment, recommending solution strategies, and planning the service execution. Number two, industrial manufacturing companies experimenting with new business models or process evolutions. For this industrial manufacturing companies need a platform on which new applications can be developed and integrated into the existing business processes. And finally, number three, during a digital transformation project, many industrial manufacturing companies want to implement standard software solutions with the possibility for process extensions to keep the core solutions clean, the extensions can be built on the SAP Industry Cloud. And very important to notice also that partners play a big role in creating Industry Cloud solutions. We have started with many partners to engage. One of them is IBM.

Josie (12:22):

And thank you for ending on that note, because that brings me to my next question, because to your point, partners play a big role in this. Gaurav, how do you think this new approach allow partners like IBM to co-innovate and go to market with SAP and our customers?

Gaurav (12:42):

I think firstly tends to SAP. I think we have had a great collaboration with SAP for many, many years. And with this new strategy of industry cloud, I think this is allowed partners like IBM to harness our industry knowledge and also the experience that we had with our customers to build some industry solution assets that can really accelerate the process of implementation and the time to value for our customers. Now taking on the point that Patrick made about the next processes. We all understand due to the shifts that are happening in the industry, the new business models the customers are now looking at, what are the next set of processes, the workflows that they need to build for the next coming generation. And, we have also worked on these processes and created what we call as intelligent workflows. Now within IBM, we have used IBM as customer zero, as first customer. We have, we have already tested out some of these intelligent workflows into our own backend processes. We have built a lead-to-cash, plan-to-manufacture, a record-to-report, source-to-pay, which are like really enterprise level processes. But we have also infused the industry specific nuances that we have worked together with SAP, around let’s say variant configuration for industrial manufacturing companies around cognitive field service, around a cognitive pricing engine that can allow the salespeople to understand the environment and do the pricing right for every condition that they place. Around how can you include asset management and worker safety into your manufacturing processes? There are some very unique requirements that industrial manufacturing companies are looking for, and we have already embedded that into our intelligent workflows. We have launched some of the workflows earlier this year with SAP and we continue to build on, on these workloads using the SAP’s Intelligence Suits and also the SAP Business Technology platform.

Josie (14:52):

This is really a great example of how we are working with really obviously important partners like yourselves to drive this really deep industry knowledge that our customers need. Now, looking ahead into the future, which I think currently is one of the hardest things to do considering the current state of the world. But what key issues do you think SAP and IBM can really help industrial manufacturers address in order to be successful, Patrick, perhaps starting off with you?

Patrick (15:29):

Yeah, and I think it’s also very straightforward. Industrial manufacturing companies are under tremendous pressure. This is driven by the impact of COVID, but also due to new technologies that traditional business model of industrial manufacturing companies are completely disrupted. And this disrupted force will even accelerate throughout the years. We believe from SAP that until 2025 industrial manufacturing companies need to drive their digital transformation strategy in: number one, find new ways that solutions are being developed, number two, customers are served, and number three, global supply chain and operations are run. In order to be on top of this disruptive force, industrial manufacturing companies need to act very, very fast. Industrial manufacturing companies want to kickstart the digital transformation and which to use the risk throughout the entire project. And for this, our partners like IBM play a significant role. We from SAP have been working with IBM to build an end-to-end intelligence solution that is tailored to the needs of industrial manufacturing companies. This solution is built on the principle of best practices and integrates the relevant solutions and is a good start to really kick start the digital transformation.

Josie (17:16):

Which is critical in today’s. Like you said, it’s been accelerated by COVID, but it was going to be there regardless. What about you, Gaurav, what are your thoughts on this?

Gaurav (17:28):

Josie, I couldn’t agree more. COVID has definitely accelerated the digital transformation journeys for many of our customers. But I think there is also as Patrick pointed, the customers are looking for a faster time to value and also reducing risks. With this approach of intelligent workflows, we are helping our clients simplify, optimize, and reimagine how works get done in their enterprises. Our focus is absolutely to leverage whatever investments they have made, and technology decisions they have made, and then take them into a, onto a journey where they don’t feel the heat of a massive transformation program. We sort of go through the journey with them and bring what they need at the right time. Also, with these intelligent cloud offerings that we have built, we are providing them a platform which is open and flexible in terms of the infrastructure choices that they want to make. We have a strategy at IBM to focus on the hybrid cloud, and that is what we have put at the base of our solutions. This allows our customers to actually build once and then deploy on any cloud infrastructure that they like. There are many customers who today are comfortable with an on-prem deployment, but in future might want to move to a cloud deployment. We are bringing that capability for our customers so that they have the flexibility of making the choices that they want to make, and also making sure that their processes are continuously improving. Our focus is helping our clients start this journey quickly, leverage whatever intelligent workflows we have built to reimagine their processes, and also use the solution assets that we built along with SAP to really accelerate their journey into the new intelligent enterprise.

Josie (19:30):

And, those words, I think we can say goodbye to all of our listeners. You know, it’s really about accelerating the journey to the intelligent enterprise. Like you said, Gaurav. Patrick and Gaurav, thank you so much for coming on the show and making us so much smarter about what’s going on with industry cloud and the industrial manufacturing industry. And all of our amazing listeners, thank you so much for tuning in. Hopefully I’ll see you on the next episode. Bye everyone.