SAP's IoT Strategy: Will Leonardo Fly?

What a difference a year makes. Now I need to start by saying that we weren’t the biggest fans of SAP a year ago. Unlike other research firms, our analysts talk to end-users just about every day (and let’s face it, if the analysts at other firms actually did talk to real customers their stories would start with something better than “one client of mine that I can’t name…”). With every discussion we get a lot of data and an idea of both the good and bad in the tech world.

Consistent themes warrant investigation and SAP fell under the microscope last year for being less than stellar. But then customer empathy emerged as the focus from CEO Bill McDermott at SAP Sapphire Now last year. At this year’s conference the feedback I heard from attendees was that it is working. I spoke to a number of happy customers with a confidence in their future. Okay SAP. Nice job with that.  

So the focus for this year is Leonardo …

We’ve already lamented that the Internet of Things (IoT) is the hot buzzword today. But then within this over-hyped buzzword is real value and SAP sees that. In fact, SAP shared its vision at Sapphire Now this year by launching Leonardo, its “digital innovation system.”

As a matter of record, Leonardo is more of a brand than an actual product. Leonardo will bring multiple applications together under the SAP cloud in a framework for turning streams of IoT data into a manageable store for analysis. SAP Leonardo encompasses IoT, blockchain, machine learning, Big Data, and analytics.

In the end, Leonardo is a marketing bundle, not a market mover. It allows SAP to sell a suite of its products and applications, connecting more and more of a business’s software needs to SAP products. Leonardo’s marketing is focused on “innovation” and the idea of creating the next generation of business. I’d have to agree with their vision where IoT is the small stream that flows into a river of data driving an ERP-centric world. 

SAP is addressing their customer’s fears that they will get caught behind the curve with a one-word solution for their IoT concerns. But while the Leonardo marketing material might be full of buzzwords and phrases that businesses like to hear, there is little meat on the bone. A “digital innovation system” is really a group of SAP applications that already exist. While SAP will work with organizations to put together the right Leonardo “toolbox” for businesses, one wonders if that same service would not simply be offered to customers looking for a suite of SAP applications outside of the IoT environment.

As a product, Leonardo is non-existent, but as a brand commitment, it says a lot about where SAP sees the future going. IoT has long been claimed as the future, yet has failed to live up to the hype (See report: Cutting through the IoT Hysteria February 2017).

With its investment in Leonardo, and a further $2 billion for IoT committed over the next five years, SAP clearly sees IoT as the way forward. This dominated the discussions at Sapphire Now, and SAP views it as a major component of its business offerings moving forward. SAP is establishing partner ecosystems and setting up jump-start programs to aid customers in their transition to the integrated IoT platforms.

With Leonardo it looks like SAP has mapped out a path to finally start generating ROI from IoT. It may not be earth shattering but it is real.