SAP is betting big on Internet of Things (IoT), and is planning to invest €2-billion over the next five years to accelerate innovation in its IoT solution portfolio, increase sales and marketing, scale service, support and co-innovation, and grow its ecosystem of partners and startups in the IoT market, which is estimated to reach €250-billion by 2020.

Simon Carpenter, chief technology adviser at SAP Africa, explains that the company has made the new investment as part of its focus on Industry 4.0.

“The thing with IoT it is the ability to connect everything to everything, which ties in to the notion of Industry 4.0. The German government is on a national initiative to drive Industry 4.0. It recognises that the fabric of the economy is mid-size companies that make things that help people make things. So they are driving Industry 4.0 to ensure German manufacturers remain competitive.”

He adds that IoT allows technology to be used beyond the factory floor, also helping to operate, monitor and maintain products once they are in the field.

The new realm of IoT will be equally relevant in South Africa and Africa, where smaller and medium-sized companies form the backbone of economies, Carpenter says. In fact, SAP has recognised the importance of this market by setting up one of its first SAP IoT labs in Johannesburg.

SAP is already involved in a number of proof of concepts, and should announce its first IoT implementations soon, he adds.

Central to today’s SAP IoT announcement is the acquisition of two companies: and Fedem Technology. is an enterprise-grade IoT provider that simplifies the process of creating, deploying and managing complex IoT solutions. Plat-one provides expertise and technology to accelerate the availability of key IoT capabilities in SAP Hana Cloud Platform, such as advanced lifecycle management for IoT devices, broad device connectivity, strong IoT edge capabilities that work seamlessly with a cloud back-end, end-to-end role-based security and rapid development tools for IoT applications.

SAP will demonstrate a ecosystem operation in beta as soon as November.

Fedem Technology specialises in advanced engineering analysis and building software for multibody dynamic simulation and lifetime calculation of structures and mechanical systems under the influence of complex loads.

Carpenter explains that with this acquisition SAP plans to build an end-to-end IoT solution in which a digital avatar continuously represents the state of operating assets through feeds from sensors, replacing the need for physical inspection with a “digital inspection”.

In addition, the solution is intended to consider complex forces in play and detect both instantaneous consequences of one-off events and long-term health effects of cyclic loads, making possible accurate monitoring of maintenance requirements and remaining-life prediction for assets.

While business and public sector entities have unprecedented access to more information and realtime feeds, they still have difficulty tying it all together across operating locations, business units and functional teams. SAP IoT aims to make sense of Big Data from the multitude of things through IoT solutions that apply machine learning and integrate with the core business applications of SAP S/4HANA.

SAP IoT includes solutions connecting people, partners, things and the physical environment, enabling organisations to extend and enrich business processes with realtime, live intelligence so that they can see where opportunities exist, achieve new operational efficiencies, and reimagine business models, products and services to deliver more immediate customer and stakeholder value. It seeks to enable connected business and connected society, addressing urban and rural areas and spanning agribusiness, infrastructure and energy, health, defense, manufacturing, consumer and transportation industries.

As part of today’s announcement, SAP is introducing Industry 4.0 packages that feature IoT solutions to enable customers’ digital business strategies.

The jump-start package is designed to initiate operational and business system connectivity as a foundation to monitor equipment effectiveness and provide insight into shop-floor operations. The accelerator package also has this functionality, and adds an automated, paperless, manufacturing execution and control environment by supporting manufacturing planning and execution, performance analytics and advanced plant maintenance.

Both packages are complemented by the SAP Distributed Manufacturing application for additive manufacturing 3D printing services. The jump-start and accelerator packages are available immediately. SAP plans to introduce the third Industry 4.0 solution package, the “advanced” package, at a later date to provide advanced manufacturing insight and controls, machine learning functionality and predictive analysis for quality and maintenance operations. SAP also plans IoT package solutions to address the unique digital operations of cities, agriculture and energy industries.

SAP plans to establish locations around the world to collaborate on Industry 4.0 and the IoT with customers, partners and startups. SAP IoT labs are intended as lighthouse locations and primary access points for IoT research, development, proof-of-concept modeling and incubation, with IoT showcases, thought leadership, expertise and infrastructure for strategy and product co-innovation.

SAP plans to increase investment in consulting and knowledge transfers with dedicated innovation adoption consulting and IoT universities at the sites.

Planned locations include Berlin, Johannesburg, Munich, Palo Alto, São Leopoldo and Shanghai, with SAP and partner experts in areas of specific IoT focus native to each region, such as Industry 4.0, logistics, cities and digital farming. The labs are intended to provide customers with access to co-innovation resources including design thinking experts and workshops, and interactive demos of IoT-related technology including autonomous systems (such as drones and robotics), IoT security, machine learning and 3D printing.