SAP broadens Leonardo as a digital toolset for data-driven applications

On top of its cloud platform, with a broader SAP Leonardo, SAP launches a set of components for the design, development and deployment of digital applications that complement its business applications. Components provide features for big data analytics, machine learning, IoT and blockchain.

When introduced, SAP Leonardo was “just” SAP's IoT platform. At Sapphire, Leonardo became the brand name for SAP’s digital toolset for innovative solutions. For SAP, Leonardo is positioned as the toolset to drive innovation, while its business application, namely SAP S/4HANA, is to run the core business processes of the company. SAP Leonardo is an umbrella for a number of existing technology assets from SAP.

The role of Leonardo

In our view, the main idea behind SAP Leonardo is to create new, data-driven applications by using these components. This can be an application that collects data from devices or machines and combines it with data from an ERP backend, such as order data, customer data and HR data. Also, Leonardo will be a platform on which companies deploy applications that were developed by SAP or SAP partners.

At Sapphire, SAP provided the example of a new real-estate application that is fed with sensor data from buildings about utilization, internal cost figures as well as lease contract data from the backend system. Although this may not be rocket science, it shows in which direction SAP is going to push Leonardo: Providing a platform for applications that connect IoT data with other data from external services as well as operational data and integrating it into transactional business processes.

Machine learning inside SAP applications

Concerning machine learning, SAP’s efforts are very much about automating things within SAP applications. As chairman Hasso Plattner puts it, SAP will not extract data and process it outside the application. Rather, machine learning features will be attached to an application so the data does not have to leave the system.

We expect SAP to provide vertical-specific features on SAP Leonardo that will complement its industry solutions. Machine learning can help to automate processes in these solutions that today require human interaction, and to analyze different types of data. Blockchains may help to build a new form of connectivity networks with companies that participate in business processes.

SAP’s IoT toolset

Compared with other platform approaches of vendors such as Microsoft and IBM, as well as with the IoT platforms from the likes of GE and Bosch, SAP Leonardo does not offer the same functional depth. But we expect the real benefit SAP can provide to be the integration into the leading core application backend.

Whatever companies do in terms of digital innovation, such developments will include the integration of backend processes. Providing this integration in a flexible and less complex way, plus the ability to create innovative applications, can be a key asset for SAP when selling Leonardo to customers.

That said, it will be important to see the development of SAP’s announced strategy of being open to integrating third-party platforms. If, for instance, we take the fast-growing number of IoT platforms popping up that provide deep functionality and therefore would be of interest to companies to integrate with Leonardo.

What's more, they will want to understand the license und usage terms for SAP Leonardo if data from third-party platforms is passed through.

In our view, SAP Leonardo extends SAP’s digital platform strategy in a meaningful way. As demand for digital platforms is skyrocketing, SAP must make sure that its message is heard. This message has so far addressed its large customer base. We will see if and how SAP can be an application-independent platform provider as well.