SAP relaunched its Leonardo platform as a “digital innovation system” in June 2017 at its Sapphire conference in Orlando, marking a shift from what was once considered an IoT platform.
The idea of the new-look Leonardo is to allow customers to take advantage of emerging technologies like artificial intelligence (AI), machine learning, advanced analytics and blockchain on top of their business data.
Now SAP wants to give customers a simple way to embrace all of these emerging technologies to solve specific business problems, before packaging them up for non-early adopters to procure later on. So instead of just helping customers embrace IoT with a cloud system and a set of templates, SAP has expanded Leonardo to the whole spectrum of enterprise problems.
As Mike Flannagan, senior vice president of analytics at SAP put it at the time: “Leonardo is about accelerating time to value by finding generalised, common business problems across an industry.
“It’s about taking a business problem, which is specific to one customer, find the elements of that problem which are common across the industry, then defining the elements of a methodology, the technologies used to solve that problem and package those up and make them available as an accelerator for the next customers”.
Simply put, Pat Bakey, president of SAP Industries, has described Leonardo as "our way of packaging innovation".
Tracking its progress so far, SAP chief innovation officer Juergen Mueller said during a press Q&A at Sapphire 2018 that SAP has tracked 196 Leonardo ‘scenarios’ to date, up from 15 at the time of launch. “Probably in a year from now we will have a four digit number of Leonardo scenarios,” he added.
Defining SAP Leonardo
It can be tricky to find a working definition of SAP Leonardo at this point because it is an umbrella term for a number of SAP technologies, all built on top of its open platform-as-a-service (PaaS) offering called SAP Cloud Platform.
Speaking during SAP’s 2017 Sapphire event in Orlando, Florida, cofounder and chairman of the SAP supervisory board Dr Hasso Plattner called Leonardo a “bounding box” which sits around “a set of objects. So this is a box around a set of tools to build a system which then, with machine learning algorithms, finds insights which we can attach to transactions” within your SAP environment.
Plattner reiterated that what makes SAP’s approach to AI and machine learning unique is that customers have all of the important business data right there underneath them, in the SAP transactional systems, and that keeping the data in one place is the best way to safeguard it.
During his Sapphire keynote, CEO Bill McDermott said that Leonardo “is the biggest move our company has made since HANA” and that “it’s time for your core systems to fuel your digital innovation, it is time for your data to drive a new customer experience. It is time for machine learning to take the work out of your workflow. It is time for billions of devices to go from thinking to doing.”
McDermott was keen to emphasis the openness of Leonardo for those all-important net new SAP customers looking for cognitive, IoT or big data solutions. As Leonardo is built on the SAP Cloud Platform, customers “can procure Leonardo and snap it into any architecture or environment you have”, McDermott explained, because “the SAP Cloud Platform is an open platform, with all open standards and anybody, including non-SAP customers, can get started”. This includes running on the three major public cloud infrastructure vendors: AWS, Microsoft Azure and Google.
Getting started with SAP Leonardo
Mala Anand, who is now President of Leonardo, had said on stage in 2017 that: “Leonardo is about the business, we start with a business problem, we apply our design thinking methodologies to define the desired solution and apply rapid prototyping to prove how we can make the solution a reality quickly.
"The intent is to bring together everything from machine learning, Big Data, analytics and IoT, all integrated and stitched together on our cloud platform. At the end of the day, we want to deliver outcomes and to deliver those outcomes to transition a business outcome or business model. That cannot be delivered with just one technology."
SAP provides three routes to getting started with Leonardo. First off Leonardo capabilities are embedded in SAP applications, such as smart insights within SAP Ariba, Hybris and S/4HANA.
Secondly, for quick implementations, SAP released 23 Leonardo-based innovation kits for specific industries during Sapphire in 2018, for use cases across retail, life sciences, manufacturing and automotive.
For example, the Leonardo kit for automotive gives quick access to fleet insights. “This cloud-based application optimises fleet operations by bringing sensor data together with business data to provide a global view of fleet performance for strategic decision making, and a detailed view of each vehicle for real-time operations management,” the vendor says.
Then at the more bespoke level customers can either invite SAP on site or visit a global design centre (the first five are in New York, Paris, Bangalore, Sao Leopoldo and Singapore, with seven more to be added soon, in: Silicon Valley, Berlin, Moscow, Shanghai, Seoul and Tokyo) for a day of "design thinking" sessions meant to identify the key use cases customers want to bring Leonardo to, and ending with a working prototype using SAP's Build tool. SAP then provides access to this prototype for employees to offer immediate feedback.
In 2018 SAP also announced that it had doubled the number of solutions available to customers under the new SAP Leonardo Partner Medallion Initiative.
“The SAP Leonardo Partner Medallion initiative expands the number of solutions and teams available to organisations seeking to innovate with SAP-certified technology from a global network of trusted providers,” the vendor stated in a press release. “It is designed for system integrators and technology providers, and includes both global and regional organisations to serve SAP customers worldwide.”
The initial members of the programme include Accenture, Capgemini, Deloitte, EY, HCL, Hitachi Consulting, Mindtree’s SAP practice Bluefin, PWC and Wipro, to name just a few.
Early solutions from the initiative include scenarios for connected shelves and inventories for retailers, derailment prevention for railway operators, and cold chain logistics for pharmaceutical, food and beverage, and medical device industries.
Case study: BASF
One example of a company working with SAP to solve a problem using the Leonardo model is German chemicals giant BASF, which built an email routing bot using Leonardo Machine Learning capabilities.
Speaking to Computerworld UK during Sapphire in 2018, Pedro Miguel Ahlers, digital growth manager at BASF’s performance chemicals division explained: "We went with a problem and working through design thinking, so understanding what the problem we have is and talking openly and then designing a potential solution."
The problem BASF wanted to solve was the way incoming customer request emails were routed, saving employees time forwarding misrouted emails to the right people in the organisation.
So BASF spent five months prototyping a machine learning-powered solution called CuRT (customer request tracking) before spending ten weeks on implementation, going live on March 1.
Now CuRT is routing 2,200 emails a week - that could be a pricing request or a complaint, for example - for BASF’s performance chemicals division, and is expanding rapidly into new geographies at the company.
When asked how Leonardo can stand out in a crowded market, with rival vendors like IBM Watson and Microsoft Azure offering cognitive services, head of products and innovation at SAP Bernd Leukert said in 2017: “I agree there are a tonne of platforms out in the market, but these platforms are living in a silo.
“So by opening up our core system, they can access any physical asset data, HR data, any information they have built up over the years within their ERP system, and connect this with sensor data and even marry this with external market data.
"So if you then want to get intelligence and insight into it, other companies use machine learning to push that information into a dedicated other system, we will call it batch processing, getting insight and then throwing it back.
"We are working with APIs to have real-time connectivity into the execution system and we offer that over 25 industries. I am not aware of any company on the planet that can offer that connectivity and that comprehensiveness.”
Read more: Demystifying the new SAP ERP pricing model
So Leonardo sounds like it will be competing with the Microsoft Azure cloud platform or IBM Watson, in that customers can pick and choose which cloud-based technology it wants to leverage to solve a business problem.
Rather than something more packaged like Salesforce Einstein, which is baked into its software-as-a-service (SaaS) applications to make suggestions and surface insights for users. SAP already does this within its cloud applications, like smart CV matching in Fieldglass or automated service ticketing in Hybris Cloud, but in a less obviously branded way.
As a side note, SAP has taken a partnership approach to developing machine learning capabilities, instead of doing it all in-house. It uses Google open-source project TensorFlow for its machine learning algorithms and Nvidia for the hardware to train these algorithms.
Naturally pricing for a product like Leonardo will be pretty bespoke as it comprises of various cloud software components, bundled together with services like the design thinking process.
According to SAP’s Anand, “Customers will not have to assemble pieces and parts to solve a business problem. We will use included services that tailor predefined software elements for the specific customer implementation. Everything will come at a predefined price and our engagement is time-bound, so every customer has an accelerated time-to-value.”
Anand has also said that the more packaged solutions will come at "a fixed price within a fixed time period”.
When asked what this pricing will look like now that SAP has released its first batch of industry innovation kits Anand said: “We worked really hard on this because we had a lot of feedback from several customers wanting to consume these pre-integrated capabilities it is really important for us to simplify the licensing model, the contract and the pricing, so that is a key differentiator for us as well.”
“So it is one contract, one single price and very easy to transact and make it the right subscription model,” she added.