Learn the benefits and opportunities of IoT and SAP integration for your business, navigate existing solutions, and see the pitfalls to avoid.
IoT and SAP Integration Explained: Benefits, Challenges, and Application Areas
With data-driven approaches to literally every aspect of a business taking over the world, integrating your ERP with IoT technology is just a matter of time. Integrating IoT with SAP allows enterprises to effectively transform field data into actionable insights, benefiting the business’s agility, competitiveness, efficiency, and profitability.
In this article, we’ll dig deeper into the benefits of integrating IoT and SAP, cover the main challenges one can face during integration, list the major areas of application (spoiler: they are useful for every business), and review available IoT integration solutions.
IoT and SAP Integration Benefits
Let’s take a look at the core benefits of IoT and SAP integration for businesses. All of them allow companies to outperform their competitors and keep up with the ever-evolving business landscape.
Enhanced decision-making
Data retrieved from IoT allows businesses to enhance their decision-making process and introduce a proactive approach to operations. For example, this can be clearly seen in the manufacturing area, where the integration of SAP and IoT allows companies to perform predictive maintenance by using machine learning (ML) capabilities. This helps to maintain the equipment before the actual failure occurs, greatly reducing operational downtime and cutting costs associated with standstills and equipment repairs.
Process automation
IoT with SAP integration enables the automation of processes with the help of real-time triggers, which enhances the overall efficiency of a business. For example, logistics companies can easily adjust routings on the go based on real-time information about traffic situations, eliminating potential extra fuel costs and improving delivery times.
Hyper-personalized customer experience
SAP and IoT integration enables businesses to track user behavior and offer unique, personalized customer experiences, which boosts user retention, loyalty, and average revenue per user. One of the examples here is IoT sensors installed on store shelves; these sensors send signals to SAP inventory management systems, identifying what goods need to be replenished to fulfill demand.
Smarter supply chains
SAP supply chain management systems integrated with IoT enable real-time analytics, predictive supply management, and route optimization, empowering companies to successfully adjust to changes like seasonal shifts or global trends. For instance, embedding SAP-connected IoT sensors into warehouses and trucks ensures logistics agility and increases overall efficiency.
IoT With SAP Integration Use Cases
Integration of SAP and IoT can strengthen and improve many aspects of business operations. Here are the most prominent examples:
Predictive maintenance
IoT sensors located on machines continuously send data to SAP EAM (Enterprise Asset Management). SAP EAM then processes the retrieved data using its predictive analytics capabilities and detects anomalies (too hot, slow, etc.) to anticipate equipment failure and schedule maintenance before the machine is out of order. This enables the reduction of downtime, lowers maintenance costs, and increases overall manufacturing efficiency.
Asset performance management
IoT devices continuously scan asset conditions and usage patterns to further send real-time data to SAP Business Network Asset Collaboration (BNAC) and SAP Asset Performance Management (APM). SAP systems then consolidate the acquired data, making it easy for employees in charge to evaluate asset utilization, optimize asset lifecycle costs, and track overall asset efficiency. IoT and SAP integration results in optimized asset usage, better visibility of asset condition and performance, and reduced maintenance costs.
Smart manufacturing
IoT sensors integrated directly into the manufacturing process collect real-time operational data (production rate, quality parameters, environmental conditions, etc.), sending these insights directly to SAP Digital Manufacturing (DMC) and SAP Cloud ERP. This enables SAP solutions to automatically shift production schedules, optimize resource allocation, and improve quality control. As a result, enterprises benefit from enhanced productivity, improved agility, and better product quality.
Digital twins
IoT sensors continuously capture operational data details from equipment, sending it to SAP BTP (Business Technology Platform) to create a digital twin of physical assets. In SAP BTP, these digital twins empower simulations and testing, which allows businesses to use the insights into asset behavior for proactive, data-driven decision-making. Doing so enables proactive risk management and ongoing system innovation.
Real-time inventory tracking
IoT-powered tracking devices like GPS sensors and smart shelves monitor inventory and continuously report on consumption rates and replenishment needs into SAP EWM (Extended Warehouse Management) and SAP IBP (Integrated Business Planning). With these real-time insights, you can automate inventory records updates and adjust delivery plans accordingly in your SAP system. Additionally, you can benefit from improved customer experiences due to fulfilled demands, reduction in stockouts, and better responsiveness to shifting market trends.
SAP and IoT Integration Challenges
IoT and SAP integration is a challenging process that requires careful planning and preparation. Let’s take a look at the main challenges that often happen during the process and learn how to overcome them.
High data volumes with low data relevance
A common practice for IoT devices is producing large amounts of data, while only a small part can actually bring insights and value. Keeping this raw data unsupervised can easily overload SAP systems, making decision-making processes complicated, wasting computing resources on useless background noise, reducing analytical efficiency, and increasing operational costs.
Comprehensive data validation and cleansing provided by DataLark help mitigate this issue, so that only meaningful and relevant data gets into your SAP system.
Unfiltered and too high-frequency telemetry for SAP systems
SAP solutions do their best when operating with well-structured, transactional data and batch processing, while endless streams of unfiltered, high-frequency IoT telemetry data may overwhelm the system. Leaving this problem unresolved may downgrade the performance of the SAP system, slowing real-time responsiveness and increasing risks of system instability.
Intermediary IoT platforms or edge computing solutions help prepare and accumulate data for the SAP ecosystem by reducing data frequency and ensuring better compatibility.
Latency, queueing, and processing constraints
Real-time data from IoT sensors usually requires immediate processing. Yet, SAP systems may have inherent latency, queueing mechanisms, as well as batch-processing constraints that don’t align with the demands of real-time IoT scenarios. As a result, a business may face delayed and irrelevant insights and slower response times, which can be a dealbreaker for time-sensitive processes.
Robust message queuing solutions, event-driven architectures, and edge computing techniques handle latency-sensitive processes outside SAP, providing the system with processed and timely insights.
Data compatibility issues
IoT sensors may generate raw data in various formats. This approach may cause compatibility issues, as the raw data format may not align with the SAP APIs and data requirements. This causes integration complexity, increased integration costs, high probability of data loss and corruption, and imposes overheads in data compatibility maintenance.
Sophisticated integration platforms enable businesses to automate data formatting, normalization, and mapping, to ensure data compatibility with SAP native formats and simplify the overall integration workflow.
Existing SAP and IoT Solutions
SAP offers solutions specifically designed for IoT and IIoT (Industrial Internet of Things), catering to enterprises that heavily rely on IoT-retrieved data in their operations.
SAP Integration Suite, a comprehensive cloud-based platform, is designed to connect and integrate applications, processes, data, and devices across diverse environments. SAP Integration Suite helps leverage IoT data to enhance decision-making, automate processes, and innovate operational workflows. The platform provides the infrastructure and tools required to connect and configure IoT devices and sensor networks, manage massive data streams, and apply real-time analytics and insights directly into core business processes. Besides, SAP Integration Suite allows seamless data connection from IoT devices to core SAP Cloud ERP solutions, S/4HANA and SAP Datasphere
SAP Business Network Asset Collaboration (BNAC) serves to facilitate collaboration among asset manufacturers, operators, service providers, and related entities. SAP BNAC creates a centralized platform for storing and sharing asset data, enables collaborative maintenance and real-time monitoring, supports operational information safety, and allows for digital twin creation for enhanced management and forecasting.
SAP and IoT integration solutions from Hyperscalers
In addition to SAP-native IoT integration options, businesses can choose solutions from Hyperscalers, such as AWS IoT Core and Microsoft Azure IoT Hub.
AWS IoT Core allows for an easy and safe connection between IoT devices and SAP Cloud ERP, enabling continuous data streams, streamlined management, and efficient processing of the data retrieved from IoT devices. AWS IoT Core supports robust device connectivity, message routing, and integrates seamlessly with SAP solutions, letting SAP systems analyze data in real-time and make relevant, timely decisions.
Microsoft Azure IoT Hub is a scalable cloud-hosted solution for secure management of IoT device connectivity, data ingestion, and real-time monitoring. Azure IoT Hub provides strong IoT device management capabilities, supports bidirectional communication, and easily integrates with SAP solutions for enhanced analytics, AI empowerment, and precise data processing services.
Limitations of existing SAP and IoT solutions
Both SAP Integration Suite and SAP BNAC help businesses:
- Enhance operational efficiency
- Introduce data-driven decision-making
- Enable predictive maintenance
- Cut costs associated with downtime and equipment failure
- Prolong asset lifecycle through real-time monitoring, agility, and process transparency
Yet, they are not perfect, and businesses that use or plan to use them should be aware of their limitations in order to plan IoT and SAP integration strategies more carefully.
High cost and complexity
SAP solutions for IoT are expensive, usually requiring tangible upfront investments in infrastructure, licenses, and qualified specialists. This often imposes high entry barriers that stop smaller businesses from using IoT’s benefits, prolong implementation timelines, and increase TCO (total cost of ownership).
Security & privacy vulnerabilities
Like all IoT ecosystems, SAP solutions for IoT are exposed to risks from insecure endpoint devices. Compromised sensors can be used to attack the SAP backend, making robust encryption, authentication, and secure device management critical.
Extensive configuration is needed for every device type
Each type of IoT device (heat sensors, GPS, smart shelves, etc.) requires profound, extensive configuration to integrate with SAP seamlessly. Various device protocols, data formats, and communication models dramatically increase integration complexity, which results in slow deployment, higher risks of integration errors or data format inconsistency, and imposes more maintenance expenses.
How DataLark Simplifies IoT and SAP Integration
DataLark, an SAP-centric data management platform, is designed specifically to streamline data integration and management in cases where standard solutions cannot cope. IoT and SAP integration is exactly that case, and disparate data formats, heavy volumes of data streams, and compatibility issues all prove this.
DataLark’s data quality management functionality helps standardize and unify IoT data before it reaches SAP, decreasing the processing burden and allowing users to get the full benefits of SAP’s predictive analytics capabilities.
DataLark performs data cleansing and validation, wiping out unnecessary or duplicate data. This ensures that irrelevant data will not fog the final result, leading to sharper forecasting and faster data processing within SAP systems.
Being a smart and secure SAP connector, DataLark can connect data from various IoT sources to SAP S/4HANA (batch production records, E-commerce and manufacturing warehouses, enterprise asset data, etc.) and facilitate data mapping with its intuitive, no-code interface. These features help provide seamless, easy IoT and SAP integration, avoiding costly IT overheads, prolonged process timelines, or data issues resolution post-integration.
Conclusion
IoT with SAP integration is a challenging yet rewarding journey that opens new opportunities for businesses’ digital transformation, market growth, and revenue generation by offering applicable data “seasoned” with real-time analytics and predictive AI capabilities.
We hope that this piece will help you decide about IoT and SAP integration if you are contemplating it, or find a solution to your integration challenges if you have already started the process.