SAP Prepares to Take On The Internet of Things, Announces String of New Partnerships

Global software developer SAP SE (NYSE: SAP) recently announced a string of new partnerships in a bid to step up its involvement in the Internet of Things (IoT). IoT is the concept of connecting any device, ranging from a refrigerator to components of industrial machinery, to the Internet. IoT is widely considered to be the next big thing in emerging technologies and the stage is set for its explosive growth. ^[1]

To capitalize on this opportunity, SAP has teamed up T-Systems for providing cloud-based connected logistics solutions. ^[2] SAP has also partnered with Jasper, a leading vendor of IoT services platform, for simplifying the process of deploying and managing IoT services globally. ^[3] Lastly, SAP has joined the Industrial Internet Consortium, an open membership organization aimed at accelerating the commercial proliferation of IoT. ^[4]

We currently have a price estimate of $78 for SAP SE, which is around 15% higher than its current market price.

See our complete analysis of SAP SE here

SAP & T-Systems: Connected Logistics

SAP has entered into an original equipment manufacturer (OEM) agreement for connected logistics with T-Systems, a subsidiary of Deutsche Telekom. SAP and T-Systems previously collaborated to provide a cloud-based logistics solution, ‘smartPORT’ for the Hamburg Port Authority in Germany. Through the new agreement, SAP and T-Systems will jointly offer smartPORT logistics globally. The smartPORT logistics networking solution is based on SAP’s Connected Logistics software and T-Systems’ Connected Car solution. The offering is targeted at not just ports, but also other logistics hubs such as airports, parcel distribution centers and production sites.

SAP & Jasper: Internet of Things Services

SAP has partnered with Jasper, a leading provider of software-as-a-service platform for IoT, for deploying and managing IoT services. As part of the collaboration agreement, the Jasper Control Center platform will be integrated with the SAP HANA platform for simplifying the deployment of IoT services and shortening the time to launch, manage and monetize IoT services. The Jasper Control Center automates the life cycle of IoT services; and its integration with SAP HANA will provide big data capabilities to customers for analyzing service subscription and usage data.

SAP & Industrial Internet Consortium: Accelerating IoT in Business

SAP has joined the Industrial Internet Consortium (IIC), which aims at accelerating and promoting the business use of IoT as part of an initiative called the Industry 4.0. IIC was formed just last year by a group of global conglomerates, including the likes of IBM, Cisco and GE. SAP, which has been a major proponent of Industry 4.0, will work with 140 other IIC members to deliver use cases, test beds, reference architectures and frameworks, and security for IoT applications.

This move is more of a win for IIC than for SAP, as IIC will gain an important partner in its drive for inter-operability among customers. On the other hand, SAP will join the group leading the bid for accelerated adoption of IoT for business and may gain technological advantages from the collaborative movement.

Internet of Things: The Next Big Thing?

According to Gartner’s annual Hype Cycle report, the Internet of Things overtook big data as the most hyped technology in 2014. Forecasts for the market size and adoptability of IoT differ greatly, but the potential is universally agreed to be immense. Estimates for market size by 2020 range from a mere $300 billion ^[5] to an incredible $7 trillion. ((Market in a Minute: Internet of Things, IDC) It should be noted that the huge difference between the estimates may be partly due to use of different definitions of Internet of Things by researchers.

SAP already has a presence in the Internet of Things market and offers a number of solutions for businesses. This includes Predictive and Maintenance Service, Connected Logistics, Connected Manufacturing and Augmented Reality Apps. Its latest partnerships will accelerate its revenue stream from IoT services, although it may be a while before significant incremental revenues materialize.

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More Trefis Research

1. It’s Official: The Internet Of Things Takes Over Big Data As The Most Hyped Technology, Forbes, August 18, 2014 [↩]
2. T-Systems and SAP Partner to Offer a Cloud-Based Logistics Solution for Internet of Things, SAP Press Release, March 3, 2015 [↩]
3. SAP and Jasper Team Up on IoT Services Initiative, SAP Press Release, March 3, 2015 [↩]
4. SAP Joins the Industrial Internet Consortium to Accelerate the Internet of Things, SAP Press Release, March 4, 2015 [↩]
5. Gartner Says the Internet of Things Will Transform the Data Center, Gartner, March 19, 2014 [↩]