Internet of Things (IoT) is at the core of building many intelligent enterprise capabilities, including Industry 4.0. It was highlighted as a key strategic capability area in many of our research reports like Modernizing Logistics and Inventory Tracking, Analytics in The Cloud, and Supply Chain Planning in The Cloud. From Mobile assets like tractors or trucks to remote assets like a drilling rig in the ocean, IoT devices capture and relay critical data that can be leveraged in many ways. For many organizations, real-time end-to-end visibility in their operations and supply chain is not attainable if they do not include IoT in their infrastructure. An important aspect to note is that the only way to capture this data, in streaming format, in real-time, from IoT devices, most times, is through interconnectivity with infrastructure as a service (IaaS). The opportunity to create new products, solutions, and markets is huge. Figure 1 from Fortune Business Insights illustrates the opportunity for Industry 4.0 market by 2029. I think these projections are conservative, even for Industry 4.0, and applications of IoT extend beyond Industry 4.0. This also means a big opportunity for hyperscalers and SAP BTP to leverage IoT with other emerging technologies to create huge market opportunities. Figure 1: Industry 4.0 market share projection Source: Fortune Business Insights In case you missed the news, Salesforce recently surpassed SAP as the world's largest enterprise applications vendor. Remember that Salesforce was cloud-native to begin with. As I have highlighted consistently, the kind of growth that cloud is seeing currently and will see for at least another decade, will be phenomenal. Salesforce's consecutive 73 quarters of growth is a result of that. But in the end, cloud is just infrastructure. It is the solution that rides on that infrastructure that creates value and is the competitive differentiator. SAP is still a giant. As you will see in the example in this article, the kind of penetration it has across markets and industries is unparalleled. It also has offerings that span the end-to-end enterprise. And with SAP BTP, it is now positioned to eliminate the "cloud-gap".

Big Gaps Mean Big Opportunities for IoT on SAP BTP

Microsoft and Intel recently published their IoT Signals Manufacturing Spotlight research report that had some really interesting insights, depending on how you interpret them. There was a lot of good educational information on stages of manufacturing digital transformation, definitions of technologies and architecture, use cases, and opportunity areas. You can download the report here if you have not already done that. Other hyperscalers, like AWS, also have resources you can access here on the abovementioned topics. The interesting points I found in the report were beyond technical jargon. Opportunity 1: Lucrative industries that are still laggers One interesting aspect of the respondents' industry is shown in figure 2. Note that the survey had 500 respondents, which is very good sample size for this type of niche survey. Figure 2: Industry of the employer of respondent Source: Microsoft and Intel IoT Signals Manufacturing Spotlight research report, August 2022 The automotive industry has been one of the earliest adopters of manufacturing innovation, so it is not surprising to see more respondents from this industry. While many may not interpret these percentages and the chart that way, what this may indicate is that  industries that are shown in a darker hue in the graph above represent opportunity. The penetration of IoT related products, services and innovation may not be as deep as others. Now some will hypothesize that the survey sample was just a sample of Microsoft and Intel clients and hence the interpretation may not be accurate. But the fact is that the deeper the adoption of a specific technology in an industry, the more respondents will respond to a survey in that specific technology area. And if your hypothesis is that the sample may not be uniform, that also may be an indication of lack of penetration of IoT related services in certain industries, so MS and Intel could not find enough respondents there. And some of these industries represent huge opportunities, considering the lucrative nature of these industries, like Pharma. Looking at the top ten Pharma companies by revenue, as per proclinical.com, shown in figure 3, you will realize that all of them leverage SAP solutions. Figure 3: Top ten pharma companies by revenue Source: Proclinical.com And this also means that SAP already has the foundational elements to expand the scope of offerings, putting BTP at the core of its offerings. A digital twin is just one opportunity, but BTP allows organizations to build IoT-enhanced business processes, integrate IoT-based sensing directly into business processes, and leverage that data to enhance business processes and build new products and solutions, embedded IoT-capable event responses. The list can be long, and the opportunities are many. So the key question is, what is the first key strategic step SAP needs to take? While a lack of technical skill set is certainly an impediment, that is not what hinders adoption. Lack of technical skill sets comes into play after organizations have charted a path. The key is to help organizations develop a strategy with BTP at its core. Opportunity 2: Help organizations bridge the strategy disconnect. If we look at the infographic below, there seem to be some disconnects in the data for different strategy categories, highlighting that organizations can use help to formulate their strategies. And the provider that can help them with this also gets the opportunity to place their solution at the core of this strategy. Figure 4: Progress of key IoT-based transformation strategies Source: Microsoft and Intel IoT Signals Manufacturing Spotlight research report, August 2022 An example is the percentages for "partially and fully implemented" for "Edge computing strategy for shopfloor/operational assets" and "Smart factory strategy."  You can not be 62% done with your smart factory strategy while you are still 38% through with your edge computing strategy for shopfloor assets. While the roadmap to build these strategies is not within the scope of this article, your shopfloor edge computing strategy should be in place before you are halfway through your smart factory strategy. I can see similar disconnects all over this chart. What this chart highlights to me is that organizations are still unsure about formulating these strategies. SAP already has a dominant presence in opportunity markets, as highlighted above. If it can help executives in these opportunity industries formulate these strategies and embed BTP at the core of that strategy storyline, it can create big opportunities.