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Hello Everyone,


Nowadays, everyone is talking about Industry 4.0 and SAP IAM (Intelligent Asset Management), but what exactly it does?...and what it focuses on?

In this blog, I would like to brief about Industry 4.0 in a nutshell and touch base on its association with SAP IAM (Intelligent Asset Management)

We hear other terms viz., I4.0, Smart Manufacturing, Manufacturing 4.0, Smart Factory, etc…

The core focal point of Industry 4.0/IAM is to have "Digitisation" of physical assets in a digital network to enhance the product portfolio...

The topics that I would be covering in this blog are as follows,

  • How it was before Industry 4.0

  • Origin of the term Industry 4.0

  • What is Industry 4.0

  • Focus points of Industry 4.0

  • Key BOMs of Industry 4.0 – A few of them will be briefed in this blog

  • Challenges of Industry 4.0

How was it before Industry 4.0:

I will touch base at very high-level about the revolutions that took place from time to time

  • Industry 1.0

First Industrial Revolution between 1760 and 1840 in Europe and the United States

It was the transformation of manufacturing processes from hand production methods to the mechanized factory system.

  • Industry 2.0

Second Industrial Revolution was a rapid standardization and industrialization between 1870 to 1914, during this phase advancement in manufacturing and production technology was enabled

  • Industry 3.0

The third Industrial Revolution is also called Digital Revolution was the transformation of mechanical/analogue electronic technology to digital electronics between 1950 to 1970 and is continued to the present day

  • Industry 4.0 (Present world)

The Fourth Industrial Revolution is called the Technological Revolution, which enables smart technology in traditional manufacturing/production processes

Origin of the term Industry 4.0:

The term Industry 4.0 was publicly introduced in the year 2011 at Hannover Fair, which is one of the world’s largest trade fairs at Hannover, Germany.

What is Industry 4.0

It mainly emphasizes the utilization of IIOT (Industrial Internet of Things) by which one can enable a complex network of manufacturing management to have automation and data collection/ exchange/ analysis to predict potential failures of an asset and to improve productivity and efficiency of manufacturing assets.

Focus points (a few) of Industry 4.0

  • Interconnectivity: Connecting Machines, Devices, Sensors and people (Operators/Manufacturers/Service Providers) to communicate with each other using Internet of Things by collecting/Exchanging the reliable data

  • Transparency: By collecting/Exchanging data at various operating conditions of an Asset, it provides valuable insights to operators to take a firm decision at right time to improve the efficiency of the physical asset and thereby improving production efficiency.

  • Predictive Maintenance: By usage of IIOT sensors and the technology of interconnectivity the healthiness of an Asset can be identified in life and allows machine operators to perform cost-effective maintenance rather than adopting Run to Fail concept.


When we look at the above focus points, we can understand the core objectives of SAP IAM (Intelligent Asset Management) and their association with I4.0….

  • Cloud-based network collaboration on asset management with manufacturers by establishing a global equipment registry (Asset Central) and by leveraging IoT

  • Predicting failure of an asset by correlating the data between Input parameters and historic data, thus providing statistics on ‘Anomaly Detection’

  • And Influencing Asset Strategy Decisions


Key BOMs of Industry 4.0 at a high level:

  • Internet of Things platforms - Enabling a vital change in productivity

  • Global Positioning System (GPS)

  • Advanced Human-Machine Interfaces (User Interfaces to have an effective operation of a machine from the human end and on the other hand machine simultaneously sends critical information that helps the operator to make a firm decision)

  • IIOT sensors

  • Data Analytics

  • Cyber-Physical System (Physical and Software components are deeply interconnected and able to interact with each other)

Challenges of Industry 4.0

  • High Capital Investment

  • Business Model Adaptation

  • Unclear ROI (Return On Investment)

  • Lack of adequate skill set to expedite the transformation towards I4.0 functionalities

  • IT security Issues (Letting critical process networks open)

  • Reliability/Stability of communications between Machine to Machine/User Interfaces

  • Reluctance to Change Management

  • IT system outages/failures that would cause huge re-investment


By leveraging I4.0 concepts, SAP IAM adopts the capabilities of

  • Network Collaboration:

Connecting multiple business partners for inter and intra company information exchange and collaboration. Also sharing model databases with applications such as equipment look up, spare parts management, Equipment performance improvements, equipment obsolescence strategies

  • Maintenance strategy definition:

Improving Asset Strategy Performance by assessing criticality using Risk Priority Number (RPN) and FMEA(Failure Mode and Effects Analysis)

  • Condition Monitoring and alert mechanism:

Visualization of sensor data and the alert mechanism by leveraging asset indicators

  • Root Cause Analysis: Failure Mode Analytics (PdMS)


  • Prediction Via Machine learning


SAP IAM~Intelligent Asset Management and its association with Industry 4.0 can be understood from


I hope this document could bring a high-level understanding of Industry 4.0 core functions and related challenges of it.



Yours faithfully,

Pardhasaradhi Reddy.C
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