Can you summarize your recent keynote?
It was basically a status check on the digital energy revolution. We have been talking about digital in oil and gas for a couple of years (even we both know that the industry has been digital for much longer that that!) What is new is the context, in particular the automation perspective. Last January the World Economic Forum published an authoritative report on the importance of digital transformation with a chapter on its impact on the oil and gas industry which demonstrated a potential value at stake of $1.6 to 2.5 trillion.
Indeed!
Yes, and similar findings were discussed and reported at Davos last year. The takeaway is that digital has arrived in oil and gas, the strategy has been validated. For operations, the next big things are automation and predictive maintenance. But automation is different today. It used to be about keeping equipment running within safe limits. Now companies are rolling in economic optimization and the entire business context, driving IT/OT convergence in the brave new world!
OK this is plant and process automation but what of business process automation. Isn’t that closer to SAP?
Sure. But automation now crosses business and engineering. I was at GE O&G in Florence where Matthias Heilmann (GE oil and gas chief digital officer) and I spoke of the need to collaborate on this. Neither SAP nor GE can do this independently. You need to connect the supply chain, the financials and the scenarios. This is how the WEC paradigm gets translated to oil and gas.
We heard GE’s side of the story at Florence. What is SAP’s take here?
It’s all about automating the business and automate processes at the edge to keep equipment running. A large rotating machine may get a signal to ‘call home,’ but the action to be taken needs more than the engineering data. You need the overall business context before you can take a decision. What are the cost implications of a shut down? What will the business outcome be? What people and skill sets do you need? Where are the spare parts, how much will it cost to ship? All this is our bailiwick of a high-level business model. GE’s strength is at the machine level but not so much at understanding how all of the equipment works together, how it all fits together to achieve the overall business outcome. This is also where the analytics and big data come into play, and rolls up into an automated business process.
What of culture? Don’t engineers’ eyes glaze-over when they hear talk of SAP?
Sure. I’m an engineer and we do tend to ‘glaze-over!’ We used to do our own discounted cash flow using standard costs and so on. But things are moving on. Now we can work with live information, true costs and the real business context. Breaking down the silo boundaries remains an issue for sure. We address this by showing people how these benefits could be achieved. From board room to shop floor. The SAP Digital Boardroom lets you drill down through the data achieving complete process transparency. The engineers still may not care, but they don’t really need to know, they just have to provide the data!
What’s next on the horizon?
We heard from Jens Strüker* (see next article) on blockchain. There is a lot of interest in this technology which is still in its infancy but moving up the great expectations part of the hype curve, even if the energy involved in transmitting all the blockchain information around may be problematical. The punchline for us is how can we clarify our guidance. We don’t just go to market with choices. We will be doing a lot of research ourselves and will come up with a recommended position on the technology. Likewise for the move to cloud, we propose standard business process, automation efficiencies and a drive towards an industry-wide business process standard. After all, why do you even want to create and check an invoice at all? All could be done with an instant and secure cash transaction. The move to the public cloud requires similar guidance on process standardization. I wound up my keynote unveiling the next big thing for SAPphire, the Digital Transformation Navigator. The promise of S4/Hana suite is to deliver all of the above and get to a new, simpler world.
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