Shell and the public cloud

Shell enterprise platform manager envisages a ‘different energy system’ and a division of IT labor between ‘parity’ and internal value-added development. All in the cloud.

Speaking at the 2018 SAP in Oil and Gas conference in Lisbon, Shell’s Frank Westerhof had good news and less good news for his hosts. Good news is that the S/4 HANA Cloud will be an integral part of Shell’s ‘market standard.’ The less good news is that Shell does not want the whole SAP enchilada, at least, not on one plate! Shell foresees a ‘different energy system’ with an evolving energy mix and ongoing digital disruption across the value chain - from AI, the cloud and more. Shell’s strength is doing stuff ‘at scale’ but this means that, like a big oil tanker, it is slow to change direction.

Westerhof’s answer is to divvy up Shell’s process into ‘parity,’ where Shell does not seek differentiation, and non-parity where it does. The 85% of Shell’s parity processes share vendor innovation with other users. The remaining 15% is internal development. While parity IT is essentially outsourced, that does not equate to ‘hands-off.’ Shell and SAP are moving together into the cloud and Westerhof is keen to shepherd SAP in a direction that suits Shell’s vision. Parity processes will require a public, API-based interface that can leverage the ‘super scalability’ of the cloud. Instead of a ‘mammoth app’ that does everything, Westerhof envisages a new paradigm of multiple tenancy and containers. This mandates rethinking Shell’s own platform strategy with ‘core, asset-focused instances’ to roll out ‘over the next five years.’

Westerhof sees ‘everything’ eventually moving to the public cloud with Amazon and Microsoft Azure as the foundations of Shell’s digitized assets. Today Shell has around 4,500 applications. But the core application portfolio is destined to shrink in the move to a more agile future. This will entail clusters of applications that focus on assets, customers, finance and people. ERP will remain as a key component but ‘ERP processes are parity.’ Shell will stay with SAP, ‘the market standard,’ and is a keen member of the SAP Oil and Gas leadership consortium. In return, Westerhof expects a ‘minimum viable’ oil and gas industry-ready version of the S/4 Hana cloud by Q4 2018. He advised all to ‘get off the SAP ERP central component by 2025 to avoid risk.’ Westerhof also approves the changes in Hana from its beginnings as ‘one big ecosystem’ to a more open, containerized approach.

Shell’s new focus means ‘withdrawing from a lot of things we used to do’ as parity processes are outsourced. But, opines Westerhof, ‘SAP needs focus too and the courage to say ‘this is what we are not going to do!’

Listening between the lines we felt that Shell is currently leaning more in the direction of Azure than Amazon. More from the SAP in Oil & Gas event in our next issue.

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