2018 SAP in Oil & Gas, Lisbon

1000 plus attendees hear from Peter Maier on dual trends of greening of energy and digitization. Digitization means a shift to the cloud, whether public or private, hooking into SAP Leonardo Internet of Things and catching the train to microservices. SAP scope grows, although at least one major client warns of risk of spreading too widely. Fedem acquisition now blended with O&M offering as digital twin.

SAP has a huge footprint in oil and gas as witnessed by the 1,000-plus attendance at the 2018 SAP in Oil & Gas conference held earlier this year in Lisbon, Portugal. We see a tension between SAP as ERP (or even just accounting) and its expanding scope across the oil and gas software and business landscape as outlined in the oil and gas solutions map. Some, like PDO are accompanying SAP in its scope creep across the oil and gas landscape. HANA was cited as key to Andeavor and SASREF’s digital refinery deployments and in Statoil’s ‘digital twin’ of an offshore platform. On the other hand, Shell appears reticent to the expanding scope, warning of the ‘risk of spreading too widely.’ In a different dimension, on the IT side, there is another tension between the big (monolithic?) ERP app and the promise of shiny new ‘services.’ Today, all new SAP development is ‘based on cloud-first API microservices.’ While it is unclear where industry-at-large stands on this, Shell is pushing for microservices as we reported in our last issue and Galp Energia reports a shift to the new services/API/Devops paradigm. Following the 2016 acquisition of Tronheim-based Fedem, SAP’s extensive operations and maintenance portfolio has transmogrified into a ‘digital twin’ offering.

In his keynote, Peter Maier, SAP head of energy and natural resources, spoke of two challenges, for SAP and the world at large. The first is the green revolution. SAP has joined Bill Gates’ breakthrough energy foundation ‘to ‘invest in a carbonless future.’ SAP is also a partner in the EU Horizon 2020 ‘Flexiciency’ program covering retail market energy services. The second challenge the rate of change in the IT world and the need to combine a ‘system of innovation’ with a ‘system of record,’ the heart of the digital transformation. Here, SAP is ‘co-innovating’ with different industries whose digital priorities are driving an agenda that encompasses IoT, machine learning, analytics, big data and (the inevitable) blockchain.
Maier complimented Accenture for its recent announcement of its ‘Intelligent Enterprise’ platform, a line of business solutions running on HANA. SASREF and Andeavor got a shout for their digital refineries, providing ‘real time visibility of profitability, cost control and operations/IoT.’ SAP is piloting blockchain for e-bill of lading, DT, 3D printing, real time settlement and bidding. Finally, Statoil’s digital twin of an offshore production platform is enabling predictive engineering intelligence for the data-driven enterprise.
Deployment is a recurring question with options spanning on-site, a hybrid cloud or the public cloud. The latter can be Azure, Google, Amazon, or SAP’s own cloud. Maier nudged folks in the direction of a public cloud deployment as ‘the private cloud offers limited flexibility.’ Some companies struggle with the deployment issue, ‘don’t give us options, give us guidance.’ SAP’s Transformation Navigator does just that guiding users through the labyrinth of options. The intent is for the Transformation Navigator to provide a peek into the future, showing what products are in the pipeline and where they may fit into your portfolio.
The debate that followed illustrated some of the tension we mentioned in our introduction with Shell’s Frank Westerhof describing the ERP function as ‘parity’ while seeking to differentiate its own operations elsewhere. Maier pointed out that best practices in and around ERP may not be in oil and gas. SAP can seek these out and embed them in the platform. Westerhof observed politely that ‘SAP needs focus too, there is a risk spreading too widely. You need the courage to say this is what we are not going to do!’

In his keynote, Carlos Costa Pina from Portugal’s Galp Energia addressed digitalization as a key component of the company’s business transformation. Galp retains its oil and (especially) gas focus but now spends ‘up to’ 15% of capex on renewables. The company is revising the relationship between IT and the business ‘to be less rigid.’ The changes include Devops, an ‘API friendly’ environment, a customer-centric view of data and increased business unit governance of IT. This involves ‘blurring the boundaries’ and reducing central IT’s control of spend. Galp has some 200 IT initiatives under a new IT master plan covering big data/analytics, mobility and a new IT operating model. One initiative involves AI and big data applied to Brazilian pre-salt exploration, said to add a potential $14 billion of revenue at if it comes good.

Stephan Parthier, from German utility Uniper was up next, speaking on the 4th Industrial revolution, where ‘everything is connected’ and data is the foundation of cyber-physical systems. Data is underutilized today. Uniper is consolidating its legacy data to the cloud and focusing on the user experience. A dashboard from Enerlytics supports the new business model with an all-digital business to business (B2B) transaction environment. Accredited third parties can access Uniper’s PI system from the portal. A workflow management GUI has been developed with SAP Fiori, hosted in the SAP cloud. Another use case under study is blockchain as in the Quantum joint venture (with Total, Engie and others). Parthier opined of blockchain that ‘I can’t say how market proof the technology is.’

Patrick Miller (Archer Energy Solutions) admitted that ‘computer security makes folks cringe.’ But since ‘data is the new oil’ and ‘disruption is the new normal’ security becomes a prerequisite. Miller came close to offering a counsel of despair, warning that operational data acts like a magnet for the bad guys. Moreover, ‘you can be secure and not compliant and vice versa.’ Regulations prescribe actions not attitude. Companies need to change and manage behavior as they do in the safety area. More despair comes from the thought that your adversaries, especially if state backed, have people, money and time. ‘You are outgunned. A determined adversary, perhaps a competitor, will get in.’ Attackers likely have a long-term view with perhaps a five year attack plan. A proven security solution is based on science and years of operational experience. Reduce your exposure, if equipment (like a printer) is not vital for operations, get it off the network. Operational islands are a good idea but beware that even an air gap is really ‘just a speed bump.’ Resilience is a different from prevention. Since systems will fail, you need an incident response and recovery plan to develop your security ‘muscle memory.’

SAP’s new head of oil and gas, Benjamin Beberness, reported increased deployment of S/4 Hana, the Leonardo Internet of Things and blockchain. SAP is offering ‘Leonardo accelerators for oil and gas’ providing predictive engineering insights from a digital twin, a cloud-based IoT solution. SAP is also working with IBM on a blockchain for joint venture accounting. Today, all new SAP development is ‘based on cloud-first API microservices.’ These let you pick what SAP functionalities to use and mix and match with third party APIs (if they have one!). SAP’s cloud is not a ‘paving of cow paths’ and will not be a 1:1 copy of existing systems. The first industry-specific cloud services are planned for year-end 2018 with minimum support for the upstream segment. The shift to the cloud is driven by a Shell/Exxon consortium.

Ali Amri and Oman Iman Juma Nasser Al Wahaibi showed how Petroleum Development Oman has leveraged SAP Easy Document Management to plan and visualize its drilling sequence business process. PDO has a comprehensive SAP landscape. The company operates some 40-60 rigs and drills 650 wells per year. The drilling sequence is managed as a network in SAP with rigs managed as work centers. Previously, drilling sequence change requests involved a ‘long and complex process.’ SAP has allowed a business process management approach spanning drilling, manpower allocation and data management.

Eugenio Moya presented on SAP’s connected assets and the digital twin. SAP’s Leonardo IoT embeds technology acquired in 2016 from Trondheim-based Fedem. Fedem develops simulation software that ‘uses Newton’s physical laws to bridge IT and the real world through virtual models.’ Shortly after the Lisbon event, SAP demonstrated a network of its digital twins at the Hanover Messe. Leonardo blends first-principle physics based and machine learning derived models. The solution supports the facility lifecycle, from design, build, handover operations and turnaround. OSIsoft is a partner. SAP’s VORA big data hub also ran, as did the edge gateway from DELL/EMC.

Finally, SAP is releasing a ‘Model company service for oil and gas’ a ‘ready-to-run, comprehensive reference solution supporting core line-of-business processes across the value chain.’ The solution can optionally be augmented with Accenture’s AIEP intelligent enterprise platform. More hands-on folks can tweak the combined solution with Accenture’s Liquid Studio rapid application development studio.

The SAP in Oil & Gas event is co-hosted by TA Cook. More from the conference home page.

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