SAP’s Peter Maier described the world energy business as ‘under construction’ with pressures from climate, deregulation, decentralization and digitalization. Diesel/petrol engines are ‘hugely under pressure’. Germany is to sunset coal. Elsewhere global megatrends will impact utilities, energy, mobility and the global supply chain. All of which is fine for SAP which has digital solutions for all of the above. Maier encouraged corporates to ‘join the S/4HANA movement’ and make SAP information ‘open and transparent’ but with the caveat that ‘this is a non-trivial task’. SAP is developing a new maintenance solution with AI and predictive analytics. With regard to the path into the cloud, ‘most of you are on the left, just starting out’. Companies can expect to spend ‘at least 10 years in the middle’, with a hybrid on-premise/cloud solution. Moving to the cloud is a complex process. SAP business consultants are there to help ensure a clean cloud solution on arrival. Today, big utilities are running on S4, ‘I could not say this 2 or 3 years ago’. Maier recognizes that there is a big desire to run on the ‘hyperscalers’, Azure, AWS and Google Cloud and gave a ‘clear commitment from our side’ to help with the migration. Celonis process-to-pay metrics solution got a shout-out even if, as Maier said ‘we could have done this ourselves’ (in Ariba). But ‘when I saw Celonis Process Miner, it blew me away’. The tool is used by Shell, Exxon, BP, Total and Schlumberger. Qualtrics was also on-stage with its transformational forecourt experience. The company combines operational ‘O-Data’ with ‘X-Data’; i.e. user and customer experience data.
Green investor Peter Molengraaf provided a state-of-play of the electricity business. He believes that the currently overlooked low voltage side of the business (domestic/consumer) is where the action is or will be soon. Solar photovoltaic (PV) and wind will soon be cheaper than existing fossil assets. To date, all forecasts have underestimated the potential for cost reduction of renewables. So, we will be building renewables as fast as you like, except that most grid operators will have problems handling the new energy sources. Politicians are unlikely to block this cheap, local energy such that wholesale prices will be low. Some expect that demand shifting technology (batteries for day/evening use and storage with hot water, hydrogen, synfuel) will rise. But storage may not be necessary when electricity is cheap every day and it will be very hard for storers to compete with direct energy users. Users will be in a position to arbitrate and will be in charge of the energy transition. For utilities, investing in renewables becomes risky. Renewables will be ‘grid-like’, generating low returns. The ‘inversion point’ comes when new renewable capacity is cheaper than existing fossil generation. Molengraaf observed that here, ‘every year, the EIA is wrong in the same direction’. The transformation brings IT opportunities, managing other parties’ assets like EV charge points, heat pumps, solar installations and battery storage on forecasting platforms with very high granularity. There will be hundreds of thousands of substations so medium/low voltage monitoring will be key. Comment: This sounds like the telcos at the advent of the internet when they turned around a commodity business into a money-spinning value add.
Frank Westerhof provided an update on Shell’s journey to S4/Hana on the public cloud, described in Oil IT Journal last year. Shell has been a SAP customer for 40 years (SAP was founded in 1972) and is now a ‘deep partner’. Shell’s own implementations (through to 2017) created economies of scale with single global instances for its main lines of business and there is no business case for further consolidation. Shell has also ‘done the cloud bit’, 12 years ago. Now the focus is on global process excellence in the face of a changing world of energy, especially in the EU. Shell has committed to decarbonize its own and its clients’ portfolio, with the implication that by 2030, ‘we will have to be the biggest power company in the world’. As Westerhof revealed last year, only 15% of its IT can be considered ‘competitive’ for the remaining 85%, ‘we want to be a consumer’. The endgame, ten years out or so, is a shift to the public cloud. Most all software providers (except SAP!) offer an SaaS*-based model. Shell is convinced that everything will move in this direction with stages of on-premises to a private, single tenant on-premise cloud, a switch to a hybrid solution or perhaps a more attractive solution, straight from on prem to the public cloud. But is software ready? No. Shell is working with SAP in the hope that the move will be made in one go. This is a paradigm shift away from the single global instance, ‘no longer the holy grail’. ERP is non differentiating so the plan is for a cloud version of SAP S4/Hana that is being developed in the Cloud Consortium for Oil & Gas, a consortium with Equinor, Apache, Devon, BP and Chevron as members. This will enable a move to a multi-tenant environment across Shell and its customers (B2B) and consumers (B2C). Previously as scope expanded, so did complexity. This can be avoided with a simple ERP for a simple upstream asset. Shell does not want either to be the ‘complex’ tenant or too small to be worth bothering with. Shell is aiming for a ‘balanced integration with 50 or so Shell tenants’ and a standard configuration. This is ‘a greenfield journey and a huge opportunity’ to move from process to data centricity. Shell now has three S4/Hana tenants live on the public cloud, New Energies, the pension fund and its Samco asset management unit. However, not all SAP-to-SAP integration is available out of the box which currently involves a high degree of friction and customization. The vision is for data centricity with internal and external connectivity, leveraging open standards, and AI-driven ‘touchless’ processes. Comment: Adding AI to ERP is a coming-home for SAP’s founders who left IBM back in the early 1970s where they were working on … AI.
Shell’s presentation was a great introduction to a ‘public cloud’ provider in the person of Mert Dogu, business lead for SAP on Amazon Web Services. Dogu offers to ‘spin up an SAP system in hours’ and enable interaction between SAP data and other sources such as drones, sensors and digital twins and use machine learning to ‘predict upcoming events that need fixing’. SAP at is at the heart of the digital transformation for many oils as is the shift to the cloud. But the migration to S4/HANA has not really happened yet and partners and customers are asking if they should go cloud first, or stay on Oracle, or go to S4 or brownfield, on prem, in colocation or what. These decisions are long term and costly which is where the ability to trial software on AWS comes in with the AWS/SAP FAST program. SAP can also connect to a S3/AWS data lake or into IoT/ML with Greengrass on AWS. In a statement that appeared to counter Westerhof (above), Dogu stated that SAP uses AWS to provide SaaS functionality, at least for NS2 and Concur. BP and GE Oil & Gas run SAP on AWS. BP is retiring data centers, ‘removing technical debt’ in the form of 3,000 apps and 7,000 servers and has ‘saved 30% on TCO’. More SAP/AWS case studies here.
Tanya Doyle Pacific Gas & Electric teamed with SAP’s Raik Kulinna to present a proof of concept of blockchain for supply chain traceability. As a regulated business, PG&E needs to be sure that its supply chain is fully qualified and all materials traceable. It can be hard to get documentation from suppliers and PG&E is reliant on vendors to get from datasheets manufacturers. Blockchain is said to ‘verify that what we received came from the manufacturer’. A manufacturer can post quality data to the blockchain for all stakeholders to access. This makes it possible to identify materials that may be fraudulent or of questionable pedigree. The work is now being developed in an industry consortium. More from the SAP blockchain in energy booklet. In the Q&A Doyle was quizzed as to the difficulty of connecting a digital blockchain record with an actual physical asset (see our editorial on this apparent blockchain flaw). PG&E recognizes that the system is currently ‘imperfect’ but hopes that the blockchain-to-physical world gap can be bridged with bar codes or other means of identification.
Royal Dutch Shell operates warehouses around the world and in over a million trips, moved 2.5 billion tonnes of cargo in 2017. Stephan Treuer described how Shell performed a market scan to look at barcode reading warehouse apps for its Prelude floating LNG development. A couple of POCs and another market scan saw Shell sign with Innovapptive in 2018 and is in the final stages of developing a solution that includes Cognex scanners and Zebra barcode printers. Three different SAP systems (G-SAP, BluePrint and ChemSAP) are involved and now ‘all paper-based stuff is on the mobile’. The development has extended Innovapptive’s ‘market standard’ system to oil and gas. Innovapptive provides an SaaS, multi-tenant, cloud solution adapted to the distributed design and build environment of Prelude, the largest floating vessel in the world. Prelude’s Darwin onshore supply base warehouse operates on SAP Inventory Management, currently a paper-based system. Darwin will go live with Innovapptive’s mInventory in Q3 2019.
Despite the ‘SAP in Oil and gas’ title, the event proved strong on the energy transition. Albert Cheung from Bloomberg’s New Energy Finance unit stated that electric vehicles (EV) and batteries are ‘coming of age’. Worldwide, some 2 million EVs were sold last year, around 1-2% of sales. In Norway 50% of sales are EVs, in China 7%. Last year, conventional sales are dropped, heralding ‘Car Wars episode 3, the Empire strikes back’ as VW enters the EV market. The price of lithium ion batteries is down 85% in the last 8 years. The next megatrend is that a clean power system is in sight. California, Spain and others are committed to 100% renewable power in a generation. Costs have come down rapidly. Solar PV is 90% cheaper than 10 years ago. Renewables are now the cheapest source of electricity in many countries. For new builds, renewable power will soon be cheaper than fossil. PV and storage is already competitive with gas in the southern US. Overall the world can get to about 70% zero carbon by 2050 with ‘peak coal’ in 2027. Gas capacity will increase but gas burn not so much. Oil is at risk. EVs and more efficient motors are to ‘wipe out’ 8 mm b/d by 2040 although others (Aramco, BP ) do not expect the bottom to fall out of the market. Digitalization, the new ‘strategic imperative’ is to impact the upstream, downstream and utilities. The social and political conversation is changing. While a green new deal in US has met with criticism from Republicans it has created space for conversation. In the EU, climate change is considered real. In the UK, from 2025, new homes will not be connected to the gas grid. Norway’s sovereign fund is out of upstream oil. Shell now has emissions targets linked to executive pay. This social and political stuff moves markets.
Arno Hagmans, from EU green energy company Innogy, described ‘S4i’, a S/4Hana ‘digital core’ deployment joint venture with SAP that went live this year. Innogy is a user of AI/ML but wanted to consolidate its efforts around a central database aka the digital core. This needs to be simple to use, previous SAP implementations have become too complex, too customized over decades and disconnected from the SAP roadmap. ‘We will not do this again, there will be no more custom code unless absolutely necessary’. SAP Activate provided a formal approach, leveraging Solution Manager and best practices. Innogy’s IT practitioners thought that ‘sprint methodologies will never work with SAP’ but it proved possible to deliver something in three weeks, keeping it ‘simple and standardized’. The system has now been running for three months and is working well, although Innogy is struggling with change management and training of its 4,000 users. ‘We started a bit late!’. Innogy’s digital core operates in the Hana enterprise cloud and is being complemented with mobile apps, AI for incoming payments and Ariba. The S4i project also involved management consultant Horvath Partners and the SAP project management office and quality assurance consulting services.
Eirik Solberg whose is ‘DigitalInc tribe lead’ chez Equinor set out the goals for an ‘autonomous supply chain’ by 2025. This is to include 3D printing, supply chain ‘control towers’ and ‘smart contracts’ on blockchain/IoT. The internal incubator, aka DigitalInc, sets out to produce a ‘minimum lovable product’ in 10 weeks. The prize is Equinor’s 144 billion NOK spend in 2018. The aim is for ‘collaboration and trust between IT and the business’ something that has been lacking in the past. There will be no more handing over 100-page requirements documents. SAP ECC (ERP central component) is at the heart of the initiative. Accenture Latvia is involved.
Andreas Skubski presented BP’s work management transformation. Eight years back, BP had over 200 ERP systems. These have now been consolidated to some 20 SAP instances. IBM Maximo was previously used as BP’s work management system which caused some challenges in data transparency and the difficulty of bi-directional alignment with SAP. A review of the situation led to the decision to replace Maximo and go ‘end to end’ with SAP. BP then realized ‘what we were missing and how much effort was wasted in maintaining all these interfaces’. But it was not possible to do work management with the standard SAP WM. Further complications came from legal issues around joint venture company codes. BP operates maintenance crews across JVs so a plant can’t be assigned across multiple company codes. This has been fixed with a plant revamp/staging layer work around. BP’s management said, ‘if we spend to enhance SAP, can you make it sexy?’ This resulted in a new Fiori GUI and a redesign of work management with Fiori concepts. This has now become a major project with a mobile app that allows employees to create work through a validate, plan, schedule, execute and close process. The new solution has cut 60 pages of SAP documentation down to 6. In 26 weeks, the whole work management app was redesigned, still connected to the SAP Cloud back end. The new Fiori GUI shows everything on one screen, irrespective of source.
Exhibitor Anyline has a neat solution to meter reading with a mobile phone. A joint venture with OMV has developed a machine-learning based app that captures meter serial number and reading on old, including some very old, meters. The system was trained with videos of typical meters. OMV field personnel is now using the solution that is displacing ‘clunky’ purpose-built data recording devices that require values to be punched-in. Anyline is also used by BMW to read sheet metal ids in polarized light.
Aperio has developed a set of digital ‘fingerprints’ of sensor data from a PI System. This is used to spot cyber events or a broke, flatlining meter or to look for correlations between sensors. The system can be used to clean data prior to ingestion to a SAP Hana database. Aperio can ID nefarious activity such as Stuxnet spoofing PI data by copying and repeating historical recordings.
Finally, we chatted with SAP’s Simon Grabowski who was demonstrating a … demonstrator. The small enclosure is designed to show off components of SAP’s Intelligent Enterprise and the digital factory. In the configuration on show, a Raspberry PI-based enclosure housed a model pump and level detector and a connected safety helmet. These feed data into SAP Asset Manager – enabling work order generation as required. The helmet captures biometrics (sweat factor from humidity and body temperature) via a Bosch BME 680 Multimodal sensor. Should the worker be required to dismantle the pump, an optical scanner can perform a rough-and-ready image recognition of the pump and return the part number. The AI is constrained by the context of what system is being checked out. The system could suggest a fix by comparison with historical records of similar kit. Another possibility would be to use SAP Copilot (voice recognition) to ask, ‘what fool serviced this pump last?’ (these were not his words). Grabowski has built a dozen of these units to demo various functions for potential apps.
More from the conference organizers TA Cook.
* Software-as-a-service.
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