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The Digital Future of the Oil & Gas and Utilities Industries

April 14, 2015 by Susan Galer 17

The transformational impact of Internet of Things and SAP S/4HANA

Companies in the energy production and distribution industries are increasingly using cutting-edge innovations like Internet of Things (IoT) and in-memory computing to simplify their business, improving performance and customer experiences. In this exclusive Q&A with the SAP News Center, Peter Maier, General Manager for Energy and Natural Resources at SAP, highlights the trends and transformational technologies impacting the oil and gas and utilities industries. Maier is keynoting at two events being held this week in Berlin: the International SAP Conference for Oil and Gas, and the International SAP Conference for Utilities.

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Peter Maier, General Manager for Energy and Natural Resources at SAP, is among the thought leaders speaking at SAP-sponsored oil and gas and utilities conferences in Berlin this week.

SAP News: How can companies in energy industries stay on top of their game?

Peter Maier: The oil and gas industry is grappling with volatile oil prices, and needs to make the best business decisions depending on the company’s region, size and scope of business. Currently, most organizations are focusing on cost-cutting and optimizing cash flow, without losing the long-term perspective. With the world’s population totaling 10 billion people by mid-century, demand for oil and energy will only grow, fueled by urbanization and an emerging middle class of consumers that wants more cars and other products. The upswing will come, even if the timing is uncertain.

In the utilities industry, deregulation is a major driver. Consider Japan, where the unbundling of the few major utilities resulted in hundreds of new market entrants queuing up for electricity retail licenses. Driven by information technology, the race is on to offer consumers differentiating experiences through automation. Companies are focused on renewables and using advanced technology to improve cost-effectiveness and performance. Managing the smart-grid infrastructure is a huge task, and utilities need innovation to handle growth and consolidation.

What innovations do you expect to see in the next two years?

With predictive maintenance capabilities, we’ll see exponential growth in collaboration across business networks to cost-effectively source supplies and services, reducing inventory and boosting productivity. This is because many oil and gas companies and utilities extend their staff with an equal number of contingent workers. However, companies remain responsible for skills certification and compliance with health and safety regulations. They need to get the right people with the right skills and the right materials at the right time, and a network is the most effective way to do that. This is already starting to happen on Ariba, SAP’s cloud-based business network.

Where does IoT fit into the transformational strategies of these industries?

Industry models will radically transform when machines initiate, control and manage maintenance and repair. They will automatically detect problems before they occur, ordering parts seamlessly, and finding qualified, contingent workers at the best price in the business networks with software like Fieldglass. Across the smart grid, sensors analyzing big data in real-time can power smarter energy usage. Imagine what happens when your dishwasher, air conditioner, or freezer are exchanging data with your electric utility to take advantage of cheap energy generated by wind and solar power plants. Overall, the Internet of Things will help companies dramatically improve reliability, safety and security.

What trends are you seeing from SAP customers in the energy industry?

Customers are focused on driving the cost out of IT to free up funds for innovation. This is making business networks, cloud-based computing and hybrid deployment commonplace. For example, smaller upstream companies want to get closer to engineering partners for procurement efficiencies. We’re also seeing growing demand for cloud-based deployment of human resource processes, including talent management, as well as real-time customer experience and finance solutions that allow companies to match the accelerated pace of business.

How are energy companies using innovations?

Customers are using SAP HANA in-memory technology to get closer in real-time to customers and suppliers, as well as production assets like oil wells. They’re radically simplifying business processes for faster business outcomes using role-based data user interfaces like SAP Fiori. For IT, these technologies simplify the stack, lower total cost of ownership and increase agility.

What can customers in the energy industry expect from SAP this year?

We are committed to provide customers with easy access to unified, accurate data in real-time so they can make better decisions and accelerate innovation. SAP S/4HANA is the answer to our customers in oil and gas and utilities industries that want to innovate the business and create new user experiences. It will also allow them to drastically simplify their current IT environment. As always, customers have choice. They can deploy SAP S/4HANA in a managed or public cloud, or on-premises. We will share a clear SAP S/4HANA road map so customers can apply these innovations to address their business priorities. Our objective is to reduce risk for our customers every step of the way with Rapid Deployment Solutions, database migration to cloud-based solutions like Simple Finance and our Ariba business network. This is the journey and this is the year that oil and gas and utilities are moving forward to transform the industries.

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