Fueling Industry Innovation: Oil and Gas Giants Come Together to Make a Bold Move to Public Cloud

It’s sometimes easy to forget in today’s global environment that working together can be a useful means to a fruitful end—even in a business context.

In the technology sector, working together is not only useful but often fully necessary to develop some technologies like blockchain, which requires pure capitalistic ideals, ego, and selfishness be put aside for the greater good.

It was in this spirit that the oil and gas sector, with SAP and Accenture, formed a consortium to develop market standards for an industry-specific, public cloud, enterprise resource planning (ERP) solution that can be used by oil and gas companies around the world.

Shell has been a leader in this effort, along with Chevron, BP, ConocoPhillips, Apache, Devon, and Equinor. Furthermore, 25 other oil and gas companies are working as reviewers within this initiative.

“Oil and gas companies meet each other all around the world in joint ventures,” said Frank Westerhof, general manager of Enterprise Platforms at Shell, who recently attended the Accenture SAP Leadership Council to share the consortium’s progress. “One of the reasons that SAP even considered the oil and gas industry for a groundbreaking project like this is because of that history. All of us share the same suppliers, so it’s in everybody’s interests to squeeze out inefficiencies from the costs of doing business and focus on what energy resources are available.”

Westerhof said the consortium started with one premise: 85 percent of running a business is, as he said, “non-differentiating,” meaning that the remaining 15 percent is what can make you a market leader and impact your bottom line and the dividends paid to investors.

The ERP software that a company runs, while complex, primarily falls in the 85 percent bucket. Rather than every company developing its own standard, the consortium has been working for about 18 months to develop one for the entire industry.

“We, meaning oil companies, face a business environment where we are seeing a lot of changes,” explained Westerhof. “From a business perspective, we face decarbonizing energy sources. And on the other end, we face digitalization.”

“In many ways, digitalization can be seen as a big opportunity,” he added. “But, you can also see it as a big threat. If you start with a complex company – and because of our size we are all complex — and digitalize around the edges, it can exponentially increase the complexity of that company. It is very important that we guide both of the business changes we are facing with a clear strategy.”

“That strategy is all about focus. We want to make very conscious decisions about where we are differentiating—where we want to go the extra mile to develop our own stuff—and we also want to understand that digitalization is where we want to take advantage of the things the market has to offer. The ERP space is what we see as parity.”

The consortium, formed by SAP, led to thoughtful discussions and the development of an industry market standard platform, with Accenture and SAP providing guidance on technology.

“Accenture and SAP are working together to develop market standards for the oil and gas industry in the public cloud,” said Jan van den Bremen, senior managing director and global technology officer for the Accenture Resources Operating Group. “This is an agile, ongoing process building on Accenture and SAP’s track record of developing improved solutions for the industry.”

The consortium holds regular meetings with different workstreams to develop the public cloud ERP solution, including logistics management, revenue accounting, asset management, and procurement. The deliverables are available on quarterly releases, with the first major development milestone scheduled for May 2020.

“Sometimes I call it the corporate equivalent to open source,” said Westerhof. “Up until recently, the holy grail of any ERP implementation is single global instancing. We think that this move to public cloud will be different.”

Listen to the SAPPHIRE NOW Opening Keynote replay with Adaire Fox-Martin, member of the Executive Board of SAP SE, Global Customer Operations, and Jay Crotts, CIO of Royal Dutch Shell to discover how Shell is accelerating the journey to public cloud for oil and gas.