ARC VIEW. OSIsoft-SAP Partnership Deepens SAP s Predictive Analytics at the Plant Floor. Keywords. Summary. By Peter Reynolds

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1 ARC VIEW AUGUST 13, 2015 OSIsoft-SAP Partnership Deepens SAP s Predictive Analytics at the Plant Floor By Peter Reynolds Keywords SAP, OSIsoft, Oil & Gas, Internet of Things, SAP HANA, PI Server Summary The Internet of Things (IoT) may be the latest buzzword, but this technology disruption might also be characterized as a company s digital transformation. In the process industries, users have been connecting assets to production and operational systems for decades. However, most have missed opportunities to The addition of the OSIsoft connector to SAP HANA will combine real-time effectively couple these assets to the business level. data with business analytics to make it easier for oil & gas enterprises to Real-time plant automation systems and software implement and realize the business have long played a role in the efficiency, safety, and benefits of predictive analytics in their real-time operations and profitability of oil & gas, chemicals, utility and mining maintenance activities. industry operations. But Industrial IoT (IIoT) is changing this game by making this real-time connection between operations and business systems easier and more cost effective and helping industrial organizations employ preventive and predictive analytics to make sense of all the data being collected. The disruption of IIoT is about defining new business outcomes by connecting operations, supply chain, workers and services. OSIsoft, a leading supplier of process data infrastructure and real-time intelligence software, has joined forces with SAP to help make IIoT a reality for the energy industries. The addition of an OSIsoft "connector" into the SAP S/4HANA Analytics suite enables both companies to add value for their mutual customers. This connector will enable customers in the process industries to pull plant or facility operational data into predictive analytics software tools in the SAP HANA application suite. SAP has and will continue to be the core financial system of record for the majority of the oil & gas industry. The addition of the OSIsoft connector to VISION, EXPERIENCE, ANSWERS FOR INDUSTRY

2 ARC View, Page 2 SAP HANA will combine real-time data with business analytics to make it easier for oil & gas enterprises to implement and realize the business benefits of predictive analytics in their real-time operations and maintenance activities. Now, real-time predictive analytics on SAP HANA may become a whole lot more pervasive for operations and maintenance personnel at the plant. IIoT Enabled Real-Time Decision Support While business analytics was once a laborious, time-consuming task that required a staff of experts to extract relevant and meaningful decisionsupport information from an oil & gas enterprise s data, IIoT-enabled predictive analytics is changing all that. Instead of getting answers to operational questions in days or weeks, these answers can now be made available in near-real-time, enabling operational personnel to make better and timelier decisions that affect the business. ARC research shows that the IIoT currently has the greatest impact on: Asset health improvement and equipment uptime Operating and production performance Safety and risk management Business process optimization Logistics optimization Improved worker experience Leveraging OSIsoft Infrastructure with SAP Enterprise software technology by itself may not be a differentiator for the oil & gas industry since most companies run on the same core financial systems. Today, the factors that differentiate profitable operations, both upstream and downstream, include how rapidly they can adopt technology, improve work processes, eliminate waste, and increase technical agility. The current convergence of information technology (IT) and operational technology (OT) in the oil & gas industry and, in particular, the new partnership between OSIsoft and SAP should help drive software adoption without disrupting technology and database architecture at the plant floor. At a recent OSIsoft Users Conference, Martin Otterson, Vice President of Sales and Marketing at OSIsoft stated that Big Data and IoT are helping

3 ARC View, Page 3 converge the operations and IT worlds to drive business. Companies are connecting data directly from The current convergence of information technology (IT) and sensors or other assets such as SCADA, PLC, and operational technology (OT) in the oil & gas industry and, in particular, DCS. Mr. Otterson believes that the Internet of Things the new partnership between (IoT) and the cloud are fueling the growth in Big Data, OSIsoft and SAP should help drive which must be converted into useful information to software adoption without disrupting support timely decisions. By transforming manufacturing, materials, machines, products, and utilities in the technology and database architecture at the plant floor. world where everything is getting smarter and connected, the technology will enable companies to obtain operational intelligence in real-time. OSIsoft s PI Systems have been collecting data from process control systems for over 30 years. With the new connector between the PI System and the SAP HANA cloud and on-premise platforms, these real-time data will now be readily available to enterprise applications, such as predictive analytics that plant engineers, operators, and maintenance people can use to gain new insights and make better decisions. Clearly, powerful SAP HANA s in-memory computing and analytics applications are no longer just for business and executives. By leveraging the OSIsoft data infrastructure, it becomes much easier and less expensive for oil & gas enterprises to connect the OT and IT worlds. This in part due to the fact that owner-operators do not have to make significant changes or disrupt the technologies currently in place at the plant. ARC estimates there are almost $65 billion in legacy distributed control systems (DCS), programmable controllers (PLC) providing real-time control. Much of this control infrastructure, particularly in the oil & gas and chemicals industry, already has a PI System in place. Cloud services like OSIsoft s PI Cloud Connect, which uses the Microsoft Azure infrastructure, allows users to roll out the solution quickly and worry less about cost associated with on-premise storage and the IT services needed to maintain it. Recommendations Currently, the global oil & gas industry is experiencing unusual price volatility, with oil prices plunging over 50 percent in six months. West Texas Intermediate prices dropped to below $50 per barrel as this report is being

4 ARC View, Page 4 written. While this could discourage some operating companies from committing capital, ARC believes that there has never been a better time for the oil & gas industry to consider targeted investments in IIoT technologies to help improve operational efficiencies and reduce exploration and production costs. While it s likely that some marginal production will not remain viable at these prices, IIoT-enabled collaboration between previously siloed groups and IIoT-enabled intelligence and predictive analytics for key decisionmakers can go a long way toward reducing costs and maximizing production. The oil & gas industry is understandably conservative when it comes to adopting new technology. However, many industry leaders have acknowledged the need to accelerate deployment to enable margin improvement and minimize cost. Leading energy companies tend to look outward to peer companies to gain a better understanding of how others are leveraging technology and most tread very carefully into piloting ideas that are new. But ARC believes that being overly cautious when it comes to technology adoption can actually increase business risk over the long term. Based on ARC research and analysis, we recommend the following actions for owner-operators and oilfield services companies: Identify the areas of low hanging fruit in which the benefits of IIoT solutions such as real-time monitoring, predictive analytics, and increased collaboration can be quickly and materially realized. Examples may include deploying sensors and scaling up PI data infrastructure required to solve operational and business challenges that require this combination of business data and real-time data Start building predictive analytics in proven solutions such as SAP HANA, but be sure to define a business improvement outcome, such as optimizing the performance of compressors, artificial lift systems, multiphase pumps, leak detection systems, and other equipment in upstream operations, or improving asset availability and performance in downstream operations. Work with SAP partners or consortiums that are developing or have developed IIoT-related solutions for the industry business unit solutions.

5 ARC View, Page 5 Research applications in other industries that can be adapted to increase efficiencies or decrease latencies in your business processes. The retail and medical industries actively engage technologies in IoT, some that could be adapted for oil & gas, mining, or chemicals applications. One example would be the use of cognitive computing to augment expertise. Owner-operators and solutions providers alike will require diligent cyber security programs and get complete organizational buy-in to integrating security into the DNA of business operations. Since connectivity between business and operations will leverage data on premise and in the cloud. Assess your company s culture and organizational structure to realistically ascertain what level of education, training, and cultural transformations may be required to successfully implement IIoT solutions throughout the operations to maximize results. Technology is only as effective to the degree that is embraced and utilized by the employees leveraging it. For further information or to provide feedback on this article, please contact your account manager or the author at [email protected]. ARC Views are published and copyrighted by ARC Advisory Group. The information is proprietary to ARC and no part of it may be reproduced without prior permission from ARC.