Clean core strategy for oil
E3, the leading SAP community magazine in the German-speaking world, interviews Rolf Adam, Group CEO of Implico.
E3: The SAP world is in a state of constant upheaval, SAP CEO Christian Klein is reorganising his company, the S/4 conversion is stuttering and, according to the user association DSAG, SAP’s relevance is shrinking. What does this development mean for an SAP industry solution such as Oil & Gas?
Rolf Adam: For the oil and gas industry, in which we have been at home for almost forty years, I can’t see any shift away from SAP. On the contrary, due to the complexity and size of oil and gas companies, there is no alternative for today’s SAP users. The majors in the industry have been relying on SAP for decades, have built up know-how and expertise and have done a lot of in-house development. For economic reasons alone, it makes no sense for these companies to move away from SAP.
The SAP “Clean Core” approach with S/4HANA and the associated future-proofing resonate very well with an industry that has to justify its relevance in the future on a daily basis. They are looking for solutions that support the transformation of their own industry from conventional energy sources to renewables such as SAF (Sustainable Aviation Fuel). In terms of IT, this change means that future-proof standard solutions must replace complex in-house developments. This is precisely where SAP’s strength lies, supported by Implico in our segments.
E3: Implico has a software solution that is based on the Oil and Gas industry solution, and therefore on S/4HANA. As an SAP partner, are you satisfied with the quality of the SAP offering?
Rolf Adam: IS-Oil will continue to be and remain an elementary component of our SAP industry solutions, especially as IS-Oil downstream will not be moved to the public cloud in the foreseeable future due to the complexity of the processes.
We are closely coordinated with SAP in our day-to-day business and especially in the long-term product roadmap. Thanks to SAP, we are the market leader with our SDM and RFNO industry solutions and set the industry standard in the downstream business. Our customers benefit from this close technological and sales coordination, as do we ourselves.
E3: How do you view SAP’s partner support? Does SAP do enough for its partners and ultimately for existing SAP customers?
Rolf Adam: We work very closely with the SAP product, service and sales organisation to ensure the greatest possible benefit for our customers. The relationship is profound across all levels. Of course, there are always organisational changes on both sides. But we have built up a solid relationship over the years, which has enabled us to survive challenges such as the recent personnel changes.
Together with SAP, we have massively expanded our market presence in the last 12 months in particular. We are working together to realise major projects on a global scale, not only in the oil & gas sector, but also in the field of renewable energy sources. We are currently realising or working on a joint project with SAP in California to set up a hydrogen refuelling station network for a customer. For a medium-sized company like ours, a relationship like this with a global market leader like SAP is unrivalled.
E3: Many existing European SAP customers avoid the cloud not only for technical reasons, but also because of licence considerations? Does the topic of cloud licences, i.e. full usage equivalent, also affect your business?
Rolf Adam: As a solution extension partner, the public cloud will only become an issue for us and our customers when SAP decides to transfer the IS Oil&Gas industry solution that is relevant to us to the cloud.
At present, the private cloud is still the preferred option in our industry. Here we have a subscription for the full range of functions and bill our customers by block. We also offer our add-on products as cloud models, e.g. on the BTP.
E3: Your solution appears complex because the substructure with HANA, S/4, S4SCSD and IS-Oil-Downstream seems extensive. Couldn’t it be simpler?
Rolf Adam: Basically, it’s quite simple and very logical. You have to imagine it like building a house. The foundation is SAP S/4HANA with its deep technical and highly professional basis for mapping the customer’s processes and making them usable. The facade is formed by the corresponding industry solution, in this case IS-Oil, as a framework. Our specific industry and automation solutions, such as SAP SDM and RFNO, are then based on this framework. They are the core or the inner workings of the building and represent the value for our customers’ business.
Our aim is to extend the functionality of standard processes with our modules and to significantly simplify the level of automation for the user. Take the example of transactional bookings, which are still traditionally carried out manually and are fully automated using our SDM and RFNO modules.
E3: SAP has discontinued the Healthcare industry solution. Will something similar happen with Oil and Gas?
Rolf Adam: We have not received any signals from SAP about this. In addition, the two solutions are not comparable due to their very different market structures.
It is true that the IS Oil&Gas user group has become smaller and smaller. But IS Oil&Gas addresses very large, globally operating companies. Their demand for SAP solutions that support them in the automation and digitalisation of processes is very high.
SAP and we also see the optimisation of processes in the oil and gas industry, especially the transformation towards alternative fuels, as a future-oriented approach.
E3: Do SAP Rise and Grow support your software solution or are SAP’s industry solutions excluded from these programmes?
Rolf Adam: As part of our customers’ business transformation to the cloud, we are foccusing on process consulting and the implementation of our specially developed modules. Our current offerings in the area of SAP Quality Assurance contribute precisely to this approach by offering the various players customised support during the transformation process.
As an SAP Solution Partner, we support the methodologies provided by SAP, such as Activate and programmes such as Rise, or elements thereof, insofar as they can be used in the project by and for the customer. The above-mentioned Quality Assurance Programme therefore represents a Rise-compliant design and quality assurance for implementation projects.
However, it is also true that the ready-made processes provided by SAP in the cloud to date are hardly usable for the oil and gas industry and therefore Rise still has major gaps in its utilisation in our industry.
E3: In future, there will be two SAP systems: HANA and S/4 with a “frozen core” and the SAP Business Technology Platform as a “playground” for modification and add-ons. Is BTP an issue for Implico?
Rolf Adam: BTP is an important topic for us. After all, SAP’s Clean Core strategy means that both future-proof product development and customised adaptations are only possible on the BTP. We are therefore already present on the BTP with customer add-ons, for example with extensions for the use of our SDM module in the USA.
At our customer Holy Frontieres Sinclair, mass data processing takes place in BTP. We process millions of data records from the petrol stations, which then result in credit card and tenant statements, in BTP because it is much more scalable and would otherwise be at the expense of performance. We then import the finished RFNO documents back into the core system.
E3: How would you explain BTP to a customer?
Rolf Adam: I would describe BTP as a cloud-based SAP-related framework that technically runs on the cloud locations of hyperscalers such as AWS, Microsoft Azure or Google Cloud or on SAP’s own cloud. It makes cloud technologies easy to use in the SAP context. As an external add-on, it is deeply integrated into SAP. Instead of programming customer-specific solutions in the core environment, it offers developers the opportunity to develop them in the cloud environment and thus utilise the potential of the cloud for SAP products.
In short: BTP makes it possible to combine SAP functionalities with cloud functionalities. Above all, it provides customers with technological options that they would certainly not be able to operate or set up in their on-premise environment for reasons of cost and expertise.
If I want to be future-proof and compatible with the SAP Clean Core strategy, I have to position my existing solutions, which are currently customised in the core, outside the core. And at SAP, BTP is the way to do this.
In addition, BTP provides AI technologies that can be used by partners to develop add-ons and thus achieve immediate benefits for customers.
E3: Do you have plans for the BTP?
Rolf Adam: As the example of mass data processing for a customer shows, we have started with customised solutions for our two modules SDM and RFNO. In future, we will also use the BTP platform for our product development by providing additional functionalities that are part of our own business model as BTP add-ons.
We are currently working on “Add TCO”, which offers automation and optimisation of logistics management as part of the SDM module. For us and for our customers, the major advantage of a BTP solution is that, compared to an S4 core solution, where we are always dependent on SAP releases, we can offer continuous delivery and therefore make innovations available much more frequently. The same also applies to SAP, which can roll out S4 updates more flexibly and quickly.
E3: SAP is not the only platform provider in the IT world. There are also interesting concepts for hyperscalers. Some SAP partners are switching to the Microsoft Azure platform. How do you view the topic of SAP and Microsoft?
Rolf Adam: We are seeing that the decision in favour of SAP or Microsoft (D365/PowerPlatform) is driven by the size of the customer and the complexity of the business. While there is no alternative to SAP for large enterprise customers, as mentioned at the beginning, many SMEs are using the upcoming cloud migration to re-evaluate the platform decision. In the midmarket, the choice often falls in favour of Microsoft, especially in the supply chain sector.
This is also how our business is structured. Our SDM and RFNO solutions for logistics and petrol station operations are primarily aimed at enterprise customers who use SAP. In the terminal management business, on the other hand, we are seeing a trend towards Microsoft solutions for the supply chain. We see hyperscalers, whether AWS or Azure, more as a discussion point in the context of infrastructure, but not in the area of business apps.
E3: A possible future: accounting at SAP and the innovative extensions and modifications on Azure, right?
That is definitely a possible scenario, especially for SMEs that currently have their accounting on SAP. However, corporations will continue to appreciate and utilise the advantages of the integrated SAP platform.
E3: Thank you for the interview.
