Last week, we published the first part of our interview with Benjamin Beberness, global vice president of the oil, gas, and energy business unit at SAP. In the second part of our conversation, he discusses how SAP is helping its oil, gas, and energy customers overcome the industry’s hurdles and capitalize on new areas of growth.
ASUG: What are some of the main ways SAP is working with your oil, gas, and energy customers to help them address these hurdles and capitalize on these areas of growth?
Benjamin: We just recently talked about our first customer going live on our new upstream software as a service (SaaS) solution. That is a market-based standard solution defined by the industry. The reason this is relevant to the topic is because oil and gas companies have determined that about 80% of what they do is non-differentiating. They should have market standard best practice solutions that'll help them. That's what SAP provides. Another example of what we do is if you look at all the different industries that oil and gas companies are diversifying their revenue portfolio into—whether it's the lubricant, utilities, or chemical markets—we provide the solutions, expertise, and the ecosystem for them to be successful.
Having those solutions and an agile platform for companies to diversify on is extremely important. If they had a very dedicated solution that was only for oil and gas, then they'd have to have another one for all the other markets. But with SAP, our systems are designed to work together and come together to provide that holistic view of your business. Another area where we're focused on is asset management.
We are also accelerating our asset management roadmap. I talked a little bit about that during my keynote at the conference. Regardless of which industry path they're going down, asset management is going to be very critical to their day-to-day operations. Having a solution that puts the information in the hands of their employees, so they have what they need is extremely important. There's a study by McKinsey that says by making your assets run 10% better, you actually see a 4% reduction in emissions. There's a direct correlation between running your assets better and sustainability, but also if you're running your assets better, you're going to save on your capital expenditures as well. The shutdown turnaround outages and large capital investments to improve your systems will require less maintenance.
SAP has released some newer products like carbon footprint track and GreenToken by SAP that are allowing companies to start to track their CO2 emissions. That's a big focus for us. We believe that SAP is clearly positioned to provide that ability much like you manage your assets from whatever you're buying, from your suppliers all the way to your customer. You manage those financials all the way through. Well, now we want to make sure that you can manage your CO2 emissions. So, we get the CO2 emissions from your suppliers. Who has the best, greenest supplies? When we provide that gallon of gas or that megawatt of utility power, how much did that cost from a CO2 perspective?
We’re seeing oil and gas companies work more with an ecosystem. A lot of oil gas companies would build what they needed and it was very customized the way they operated. Everything they did was differentiating. Now they’re looking to leverage best practices for common processes so they can understand where they can differentiate themselves. They’ve all started up investment parts of their organization to buy electric vehicle or other startup companies. They see how innovation isn't within the industry. They’re looking outside the industry to innovate and finding these startup companies to help innovate.
ASUG: Looking forward to the next three to five years, what are some of the big changes that we should expect to see in this industry?
Benjamin: I think what you're going to see is new business models coming out of this industry. We're going to continue to see the companies like BP that just completely got rid of their upstream operations. I think you'll see a lot more of that going forward. Over the next few years, they're going to be determining the type of company, products, and services that they want to provide.
I think you will see a huge change in the investments that they're making in their sustainability programs. Today, a lot of companies are talking about sustainability, while maybe not quite making the same level of investments as they could. But, I think you'll see that change significantly, as well as new regulations emerging that will drive that. Europe has a ton of regulations. In North America, we'll start to see some of that coming out of the current administration, and then I think we will start to see it in other parts of the world as well.
Finally, I think you'll see a lot of mergers, acquisitions, and consolidations, as companies are changing. We're already seeing that today but I think we'll continue to see a lot more of that going forward. Today we have these massive companies and tomorrow there may be fewer of them. They're going to look at how do they most effectively move forward with their strategy, and part of that is through mergers and acquisitions.
Want more insights on how SAP is helping its oil and gas customers? You can watch the ASUG Best Practices: SAP for Oil, Gas, and Energy session on demand. Register here to watch.