Clean Core Strategy for Oil

E3: The SAP world is in a state of constant upheaval, SAP CEO Christian Klein is reorganizing his company, S/4 conversion is stuttering. Additionally, according to the German-speaking SAP user association DSAG, SAP's relevance is shrinking. What does this development mean for an SAP industry solution such as oil and gas?

Rolf Adam, Implico:I cannot see the oil and gas industry, where we have been at home for almost forty years, moving 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 SAP Clean Core approach with S/4 Hana and its future proofing is very well received in an industry that has to justify its relevance every day. They are looking for solutions that support their industry's transformation from conventional energy sources to renewable energy sources such as SAF (Sustainable Aviation Fuel). For IT, this change means replacing complex in-house developments with future-proof standard solutions. This is exactly where SAP's strength lies, supported by Implico in our segments.

E3: How do you rate SAP's partner support? Is SAP doing enough for partners and, ultimately, for SAP customers?

Adam:We work very closely with the SAP product and partner organization to ensure the greatest possible value for our customers. The relationship is deep at all levels. Of course, there are always organizational changes on both sides. But we have built a solid relationship over the years that has allowed us to weather challenges like the recent personnel changes.

E3: And how is the SAP market developing?

Adam: Together with SAP, we have massively expanded our market presence, especially in the last twelve months. We are working together on large projects on a global scale, not only in the oil and gas sector, but also in the renewable energy sector. We are currently implementing or working on a joint project with SAP in California to set up a hydrogen filling station network for a customer. For a mid-sized company like ours, a relationship like this with a global leader like SAP is unparalleled.

E3: Many European SAP customers avoid the cloud not only for technical reasons, but also due to licensing considerations. Does the topic of cloud licenses, i.e. Full Usage Equivalent, also affect your business?

Adam:As a solution extension partner, the public cloud will only become an issue for us and our customers if SAP decides to move the IS Oil and Gas industry solution that is relevant to us to the cloud. For now, the private cloud is still the preferred option in our industry. Here we have a subscription for the full functionality and bill our customers in blocks. 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 simplified?

Adam:Basically, it's quite simple and very logical. You have to think of it like building a house. The foundation is SAP S/4 Hana with its deeply 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 based on this framework. They are the core or the inner workings of the building and represent the value for our customers' business. Our goal 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 traditionally done manually and are fully automated with our SDM and RFNO modules.

E3: SAP has discontinued the Healthcare industry solution. Will something similar happen with oil and gas?

Adam:We have not received any signals from SAP in this regard. In addition, the two solutions are not comparable due to their very different market structures. It is true that the user group for IS Oil and Gas has become smaller and smaller. But IS Oil and Gas is aimed at very large, global companies. Their demand for SAP solutions that help them automate and digitize their processes is very high. SAP and we agree that process optimization in the oil and gas industry, especially the transition to alternative fuels, is a trend of the future. This is underscored by SAP's expansion of this industry framework to include renewables, utilities, and chemicals under the extended name IS Oil, Gas, and Energy.

E3: Do SAP RISE and GROW support your software solution or are SAP's industry solutions excluded from these programs?

Adam:As our customers transform their businesses to the cloud, we focus on process consulting and the implementation of our purpose-built modules. Our current offerings in the area of SAP Quality Assurance contribute to this approach by providing customized support to the various stakeholders in the transformation process. As an SAP Solution Partner, we support the methodologies provided by SAP, such as Activate and programs like RISE, or elements of them, as far as they can be used by and for the customer in the project. The above quality assurance program therefore represents a RISE-compliant design and quality assurance for implementation projects. However, it is also true that the off-the-shelf processes provided by SAP in the cloud are hardly usable for the oil and gas industry, and therefore RISE still has major gaps in its use 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 the BTP an issue for Implico?

Adam:BTP is an important issue for us. SAP's clean core strategy means that both future-proof product development and customer-specific adaptations are only possible on the BTP. This is why we are already present on the BTP with customer add-ons, such as extensions for the use of our SDM module in the USA. At our customer HF Sinclair, mass data processing takes place on the BTP. We process millions of records from the gas stations, resulting in credit card and rental 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 describe BTP to a customer?

Adam:I would describe the BTP as a cloud-based SAP-related framework that technically runs on the cloud locations of hyperscalers like AWS, Microsoft Azure, Google Cloud, or on SAP's own cloud. It makes it easy to use cloud technologies 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 enables developers to develop them in the cloud environment and thus exploit the potential of the cloud for SAP products. In short, BTP makes it possible to combine SAP functionality with cloud functionality. Above all, it provides customers with technological options that they would not be able to operate or set up in their on-premises environment for reasons of cost and expertise. If I want to be future-proof and compatible with SAP's clean core strategy, I have to position my existing solutions, which are currently customized in the core, outside of the core. And at SAP, BTP is the way to do that. In addition, BTP provides AI technologies that can be used by partners to develop add-ons and generate direct value for customers.

E3: Do you have plans for the BTP?

Adam:As the example of mass data processing for a customer above shows, we started with custom solutions for our two modules SDM and RFNO. In the future, we will also use the BTP platform for our product development by offering additional functionality as BTP add-ons with a separate business model. We are currently working on the TCO add-on, which will automate and optimize logistics management as part of the SDM module. For us and for our customers, the big advantage of a BTP solution is that we can offer continuous delivery and therefore make innovations available much more frequently than with an S4 core solution, where we are always dependent on SAP releases. The same goes for 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 see the topic of SAP and Microsoft?

Adam:We see that the decision for SAP or Microsoft, D365 and Power Platform, 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 I mentioned at the beginning, many SMBs are using the upcoming cloud migration to re-evaluate the platform decision. In the midmarket, Microsoft is often the choice, especially in the supply chain space. This is how our business is structured. Our SDM and RFNO solutions for logistics and service station operations are primarily aimed at enterprise customers using SAP. In the terminal management business, on the other hand, we see a trend toward Microsoft supply chain solutions. We see hyperscalers, whether AWS or Azure, more as a discussion point in the context of infrastructure, but not in the area of business applications.

E3: Thank you very much for the interview.