ARC VIEW

AUGUST 13, 2015

OSIsoft-SAP Partnership Deepens SAPs

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 companys digital
transformation. In the process industries, users have been connecting asThe addition of the OSIsoft connector
to 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.

sets to production and operational systems for decades. However, most have missed opportunities to
effectively couple these assets to the business level.
Real-time plant automation systems and software
have long played a role in the efficiency, safety, and
profitability of oil & gas, chemicals, utility and mining
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

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 enterprises 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

2015 ARC 3 Allied Drive Dedham, MA 02026 USA 781-471-1000 ARCweb.com

ARC View, Page 3

The current convergence of

information technology (IT) and
operational technology (OT) in the

converge the operations and IT worlds to drive business. Companies are connecting data directly from
sensors or other assets such as SCADA, PLC, and

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 manufactur-

technology and database

ing, materials, machines, products, and utilities in the

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.

OSIsofts 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 HANAs
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 OSIsofts 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

2015 ARC 3 Allied Drive Dedham, MA 02026 USA 781-471-1000 ARCweb.com

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 its 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.

2015 ARC 3 Allied Drive Dedham, MA 02026 USA 781-471-1000 ARCweb.com

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 companys 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 PReynolds@arcweb.com. 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.

2015 ARC 3 Allied Drive Dedham, MA 02026 USA 781-471-1000 ARCweb.com