The energy (oil and gas, power generation), materials, and process sector (collectively referred to as “energy” here) is a challenging space to operate in. Two decades of commodity price volatility have not helped. In an effort to mitigate operational challenges, engineering, procurement, and construction (EPC) companies and owner-operators are working to optimize and connect their digital engineering and physical assets.
These organizations have been using many types of solutions, including product lifecycle management (PLM), enterprise resource planning (ERP), and supply chain management (SCM), as the backbone of different business processes. And while each digital solution provides value, connecting digital solutions with physical assets provides EPCs and owner-operators with significantly greater value.
Siemens and SAP are partnering, and the energy industry will benefit
Siemens and SAP are leaders in their respective fields: SAP in the ERP, SCM, and other business process solution spaces; and Siemens in the PLM, product design, and adjacent areas. Through the Siemens partnership with SAP, customers can now select the best-in-class Capital Asset Lifecycle Management (CALM) solutions across the entire digital thread, from design through operations. The Siemens Teamcenter CALM product combines with SAP’s business process solutions, such as ERP and SCM, to form a unified, holistic framework for managing the lifecycle of an energy asset. By integrating Teamcenter CALM with SAP core business systems, energy executives can synergistically drive greater business and operations performance, despite today’s challenges.
The energy sector’s desire to change
Energy industry executives want to build more resilient, efficient, and profitable companies. This task is difficult in normal business environments. It’s even tougher in a highly volatile sector like energy. Forward-thinking executives are turning to the progressive competencies and technologies currently revolutionizing the manufacturing sector.
Systems engineering has great promise for the energy sector. Companies can use this set of practices and processes to design subsystems and components that fully leverage interconnectivity and interdependency across many engineering disciplines. Organizations can get the most out of systems engineering by adopting a PLM solution to manage their digital engineering assets, processes, and associated tasks.
Despite the clear benefits of systems engineering and PLM, energy executives and companies have been slow to adopt them. To ensure they survive and thrive in today’s volatile environment, energy companies must manage capital projects with a systems engineering mindset that incorporates the use of mature PLM solutions to ensure their “systems of systems” remain connected.
This post discusses the challenges that energy companies face and the benefits they can experience by connecting Siemens PLM solutions into an SAP backbone. Siemens and SAP have combined their complementary software solutions for product lifecycle, supply chain and asset management through an expanded partnership that enables customers to accurately represent digital threads and manage digital lifecycle solutions.
For a deeper discussion on realizing energy and utilities operational excellence using the digital lifecycle, download the Digital Lifecycle Excellence Brief.
Read on to learn more about the issues driving change and how Siemens and SAP together address these challenges. Let’s get started by looking at what issues are driving change.
Key challenges facing the energy sector
There’s no doubt about it: Energy executives face critical challenges today. But what is driving them to seek changes? There are several overarching issues. Some of the factors motivating executives to embrace a systems engineering approach and PLM technologies, include:
The need for sustainability: Government mandates require companies to decarbonize their global supply chains in an effort to help nations meet climate objectives. To comply with these directives, energy companies need transparency throughout their entire supply chain. This aspect of sustainability forces companies to make design, material, equipment, and sourcing decisions early in the project planning stage.
Disconnected stakeholders: Engineering in the energy sector is complex and multi-disciplinary, with energy companies focusing on mechanical, electrical, and construction disciplines. But electronics, control systems, and embedded software are more commonly playing a significant role too. Departments like procurement and maintenance are also crucial stakeholders. These departments work in silos with different toolsets and data models that weren’t designed to connect. However, keeping up with such modern demands increasingly requires a more robust collaboration capability.
Data problems: Using forensic analysis to understand and address plant breakdowns can help prevent other failures. But this analysis is typically complicated because operator companies don’t have the up-to-date engineering data necessary to pinpoint the cause of the failure. And even if they have the data, it may not be accurate. Further, the operator company has no easy way of ascertaining the accuracy of their engineering data.
Many of the challenges outlined here fall under the category of inadequate interoperability. A 2004 National Institute of Standards and Technology study estimated the cost of inadequate data interoperability in the U.S. capital facilities industry to be $15.8 billion per year. That cost works out to be about 4.2% of the capital asset cost on an annual basis and is never budgeted for. Experts assert that these costs are likely much higher today. There is a significant incentive for capital asset companies like energy producers to change how they operate.
The Siemens and SAP partnership enhances Capital Asset Lifecycle Management (CALM)
To improve CALM, energy sector companies can navigate these critical challenges by leveraging Siemens and SAP combined capabilities so that it becomes a key enabler for improving energy sector company operations. This approach brings together best practices from the systems engineering and manufacturing worlds with the back-office capabilities from ERP and SCM systems. It also employs PLM principles and methods from conceptual and front-end design, detailed design, and the planning, construction, and operation of an energy asset or a plant. With such a strong connection between the core ERP and SCM systems:
- CALM offers all stakeholders in the project and asset lifecycle credible real-time information, accurate digital engineering artifacts, and operational data about the plant. This information helps to drive crucial business decisions.
- CALM enables collaboration and manages digital engineering data from various sources. It also allows team members to view many types of distinct engineering representations in one central application. Serving as a single source of truth for the entire company, Teamcenter supports all energy industry standards.
- CALM consolidates the digital twin models making up a complex energy facility while maintaining the connection between multiple tasks and processes. These capabilities are facilitated in a secure, transparent, traceable, and dynamic environment.
- CALM translates and loads PlantCAD models and digital engineering data into a neutral format. Engineering teams can then manage operational changes down to the attribute level if needed.
Engineering teams can have even better outcomes with the enhanced CALM framework from Siemens and SAP. It was designed to optimize the performance of a capital asset—such as a plant, facility, or factory—across its entire lifecycle. With Siemens and SAP, CALM has become a powerful enabler that moves the energy industry towards true digital excellence.
Benefits of CALM across the lifecycle
The benefits of CALM span the entire lifecycle. It aids sustainability efforts by aggregating all engineering data related to design. This helps executives determine the exact carbon footprint of their projects while producing better designs with more accurate data. In addition, engineers can utilize simulation solutions to make informed design decisions and validate them to supplement these sustainability improvements.
CALM also helps engineers and executives in different departments make critical planning and execution decisions during the design and construction phase of the energy asset. Teams within the EPC company often work in parallel. This means many construction activities occur while the engineering design is still being finalized. Adopting a lifecycle approach ensures that construction engineers remain up to date with better visibility into the evolving design data to improve the alignment between construction and engineering. Real-time notifications empower better planning decisions for everyone.
An integrated CALM solution provides value in the middle of the asset’s lifecycle as well. It ensures a smooth handover of all digital engineering assets from the EPC company to the owner-operator company. The operator receives the latest digital twin models, which aid forensic analysis when breakdowns occur in an energy facility.
Of course, the deployed SAP and Siemens CALM solutions integrate seamlessly with the Siemens Industrial IoT (IIoT) solution stack, which accurately captures operating data. The IIoT platform analyzes and provides data to aid vital operating decisions based on artificial intelligence and machine learning models. Executives can access enterprise-wide data and insights associated with the solution stack through SAP and Siemens CALM. This integration enables the energy asset operator to respond faster to emergencies and to use the data to prevent future crises.
Embrace digital excellence
Operating a profitable, sustainable energy business is a herculean task, especially given fluctuating oil and gas prices. EPC companies and energy operators also face increased pressure to remain transparent and reduce carbon emissions. But the complex nature of the industry makes it difficult for departments to collaborate effectively. Additionally, energy companies often struggle to address breakdowns and prevent them from occurring again.
Many leading companies use SAP’s ERP solution as a backbone connecting their project execution business processes and associated data. Likewise, many industry vanguards leverage Siemens solutions to accelerate development and make more informed decisions. A combined ERP and CALM framework can help energy companies address these various challenges by providing a single source of engineering data across their entire operation. This improves sustainability, empowers better decisions, and helps prevent facility breakdowns.
To learn how to improve operational efficiency and decision-making inside your energy business, download our Digital Lifecycle Excellence for Energy and Utilities Executive Brief. And stay tuned for the next Siemens and SAP information and events.