Energy Transformation – using systems engineering to configure technology in Energy & Utilities Industry – Transcript ep. 4

energy transformation

Siemens Digital Lifecycle Excellence is significantly impacting the energy industry. The digitalization of industry operations is resulting in considerable advantages. In step with this innovation, the Siemens’ Xcelerator software suite is addressing this industry and solving many data management issues.

In this fourth episode of the Energy Transformation podcast series, John Lusty, Global Industry Marketing Leader at Siemen Digital Industries Software, continues to talk with John Nixon, Senior Director of Energy and Utilities at Siemens. This fourth installment in our podcast on using Digital Lifecycle Excellence to manage the enterprise technical information within your company talks about systems engineering and how it’s changing the way businesses and project teams configure their technology and work practices from project start to deliver a higher quality project proficiently and economically in the energy and utilities industry.

Learn how systems engineering is the driving force of technology across the industry.

Read the transcript below or listen to the fourth audio podcast.

Read the transcript

John Lusty
John Lusty, Global Industry Marketing Leader at Siemen Digital Industries Software

John Lusty: Hello, everyone. My name is John Lusty and I’m the Global Lead for Industry Marketing, covering the energy and utilities industry here at Siemens Digital Industries Software, or DISW as we like to call ourselves within Siemens. Joining me today is John Nixon, our Senior Director, who owns the energy and utilities industry strategy at DISW. How’s it going today, John?

John Nixon: Hey, glad to be here, Mr. Lusty. So much going on in energy, and happy to keep talking about it.

John Nixon
John Nixon, Senior Director of Energy and Utilities at Siemens

John Lusty: And for those who are new to our podcast, we’re focused on how energy and utilities businesses can adopt a “Digital Lifecycle Excellence” approach to capture and consolidate valuable information, supporting the complete lifecycle of their product, of their project, or their plant, depending on their business model, so that all the value trapped in that data is available for reuse. Once that information is centralized, keeping it up to date becomes more achievable – it’s hard to do today. And then we can make it more available to those who can use it as the knowledge foundation upon which problems can be solved and opportunities can be addressed using this digital twin of their assets.

Put simply, once your technical data foundation is in good shape, you can do things with it. So, for example, our second podcast that we discussed earlier, which you can find wherever you’re getting your podcasts. We discussed the use of a requirements management approach, which is often a great place for companies to start and increase the value they get from their data without breaking the bank that shows a fast time-to-value and gives your project a very positive experience.

In our third podcast, we talked about low-code application development, and how its rapid adoption across all industries is changing the way we view and use software to democratize innovation and bring rapid development capabilities to non-IT knowledge workers.

So, welcome to this, our fourth installment in our podcast on using Digital Lifecycle Excellence to manage the enterprise technical information within your company. Today, we’re going to talk about systems engineering and how it’s changing the way businesses and project teams configure technology and work practices right from the project start to deliver a higher quality project in less time for less cost in our energy and utilities industry. So, John, it sounds like Systems Engineering is a good example of the cross-pollination from other industries that we talked about in other podcasts. I gather that there’s an appetite on project teams to escape the reputation our industry has earned about major projects often being late or over budget. What do you think about this?

John Nixon: Yes, as we’ve seen many times in reports by organizations like McKinsey or Price Waterhouse, there’s this terrible lag in productivity between what you see in discrete industries – like aerospace and automotive, industrialmachinery and heavy equipment – and what you might find in energy going forward. And the challenges that I’ve seen in the field – I’ve spent something like almost 30 years in the field, what was interesting was, you’d have multiple contractors, multiple Engineering, Procurement, and Construction companies – commonly referred to as EPCs – who would be working on, let’s say, a large or even a mega-project. And what would happen is, you would have these interface agreements between them; but where does their scope stop? And where does the other organization’s scope start? Also, where is their interface point? And we had times when spools of pipe would be at different elevations, or we would see challenges where foundations, or pads for pump stations and so forth, would have had the civil and structural changes made. And we would understand then, what were the upstream and downstream mechanical effects on that from the system that was in place. So, there has been a tremendous challenge to have a multi-discipline understanding of change management, in design and in the field. And there’s so much rework that goes on when you don’t have a systems approach in these environments. 

John Lusty: So, let’s just back up a step and talk about how we got here. I recall, a few years ago, being at the construction industry institute’s annual conference in sunny San Antonio, Texas, John, not far from you. And one of the speakers showed some scary metrics on capital project performance criteria that were linked to digital maturity, and they were zeroing in on the construction segment, but I think it’s representative of the industry. And I remember on that list, there were probably 25 industries, maybe more, and construction was second last or something like that out of this long list of industries. And it sounded like that inefficiency was pervasive. What do you think?

John Nixon: Yeah, I know what you’re referring to. We’ve seen these studies – for example, banking and insurance are some of your more digitalized industries, whereas mining and construction and oil and gas and so forth are considered laggards behind these other industries. So, there’s been tremendous investment, I would say, in the last 10 years – no more than that. I could even posit that the last five years have seen a flurry of investment in digitalization. And we’re starting to see the effects of that in the field. For the sake of the conversation here for this podcast, you’re really starting to see a more systems approach to how we execute, from design through execution and on into operations.

When I think of systems, and when I think of this investment, we need the ability to better manage change, and to rid ourselves of errors and omissions as we go through the design process. And this would include the full gambit of risk that’s involved with our personnel in the field as we execute projects for energy. To me, it screams, and it demands a systems approach going forward. The days are bygone, where if we’re running behind schedule, our decision is “We’re going to throw more bodies at it. we’re going to burn more man-hours.” That never made sense to me. Let alone, in today’s world, you can’t afford it. You cannot afford to burn more man-hours for the sake of “Well, I’m going to tick off more tasks on my schedule.” That doesn’t work anymore. You have to proactively address change, which demands you have a multi-discipline approach, which means that you have to take a systems mindset to how you’re executing your design and your construction and subsequent operations.

John Lusty: Yeah, and despite the best intentions of all of the workers involved, we’ve got some super-smart people in this industry. It’s just a real challenge. Especially, despite as far as we’ve come in digitalization, there are still a lot of document-driven processes out there. There’s a huge opportunity for improvement. So, it’s been a volatile few years. And given the trends that we’re seeing in the industry today around the market volatility, John; remember, a few years ago, crude oil went negative, crazy things like that were decarbonizing the energy supply chain and software is eating the world as this digitalization wave comes. How do you see those traditional document-driven methods, and how are they impacting the industry? Also, how do you see them changing?

John Nixon: We talked about this before, in many ways, when it came to requirements management. If you’re taking a document-driven approach, you’re still requiring a very manually intensive effort to understand what are the requirements from industry standards – from customers and so forth? How do I deal with this ever-increasing, almost feels exponential – if I may use that word – growth in specifications and data that’s been gathered as part of this intense design and construction process, and then subsequently through commissioning and operations. And so, when I think about volatility in the market, and the fact that as commodity prices rise, and there’s this sense of urgency of “Oh, let’s get these projects complete so we can seize upon the opportunity that these high commodity prices provide us.” Or take the flip of it, commodity prices are going down and I’ve got operating facilities – so, what am I doing to get the most out of these facilities and make them as productive as possible, and thus as profitable as possible in this low commodity environment? This kind of volatility demands that we take a different approach than we did in the past. A document-driven approach – it’s too slow, it’s too inefficient. Algorithmic-driven trading environments require that you’ve got to take a more systems approach – more algorithmic approach – if I may reuse that term – to how you are conducting business. That’s a speed of business that a document-based, manually intensive environment cannot support.

John Lusty: Yeah. And then COVID comes along, and you can’t go into the office to get those binders.

John Nixon: Oh, my gosh! Does that exacerbate the problem?

John Lusty: Well, to me, John, this gets to the core of the value of the Digital Lifecycle Excellence approach, where all that data represents value from across the lifecycle. And when we’re in operations, we maybe don’t think about some of the decisions that were made in design and construction. But at the end of the day, when you look at the challenges that are responding to market competitiveness, and market volatility, and ESG, as you mentioned – that’s going to require an immense amount of innovation that the knowledge workers of the future are going to have to get through. So, to me, use Digital Lifecycle Excellence, then bring all that information together and improve the way we work with it; that creates the opportunity, and best positions those people to be able to solve the problems going forward. So, really, it’s an enabler. As we’re starting to move away from those document-driven processes to more data-driven processes, that cross-pollination from other industries that we talked about earlier comes to mind because we are seeing situations where companies will reach outside of their industry to pull in somebody else. So, somebody from an aerospace and defense company or an automotive company is hired into an energy company, and they have a look at these processes, and they say, “This is absolutely nuts.” We’ve seen this before, John. So, as they start to recognize the possibility of applying a system engineering approach to this new industry, what are you hearing in the marketplace of this cross-pollination, and this adoption from other industries?

John Nixon: So, as you know, I’m here in Houston, Texas. And here in Houston, Texas, if we don’t have the headquarters of companies, we certainly have one of their larger regional offices. What I’ve seen is more than one super major issue that has now taken their engineers and are rotating them through systems engineering training, at some of the larger institutions out there. So, there’s a direct investment in both, people as well as technology when it comes to systems engineering. We’ve had customers – in fact, I think back to right before COVID, when I was making presentations to some of these super-majors – who would stop me in the middle and say, “Talk to us about systems engineering. Talk to us about bringing from manufacturing into our space, a different mindset and a different way of doing this.” In fact, there are two super-majors I can think of off the top of my head who have invited automotive manufacturers down from Detroit to come discuss systems engineering. About four or five years ago that process was started, of reaching out to that industry. So, it’s really exciting to see the direct investment in a system approach we’re seeing with some of the largest energy companies.

John Lusty: I remember hearing about a reference visit from an oil and gas and chemicals company, where they took their execution teams to a shipbuilding company to understand – because at the end of the day, ships and plants were a lot the same. They had a lot of the same disciplines; one’s pointy at one end and flat in the other, and it floats. But it’s really not that much different than a plant. But how their use of systems engineering and their use of 4D construction is very different than what’s been happening in the energy industry. And I love to see examples of the industry going somewhere else, recognizing that “Hey, at the end of the day, it’s just data.” What it rendered at the end matters less. They’re still dealing with bits and bytes. And when they run into trouble, they start bridging those gaps with thousands of spreadsheets. It’s just not that different. Right?

John Nixon: Well, Mr. Lusty, it’s funny you mentioned that. You remind me again, right before COVID, we had one of our largest our customers, who’s one of the largest contractors working with the Department of Defense on aircraft carriers and other such vehicles. They came down with a trailer that they set up. And we had them set up right in the heart of Downtown Houston, Texas. And we’re walking a lot of the majors and super-majors through this trailer to see, firsthand, concepts like Additive Manufacturing offshore – what does digitalization look like for highly complex platforms like aircraft carriers? So, it was very exciting to see the eyes of the senior executives and mid-level managers as they came through to say, “Oh, my gosh! We could be doing this with our offshore platforms. We could be doing this with our FSRUs or FSUs.” And the list goes on and on.

So, there’s a real excitement to tap into what’s been perfected – if I may use that word – in associative industries such as Marine and bring those into the energy space. And these are solutions now that have maturity. I mean, let’s put it this way – if you’re going to build weapons platforms that need to meet various cybersecurity and other demands from the Department of Defense – which are innumerable, having myself been in the army at one time – I can tell you that if we can meet those demands, we can bring those into energy and move the needle on efficiency and a systems approach for our energy customers.

John Lusty: I think there’s just massive potential there. And we’re seeing the same right here at Siemens. On our team, we’ve got a systems engineer that came out of OFS (oilfield services), and we’ve got a systems engineer that came from the space industry. So, this recognition that “Hey, at the end of the day, it’s just data.” That opens a lot of low-hanging fruit in terms of potential improvements and innovations that are already technicallyde-risked. They’re not new; they’re new to our industry. It’s almost the sweet spot that we can take full advantage of all the work that was done in adjacent industries and apply them right here, honestly, when we need it most. Because as we talked about earlier, the amount of change coming at this industry, to say nothing for the change that’s going to come on for 30 years, John, is just like we’ve never seen before.

This has been just such a great discussion. Everybody, thank you very much. Given that this is the last episode of our Digital Lifecycle Excellent Series, John, we’ve covered a lot of material here. We’ve talked about using Digital Lifecycle Excellence approach to centralize, validate, and get more value from your planning to your projects technical data. We talked about how to use requirements management to solve a very common problem, and how it’s a great place to start for very short time-to-value at a reasonable cost, and your users will love you for having solved a big problem. And we just talked about systems engineering, and how that can improve execution. And above it all, we talked about low-code application development, as there is a tool that can make software engineers out of all of us – including the odd marketing guy – so that if there’s an insight that we need or siloed systems we need to connect on the cloud, we have that ability using tools like Mendix. So, we’ve covered a lot of ground. John, and before I move to close, is there anything else that you want to say, John?

John Nixon: Well, there’s a real arc of Capital Asset Lifecycle Management, what we typically call CALM, but Capital Asset Lifecycle Management is so very important in transforming this industry and all the sub-segments of this industry. So, what I look forward to do is to serve this industry as we make those investments here at Siemens. I’ve spent three decades looking for these solutions. And I have found it with this company. I’m very excited about our deep investments, and what we bring as efficiencies from the discrete industries into the energy space. So, real excited. Thanks for having me, John.

John Lusty: Fantastic points, John. So, hope everybody’s enjoyed this series on Digital Lifecycle Excellence. For more information, as you’ve heard on each one, check out the DLE white page Digital Lifecycle Excellence. It’s at www.siemens.com/dle, and there’s a lot of information there to help you learn more. You might want to stay subscribed to this podcast as we have more topics that will be coming soon.

And I believe Advanced Engineering Simulation is going to be our next one, John. So, finally, feel free to connect with John Nixon and myself, John Lusty, on LinkedIn. We love hearing about what’s working –what’s not working in the industry, and ideas on anything that we’ve talked about in this podcast – it would be great to connect. If you like what you heard today, please give us a review and tell somebody else who you think could benefit from the industry. And to all our energy and utilities professionals out there: as always, please stay safe in everything that you do, and thanks for joining us today. Take care, everybody. Thanks a lot, John, for all your help with these. 

John Nixon: Thank you.


Xcelerator, the comprehensive and integrated portfolio of software and services from Siemens Digital Industries Software, helps companies of all sizes create and leverage a comprehensive digital twin that provides organizations with new insights, opportunities and levels of automation to drive innovation.

For more information on Siemens Digital Industries Software products and services, visit siemens.com/software or follow us on LinkedInTwitterFacebook and Instagram. Siemens Digital Industries Software – where today meets tomorrow.

Related links:
Energy Transformation podcast 01
Energy Transformation podcast 02
Energy Transformation podcast 03
Energy Transformation podcast 04

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