APRIL THROUGH JUNE No. 1/2017

CAPITAL PROJECTS

BEST-IN-CLASS

ENGINEERINGdespite ofupheavals

during ArabSpring pg. 76

� OPPORTUNITIES IN ASEAN MARKETS� INFORMATION SECURITY MANAGEMENT

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Thyssenkrupp Industrial Solutions (TKIS) has supplied andrecently commissioned Egypt’s largest nitrogen fertilizercomplex, located in the Damietta free trade zone, some160 km north-east of Cairo. The project was developed bythe Egyptian Nitrogen Products Company (ENPC), a joint ven-ture between Canadian Agrium and Egyptian MISR FertilizerProduction Company (MOPCO), who will operate the plant.No doubt, this capital project is a success story, however, itsprocessing was by no means straightforward, writes

BERNHARD D. VALNION

SECOND SPRING IN EGYPT

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ment with MOPCO whereby MOPCO acquired the project,and Agrium shareholders obtained an equity interest inthe combined entity.Mid-December 2009. Agrium secured local financing of1.05 billion US dollars that allowed ENPC to proceed withthe next steps of the construction of the second and thirdproduction trains at the existing MOPCO nitrogen fertiliz-er facility in Damietta.

The rest of the story

The course of the project is particularly exciting, but not ina technological sense, because Uhde had already builtmany similar types of plants in the world. However, the at-tentive reader knows that economic and political condi-tions have changed considerably since 2011 as a result ofthe so-called Arab Spring in North Africa and the MiddleEast.The contract was signed in May 2007. The engineering forthe selected site started, construction site preparationswere made, and first foundations were poured. One yearlater in April 2008 the project was suspended as it ap-peared that the selected site is not going to be approvedby the local authorities. The work was therefore interrupt-ed and it took until December 2009 until a relocationagreement was concluded with the result that a redesignof the plant layout for a site 1.5 km away from the originallocation was necessary — this first project suspension dueto relocation led to two years of delay. As a result of the fi-

At the time the client awarded this turn-key contract toThyssenkrupp Uhde (Essen, Germany) in May 2007

this contract was the biggest contract in the company’s80 year history, comprising a total investment volume ofsome 1.2 billion US dollars. Running at full capacity, thenew ammonia-urea plant is capable of producing morethan 2 400 t of ammonia and 3 850 t of urea per day. TheTKIS subsidiary Uhde Engineering Egypt provided engi-neering services such as PDMS (provided by Aveva, Cam-bridge) modelling, drafting, and site services. The plant isbased on Uhde’s proprietary ammonia process while theurea plant uses Netherlands-based Stamicarbon’s syn-thesis technology. MOPCO is selling the urea fertilizer pro-duction to both domestic and export markets.

From the logbook of an adventure trip

May 29, 2007. Egyptian Agrium Nitrogen Products Co.SAE (EAgrium) has commissioned Uhde, a company ofThyssenkrupp, to build a turnkey fertilizer complex in Da-mietta. This was the fifth contract for Uhde in three yearsfor a fertilizer complex in Egypt.End of April 2008. Egypt Agrium (EAgrium) responded tothe Egyptian Government’s request to suspend theAgrium-Damietta ammoniaurea plant in response to thepublic consensus from Damietta citizens about the possi-ble environmental impact of the project on the commu-nity.Mid-November 2008. EAgrium entered into an agree-

Aseries of protests, insurrections and revolutionsin the Arab world, which began in December

2010, is referred to as the “Arab Spring” (accordingto the Prague Spring of 1968). This unrest, startingwith the revolution in Tunisia, was directed againstthe authoritarian regimes and the political and socialstructures. The rebellion in Egypt began on January25, 2011, with the so-called ‘Day of Wrath’. On thefollowing February 11, long-time President Husni Mu-barak resigned and a military council took over thepower. This ensured democratic elections for the de-monstrators as well as the repeal of the EmergencyLaw, which had been in force for 30 years.In the elections between the end of 2011 and mid-2012, the Muslim Brotherhood, together with otherIslamic parties, obtained a majority in Parliamentand in the Constitutional Assembly. Their then partychairman Mohammed Mursi won the presidentialelections. As a result, protests by liberal, leftist andsecular forces escalated at the end of November2012. At that time, the Constitutional Assembly alsoadopted the draft new constitution, which refers,inter alia, to the principles of Shariah. This led tonew demonstrations, which ended with a militarycoup. In the new elections, Abd al-Fattah as-Sisi waselected president.Pi

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nancial impact of this relocation the initial 50-percentshare of the Canadian shareholder within the Canadian-Egyptian joint venture was reduced down to 25 percent.During construction at the new site, the first political dis-turbances occurred in February 2011. Repeated occurrenc-es of increasing seriousness were posing severe threats tosecurity of TKIS as well as TKIS’ subcontractor personnelin Egypt. The occurrences in question comprised riots, civildisobedience and insurrection and other similar events inlarge areas of the country. In consequence, the securitysituation was reported extremely precarious throughoutthe country, despite heightened security force presenceon the streets. Large-scale demonstrations with the po-tential for violence continued in several areas of Cairo,Alexandria, and other parts of the country, with the policeand army using tear gas, rubber bullets and live ammuni-tion to disperse demonstrations. There had been a numberof deaths. There were also reports of gangs, sometimesviolent, looting properties, shops and warnings of thou-sands of inmates escaping from prisons. Rail and roadtravel has been disrupted between cities, and between citycentres and airports. The Government had also issued cur-few times. On the construction site work activities sloweddown as a result of the uprising, temporary road blockagesand strike.

The aggression turned not only against foreigners, it wasagainst everyone — mainly Egyptian workers were workingon the construction site. On November 10, 2011 the proj-ect was suspended again arising out of the decision of theSupreme Council of the Armed Forces to close down thefertilizer plant at Damietta. Within a short time, the con-struction site had to be evacuated. All expatriate engineerswere brought to safety on a special chartered airplane. Thesecurity situation was too critical as to perform any con-servation or maintenance to the installed plant equipment.The situation further escalated in 2012 and 2013, whenthe main supplier’s offices and local staff camp were de-vastated by vandalism, and a fire destroyed the TKIS siteoffices completely, including the entire paper documen-tation. During this time many of the equipment on site,such as the largest tanks, had been filled with water toperform pressure tests. Owing to the suddenly necessaryevacuation, there had been no time to drain and preservethe systems. This period, referred to as the “second proj-ect suspension”, characteriSed by a force majeure duringthe revolution, continued until February 2014.Then, the client made the decision to return to the con-tract. The following negotiations ended up with a mutuallyacceptable settlement for both contracting parties that in-cluded compensation for the damage incurred and exten-sion of time by the O/O. In this difficult situation, the factthat a similar facility had already been erected for MOPCOhelped, in that a long-term relationship already existed.Support for the project also came from politics: After thedissolution of the Muslim Brothers by the Sisi administra-tion, the political will was to get Egypt’s economy back ontrack. This project, initially the largest foreign investmentproject there, was of strategic interest to the governmentto demonstrate the administration’s support for foreign in-vestments in Egypt.Since frequent findings of defects, malfunctions and cor-rosion issues made it necessary to coordinate with thePD

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client, the project management was challenged all thetime. After all, the half-finished plant had been set adriftfor two-and-a-half years under extreme conditions withtanks and piping systems filled with water. Basically, theteam was in a continuous negotiation modem, provingwhat the causes were for detected defects and assessingthe consequences. There was no patent project handling,because engineering change requests that occurred moreor less daily had to be evaluated, e.g. whether a use-as-iswas a reasonable option, even under strict safety consid-erations. Under these circumstances it was a remarkableachievement that the first of two production lines wasready for operation just one year after the constructionworks were restarted. This evidences the truly outstandingquality delivered by the supplier network.Commissioning is one of the most exciting phases in thelife of a project manager, because, for the first time, manysub-processes have to interact properly. Larger quantitiesof ammonia are produced before it feeds into the pro-duction process of liquid urea solution to finally generatethe dried fertilizer product in the urea granulation plant.In June 2015, there was this moment of great excitement,when the first production line went into operation. Fromone minute to the next the large conveyor belts startedshoveling the daily production of almost 2 000 t of a sin-gle train from the urea plant to the bulk storage hall. AsFrank-Peter Ritsche, Project Director for TKIS puts it:”Nothing is as rewarding when client, contractor’s andsupplier’s staff are lying in each other’s arms in such emo-tional moment”. Half year later, the second productiontrain was online.

Dramatic change in business environment

Despite this success the working atmosphere for the up to150 expat engineers on the Damietta site was no longer asrelaxed as before the revolution. The revolution had trans-

formed Egypt into a strictly Muslim country. Unveiledwomen walking along the streets of Cairo are no longerapparent in public. To be out for a beer in a bar in the eve-ning is becoming a challenge. Even though in Damietta thesituation is safe again, the country is suffering regularlyattacks to police stations, infrastructure and increasinglytourist areas and hotels. Special measures were imple-mented by TKIS to guarantee the safety of its employees.Daily power cuts were affecting the daily life during andafter the revolution. Since Egypt is investing in its electricpower infrastructure the situation improved, however atcost of frequent interruptions of the natural gas supplythat the fertilizer industry relies on. These gas shortagesduring the plant commissioning and testing caused theproject another year of delay until President Sisi inaugu-rated the fertilizer complex on May 22, 2016 and overallprovisional acceptance was achieved in December 2016.Nevertheless there are indications that the prospects ofthe country are turning to positive. The exploitation of thenew gas fields on the Mediterranean coast by the Italianenergy company ENI expected by the end of 2017 will eli-minate the bottlenecks in Egypt’s domestic gas supply.Siemens signed contracts worth 8 billion Euros in June2015 for gas-fired power plants and wind power installa-tions that will, once completed, boost Egypt’s power gen-eration capacity by more than 50 percent. Energy is thebackbone of economic development, and thus the motorto generate jobs. Even though the protests of the ArabSpring were driven by pursuit of freedom and democracyand by religious motivations, the root cause of revolutionsand unrest is unemployment and poverty of the people.After all these years the population is hungry for politicaland economic stability. There’s optimism that Egypt willbe back on the global agenda. There are still capacities formore fertilizer plants to be built by Thyssenkrupp Indus-trial Solutions in that region.

List of suppliers for the ENPC projectEquipmentVendorPackage Boiler Hitachi Power Europe (Today Mitsuibischi

Hitachi Power Europe AG - Germany)Compressors (Synthesisgas, CO2) Nuovo Pignone (heute GE - Italy)Compressors (Natural Gas, Process Air, Refrigeration) MAN Turbo (Germany)Turbines Siemens AG (Germany)Nitrogen Generation Unit Linde AG (Germany)Electrial Power Generator ABB AB (Sweden)Ammonia Tank Refrigeration System Johnson Controls (Germany)Ammonia Converter (Equipment) Olmi (Italy)Catalyst Johnson Matthey (UK)Boiler Feed Water Pump Sulzer (Germany)HP Ammonia Pump PeroniHP Carbamate Pump Uraca (Germany)Refractory in Reforming Section KarenaCO2 Removal Technology – Benfield Process UOP (USA – NL)Only Process Design and Chemicals Source: TKIS

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Southeast Asia is currently a very vibrant and dynamicmarket when it comes to EPC opportunities and contracts.Changing economic landscapes, fluctuating global commo-dity prices and stagnating demands all add to the volatilityof the market in Southeast Asia. Volatile markets aresynonymous with uncertain markets and uncertainty oftenaffects opportunities negatively. What can EPCs expectfor their businesses?

BY MARCO DE BOOIJ

ASEAN POWER ANDENERGY MARKETS

Indonesia is well-known for itsgeothermal sources (top) andMalaysia is a net exporter of oiland gas (left)

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the exception of Singa-pore, are on the road tobecoming developed na-tions. The more devel-oped the country be-comes, the higher theenergy demand percapita.Many of the proposedprojects still focus onfoss i l - f ue l - poweredelectricity generation.Especially coal-firedplants are still projectedin significant numbers inthe coming years. How-

ever, there is a shift towards more clean and renewableenergy sources. This will also result in a shift in the EPCcontracting world as there is a number of EPC contractorsspecialised in renewable energy solutions that havestepped up their activities in Southeast Asia. According toan OECD/IEA report in 2015, the total amount of electri-cal power generated in 2012 in ASEAN was about756 TWh. Of this, approximately 17 percent was generat-ed through renewable energy. It should be noted that mostof the renewable energy comes from hydropower and geo-thermal sources. Other forms of that energy type such assolar, wind, and bio-energy are still marginal. This, how-ever, is changing rapidly. In the region, the potential ofsolar energy is especially high and expected to grow sig-nificantly in the near future.From an electrical power perspective, it is challenging tosee the ASEAN region as a homogeneous market. Themember countries, Brunei, Cambodia, Lao PDR, Indo-nesia, Malaysia, Myanmar, Philippines, Singapore, Thai-land and Vietnam, vary significantly in size, population,politically and economically. It therefore makes sense tolook at the member countries individually as well as col-lectively.

Detailed look at the ASEAN region

Although Brunei is by far the smallest member of ASEANboth in geographical size and in population, the electricalpower consumption per capita is easily the highest at

Southeast Asia is stillone of the global

growth regions. For2017 the average eco-nomic growth of ASEAN(Association of Southe-ast Asian Nations) ispredicted to be around4.8 percent. Of course,ASEAN and SoutheastAsia are part of a muchmore diverse marketthan, for instance,Europe. Growth figuresdiffer significantly fromcountry to country butas a region, it is seeing strong economic development.This in turn results in many opportunities for the large in-dustrial manufacturing plant industries.Besides a strong surge in EPC projects in the infra-structure construction industry, there are major opportu-nities in the power industry because of the growingdemand for electricity. Besides many planned projects inthe traditional power generation such as fuel-fired and hy-dropower, there are growing EPC opportunities in the re-newable energy field especially in solar and geothermalenergy.

EPC playing field

All the major international players in the EPC arena havea presence in the Southeast Asian region. In the conven-tional power industry, well-known companies such as Sie-mens, ABB, Alstom, and General Electric have played adominant role for decades, but times are changing. First ofall, there have been some consolidations such as GE andAlstom, and secondly, there have been new entries intothe global and regional markets.In every sector of the EPC market there is a growing num-ber of local companies aiming for a piece of the overallpie. These local companies initially team up with moreestablished and experienced players, but eventually willbe able to work independently. There is also a strong pushby the Asian powerhouses China, South Korea, and Japanin the region to carve up a larger chunk of that market.Especially in the nuclear power field, geothermal and solarprojects, the regional players have a strong chance of suc-cess.

EPC and the electrical power industry

The demand for electrical power in Southeast Asia is ex-pected to rise by 83 percent from 2011 levels. A fast-grow-ing population and a growing demand per capita aredriving this demand. The overall population in the ASEANregion is expected to grow from 615 million in 2014 to715 million in 2025. Most of the ASEAN countries, with

Bridgit (Kuala Lumpur, Malaysia) provides project management,consulting, services and training to organisations focused on im-proving their project performance. Built and manned by multi-dis-ciplined professionals with over 100 years of experience, Bridgit,with its strategic partners, provides a wide spectrum of end-to-endstrategic and tactical services and solutions to fulfil gaps in projectmanagement needs in various industries

www.bridgit.biz

Indonesia

Singapore

Cambodia

Thailand

Myanmar

Malaysia

Laos

Vietnam

Philippines

Brunei Darussalam

ASEAN member countries

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around 3 000 kWh. This is partly because 97 percent ofits population has access to electricity in their home. Mostof Brunei’s power is generated with natural gas as thecountry has an abundant supply of this natural resource.The country has begun with some initiatives in solarenergy. The first relatively small solar power facilityopened in 2011, supplying power to approximately 200houses.The main focus is to strengthen its sub-transmission gridand to develop regional grid connectivity especially withSarawak and Sabah, two Malaysian states on the island ofBorneo, thus reducing its reliance on natural gas for itselectrical power generation.Cambodia is still a relatively untapped market with regardto electrical power. In 2012, it was estimated that only 35percent of the country’s population had access to electri-city. This party explains the relatively low demand but italso indicates that the demand will increase strongly inthe near future. Cambodia aims to achieve 70 percenthousehold electrification by 2030. This will realised in twoways — through significant interconnections withneighbouring countries such as Lao and Thailand and byincreasing domestic power production. In 2012, oil-fuelledgeneration made up 55 percent, hydropower provided 39percent, while 6 percent came from coal and biomass.This country also aims to become a net exporter in the fu-ture. The main current projects centre on thermal powergeneration and hydropower projects.As Indonesia has by far the biggest population of anyASEAN country with roughly 250 million people, it is thebiggest power consumer in the entire region. Added to thisis that Indonesia consists of a large number of islands, itbecomes clear that the electrical power market in Indo-nesia is highly complex. In 2011, 88 percent of its fuel mixcame from fossil fuel sources (48 percent coal-fired, 31gas-fired, and 13 diesel-oil-fired power plants). The re-mainder is made up of hydroelectric (7 percent), geother-mal (5 percent) and other renewables (1 percent).Currently the electrification of Indonesia is around 75 per-cent. In urban areas this is significantly higher while in

rural areas it is much lower. The aim of Indonesia is toreach an overall electrification of 90 percent by 2020. Inorder to achieve this and because of short-term power de-mands, the country has put into place ambitious pro-grammes to add a total of 35 GW of power to its capacity.This initiative seems to be struggling to stay on track.An area specifically of interest is geothermal power gener-ation. Because of its location on the so-called ring of fire,the country has a large number of volcanoes and geo-thermal activities. A good example of this is the 330 MWSarulla geothermal power project that is undertaken by aconsortium consisting of Ormat, Medco, Itochu and Ky-ushu.Lao PDR is a very special case in ASEAN. 97 percent of itspower generation comes from hydropower with the re-mainder coming from fossil fuel. The electrification rate isstill low at 78 percent, with the rural areas much lowerthan that. The government plans to increase this percent-age to 90 percent by 2020.Lao has several agreements with neighbouring countriessuch as Thailand. In dry seasons with low hydropower po-tential, Lao will import power and in wet seasons exportpower. The country has further interconnection projectsplanned with Thailand, Vietnam, and Cambodia in thecoming years.Malaysia has an abundance of natural resources such asoil and gas, coal, and renewable energy sources. The coun-try is actually a net exporter of oil and gas. There is, how-ever, a significant difference between Peninsular Malaysiaand the two states Sabah and Sarawak on the island ofBorneo. While overall power generation capacity is higherthan demand, Sabah has suffered from power shortageowing to the rise in demand and aging power plants.The country’s electrification rate is close to 100 percent.Most of the power in generated by government-linkedcompanies, but there is a trend to use more independentpower producers (IPPs). The current IPPs already supply aportion of the overall power into the network.In line with the global trend, Malaysia is attempting to re-duce its dependence on coal for power generation in fa-

City of Hanoi, Vietnam

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vour of more clean and renewable solutions such as hy-dropower or solar.Of all the ASEAN countries, Myanmar has by far the low-est electrification rate of around 32 percent. Myanmar isalso burdened by inefficient power plants and grid effi-ciency losses. The power sector is fully controlled by thegovernment and heavily subsidised. Even though IPPs areallowed, the market conditions are still a strong deterrent.The country is planning to more than double its capacityin the coming years and through interconnection agree-ments is eyeing exporting electricity to countries with hig-her prices and greater demand.Like Indonesia, the power sector in Philippines is com-plex owing to the size of the population and the fact thatthe country consists of more than 7 000 islands. Thepower generation mix is relatively balanced between coal(28 percent), hydropower (21) and geothermal (24).The major islands have close to 100 percent electrifica-tion but if the smaller islands are taken into account, theoverall electrification drops to 80 percent. Although thegovernment has set itself the goal to lift the percentageto 90 percent in the coming years, this is facing severechallenges because of the complex geography. Any inter-connection with other countries will require major invest-ments in sub-sea cables. The nearest connection wouldbe with Sabah, Malaysia.Given the fact that Singapore is a developed country witha mature electricity market with a very stable population,the demand growth is very limited. The city-state howeverhas to rely completely on imported resources for its powergeneration. More than 80 percent of its electricity is pro-duced from gas-fired generation. Because of its limitedland area and features, Singapore is not able to develop alarge capacity in alternative and renewable energy. Thissignificantly restricts the state’s search for supply diversi-fication.The city-state has 100 percent electrification through asingle grid. Currently there is an interconnection with Ma-laysia’s national grid and further interconnection with In-donesia is planned.Thailand is heavily relying on natural gas as the main fuelfor its power generation. Approximately two thirds of thecountry’s generated power is gas-fired. As Thailand doesnot have any significant natural gas resources, it is bothvulnerable to market price fluctuations but more impor-tantly is also very vulnerable when it comes to power se-curity. The majority of power (47 percent) is generated bythe government-linked Electricity Generating Authority ofThailand, but IPPs are pushing for a bigger market share.In total, electrification in Thailand is roughly 99 percent.Because of its vulnerabilities, it is expected to be a drivingforce behind more interconnection in ASEAN.Vietnam is the country in ASEAN with the fastest growingelectricity demand. This is due to an increase in popula-tion, overall demand per capita and industrialisation andurbanisation.Because of this growing demand the country is planning to

develop more than 10 GW of nuclear energy by 2030. Cur-rent electrification is 99.6 percent with plans to reach thefull 100 percent by 2020.The country is opening its energy market and is stronglypromoting domestic and foreign IPPs. The country is cur-rently connected to Lao and Cambodia and purchaseselectricity from China through transmission lines. By furth-er interconnection within the Asia/Pacific Group (APG),Vietnam aims to reduce its dependence on fossil fuels byimporting low-cost hydropower.

EPC opportunities in the conventionalpower industry

Since the total amount of power generation is expected todouble by 2025, many opportunities are available in theconventional fossil-fuel-driven power generation industry.A large number of new power plants are being built in thecoming years. Furthermore, almost all ASEAN countriesare dealing with ageing power plants which either need tobe replaced or refurbished. Both the new plants and re-furbishment of older ones will lead to significant EPC op-portunities.The plan for the coming years is to realise an ASEANPower Grid with interconnectivity between the differentmember states. It is expected that this will lead to a num-ber of EPC projects. Some of the member states are alsointegrating regional grids into one national grid. Again, thiswill generate opportunities for the EPC industry.Some countries in ASEAN are seriously considering add-ing nuclear power to their energy mix. The expertise forthis will either need to come from the western EPC con-tractors such as Areva, GE, or Westinghouse, from Chinaor from Russian and Japanese firms (however weakenedafter the Fukushima accident). Relative newcomers withstrong potential are EPC contractors from South Korea,which are becoming very strong, e.g. winning projects inthe Middle East.

EPCs and renewables

As all ASEAN countries are trying to move away from con-ventionally fuelled power generation to renewable energysources, there will be a multitude of opportunities for EPCcontracts. Especially hydropower, geothermal and SolarPV will see strong growth in the ASEAN region.Depending on the member country, different sources ofrenewable energy will have prevalence. In Indonesia, thereare major opportunities for geothermal projects while incountries like Malaysia and Brunei some Solar PV projectsare being planned.Even though renewable energy projects will be relativelysmall in the short term, they are expected to grow both innumbers and in size in the foreseeable future.

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How to go digital in the end-to-end value chain? SAP provides withSAP Leonardo a convincing answer to this comprehensive question.The new brand comprises an innovative solution portfolio that enablescompanies not only realise the transformation of existing businessprocesses, but also enable them to enter into new business modelsrunning exclusively digitally.

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DIGITAL TRANSFORMATION JOURNEY

of keyboard and screen. In addition, they mark their soft-ware rather clever as real-time system with an ‘R’.The first products are called R / 1, R / 2,and R / 3.What then happened is well-known. An enterprise and anecosystem emerged with aworld-wide reputation. In2022, 50 years of his-tory will be written —or in other words,SAP has been ac-companied its cli-ents with the dig-itisation of busi-ness processesfor half a century.Many may pretendthat digital trans-formation and theInternet of Thingsare something new,even revolutionising —for SAP and its clients itis definitely not the case. For example, SAP-Hana-clientContinental has launched con-nected functions for automobilessuch as E-Call in 1996, telematics systemsfor remote diagnostics in 2001, state diagnosticsand turn-by-turn navigation (so-called ‘Digital Network Ac-cess Device’) in 2003. However, two decades ago, no onespoke of the influence of linked products on internal busi-ness processes — not even the term PLM was born (whichtook another three years). Networking, as we understandit today, means the complete digitalisation of the supplychain including customer touch points, and that is exactlywhat SAP Leonardo stands for.SAP Leonardo is the IoT framework of the German soft-ware giant (Walldorf) that combines known and new IoTsolutions under one unified brand. The provided basic

Sometimes, it is worth taking a look back into the pastto understand what’s coming up (according to HelmutKohl, former Chancellor of the FRG): The founding stone ofthe later SAP is laid in Weinheim, some five km north-eastof Mannheim, Germany. Five former IBM employees arejoining forces to form the BGB firm ‘Systemanalyse und(Eg.: and) Programmentwicklung’, the later SAP, includingfamous Dietmar Hopp and Hasso Plattner. They developthe first payroll and accounting programme, using insteadof at that time usual punched cards the very modern way

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SAP

Buenos Aires, that has almost three million inhabitants in the actual urban area and 13 million in the metropolitan area,once again ranks among the most interesting and best-organised metropolises in Latin America. Founded in 1580 atthe mouth of the Rio Plata, Buenos Aires is subject to annual torrential rains. Owing to its ageing infrastructure anddense population, flooding has historically been an issue. After a major flood in 2013, the capital of Argentina neededto rethink its waterworks system. Now the SAP Hana portfolio enables the city administration to manage 1500 km ofrainwater and drainage systems – and notify residents with weather alerts. Another remarkable example is its lighting infrastructure. End of 2015, an agreement between Philips and SAP startedin Buenos Aires, where Philips is refurbishing 91000 streetlights with LEDs, controlled by Philips’ CityTouch, a con-nected software platform for outdoor lighting, which interfaces directly with the SAP Hana platform. The city adminis-tration is able to manage more than 700000 assets, including street lights, parks, bus stops, buildings and bridges.Remote management of each individual street light point is possible with the remote management system, which allows remote adjustment of lighting levels, dramatically reducing energy consumption and maintenance costs. As aresult, Buenos Aires has been able to increase operational efficiency, realise energy savings of over 50 percent.

“SAP invested in the next generation business suite solution S/4 Hana running in an In-Memory environ-ment to enable a fast ‘Live Business Environment’ byconsuming, evaluating and executing, real-time datafrom smart products. That’s the business software environment of the future that our customers expectfrom us to enable the digital transformation journey.”

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technologies are SAP Edge Computing and the SAP Hana/Cloud platform as well as the SAP Leonardo Foundation, to enrich business processes in the application fields� Connected Products� Connected Assets� Connected Fleet

and moreover the markets� Connected Infrastructure� Connected Markets� Connected People.

In the first three above mentioned areas, SAP is tradition-ally strongly represented with a broad portfolio; the latterthree currently contain many new enhancements — SAPplans to invest two billion euros in SAP Leonardo by 2020.However, even in the new fields the vendor has alreadybeen successful over the last years, for example in ‘Con-nected Infrastructure’, as the Smart City project of BuenosAires demonstrates.The Leonardo IoT product portfolio is divided in the layers Cloud / Hana platform, Foundation, Edge Computing, andBridge.

SAP Leonardo Bridge combines real-time informationfrom connected things with business processes to turn ex-tended supply chains into live supply chain environments.There is a range of packaged enterprise end-to-end solu-tions for connected things from products to people acrossline-of-business and industry use cases.

SAP Leonardo foundation (you may say it is PaaS, plat-form as a Service) includes both best of breed businessservices that enable users to rapidly build IoT applicationsby building digital twins, reusable application services, andapplying predictive algorithms; and core technical servicesto process a high velocity of data with the ability to streamanalytics and run predictive scenarios. These are deliveredon new generation of the SAP Cloud Platform coming frommillions of devices.

SAP Leonardo for Edge Computing is a compellingbundle of technologies that run at the edge of the networkor in the Cloud (agentless), providing Edge processing ca-pabilities for protocol translation. It supports real-time andoffline data ingestion with edge filtering rules and stream-ing analytics. Dynamic edge processing then enablesback-end transactions from Edge computing.

Some additional remarks to SAP Bridge: ‘Bridge’ standsfor a command bridge of a frigate or speed boat. SAP isabout to design it based on the next generation businesssoftware concept Fiori 2.0. It centres on the users and theway they work, offering a clear structure and easy orien-tation without compromising on flexibility. PLM informa-tion can be depicted such as 3D as-designed data ofmachines and how they perform in the field (e.g. enrichedwith environmental information), or GPS information oftrucks: The user start out with his personal gateway to thedaily business allowing him to focus on core tasks but stillfollow happenings in other areas. The theme of SAP Leonardo is “Connecting people withthings and processes”, as Thomas Ohnemus, Vice Presi-dent Marketing, IoT and Digital Supply Chain with SAPpoints out to our editors. Key message is, as Mr Ohnemusfurther says “that things as they are becoming more andmore smart are linked with business processes, also in areal-time manner. It is about directly connecting productswith the digital twin and enabling ‘Live Engineering’, man-ufacturing automation, predictive service, and performinglogistics. No doubt, over time, business processes willchange considerably.”

Clear message concerning business value

The launch of the SAP Leonardo brand has attracted a lotof attention in the market. However, the clients has clearconsiderations when it comes to digital transformation.“They really want to know about the added value of SAPLeonardo in terms of how it affects their applications andprocesses in use.” The vendor’s clients ask questions suchas: With the help of IoT, do I get closer to my customer?Does it put me into a pole position to submit a more de-termined offer to my customer?Sure, the feedback varies with the size of the companies.Larger firms already have appointed a digital transforma-tion officer thus a digital agenda is anchored in their busi-ness initiatives. In the smaller or mid-size business market,however, resources for such topics are limited, neverthe-less, even there the attention for those topics is high, asMr Ohnemus ensures.

Summary

“SAP invested in the next generation business suite solu-tion S/4 Hana running in an In-Memory environment toenable a fast ‘Live Business Environment’ by consuming,evaluating and executing, real-time data from smart prod-ucts. That’s the business software environment of the fu-ture that our customers expect from us to enable thedigital transformation journey,” Mr Ohnemus stated. Andthat is exactly what the clients wants as Continental sum-marises its decision in favour of SAP: “The decisive factorfor our decision was the business concept and the smoothintegration into the existing operating environment […]”.(bv)

Stara Industria de Implementos Agricolas, active on five conti-nents, is one of the largest Brazilian manufacturers of agriculturalmachinery. After equipping its tractors with sensors, it developeda solution with SAP Labs that hooks these sensors up to SAPCloud Platform and SAP ERP Central Component to monitor vitalfarming processes in real time.

blogs.sap.com

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Plant Design 4.0

Information Security Management Systems provide benefits beyond ITsecurity as they make process definition more precise and thus capac-ity planning and machinery design more predictive. Avoiding over-speci-

fication they lower investment risks and reduce both acquisition andoperational costs. Taking stock of the ISMS, it turns out that savings

and productivity gains exceed the expenditures on its implementationand operation by far,

writes STEFAN KREMPL

eign or less familiar partners.� Security standards like ISO/IEC 27 001 require analy-sis of all data processing, including the rising informa-tion flows which parallel ‘Production processes 4.0’. Bythis, safety-driven analysis enhances process intelli-gence thus enabling e.g. businesses to avoid fuzzy plan-ning and over-specification of new machinery.

� The management model of ISO/IEC 27 001 empowerscontinuous process improvements by harnessing infor-mation flows both within and between companies.

Challenge mastered: Safety, savings,and beyond

For an accomplished security and productivity design it isparamount to exercise full control over processes, work-flow, and assets (such as machinery, devices). Right fromthe get-go the ISMS contributes to this with a 4-Steps im-plementation.

Step 1: General Requirements and Purpose. Building aISMS starts with fundamental questions that are relevantfor both CEO and CIO as they link together security andproductivity aspects:� What is the nature and purpose of my business? Pre-cise business description is key to define business re-quirements and also to derive action plans for enhancedsecurity and productivity designs.

� Which is the legal, political, economical, etc. environ-ment?

� The awareness of controlling limits is crucial for busi-nesses as they mostly operate in heteronomous en-

The Challenge: Turn security intoproductivity driver

The planning of machines, assembly lines and plants isdriven by functions and financial issues. Yet, these are justtwo of three key performance factors to be considered.Data and process security in compliance with internatio-nally accepted standards (e.g. ISO/EC 27 001) might beseen as a third crucial factor in value chain design.Standardization, e.g. in materials and dimensions, hasbeen a key factor in all industrial revolutions so far. Now,standardization also applies to security as ‘Industry 4.0’and its closely intertwined production processes requirethat every partner follows the same safety procedure fordata processing and IT operations. Security is thereforeconstitutive for the definition of all infrastructures andshould not be postponed to the assessment of alreadyestablished facilities. Actually, industry needs to win fulltransparency over each process in order to ensure thate.g. new machines seamlessly fit into both the value andthe security net.As a result, Information Security Management Systems(ISMS) are getting increasingly important: They are morethan just IT tools as they provide management methodsof how to outline, implement, and optimise all processes.In doing so, organisations enlarge insights into their work-flows and benefit in several ways:� Standardised information security management pro-vides the necessary trust between organisations andmakes it attractive to join ‘production processes 4.0’.

� Standardisation reduces cost and efforts in the imple-mentation of e.g. new manufacturing platforms with for-

PRODUCTIVE SAFETYfor safe production

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vironments that cannot change right away (if at all).� Who is interested in or affected by my business? Un-derstanding stakeholder expectations is mandatory forrisk analysis, since exposure mostly results from in-compliance with e.g. productivity or business continuitydemands of clients, partners, or investors.

Ideally, this Q&A helps organisations to exactly define theirbusiness purpose and to list all potential hazards, e.g. or-ganisational shortcomings, environmental constraints orbusiness imponderabilities. This is also a first move to-wards processes improvements in view of business goalsand stakeholder requirements. Namely, it is the gap be-tween objectives and commitments on the one hand, andtheir incomplete or jeopardised realisation on the other,that defines the urgent process optimisation and securitytasks for organisations.

Step 2: Risk management and objectives. The genera-tion of an ISMS continues with an in-depth analysis of in-formation management vulnerabilities. It starts with acomprehensive recording of assets with substantial valuefor the organisation, e.g. hardware, software, know-how,and human resources. The result is a structured inventorythat allows pinpointing vulnerabilities asset by asset– especially when they undermine business goals andstakeholder commitments as defined in Step 1. Once risksare discovered and documented it is crucial to assessthem. In accordance with ISO/IEC 27 001 risk estimatespivot around two components – the magnitude of poten-tial loss and the probability of occurrence. To evaluate the

gravity of incidents organisations can also upgrade riskassessment to full-scale BIA (business impact analysis)which makes it easier to prioritise risks for further action.Yet, before tackling threats organisations have to specifyinformation security objectives and define key perfor-mance indicators (KPIs). In doing so, organisations maketheir achievements measurable and extend control overthe entire security engineering efforts.Rightly done, organisations have here everything handyfor safety and efficiency enhancements, i.e. all businessgoals with corresponding security objectives, a full list ofassets and threats, and finally a method of how to reachthese goals in a measurable (quantifiable) way.

Step 3: Planning and Provisions. Having set the securityobjectives organisations can move on to the risk treatmentplanning. In compliance with ISO/IEC 27 001 organisa-tions have to select measures from a list of 114 controlsand add individual risk-reducing controls if necessary.Committing themselves to these controls in a statement ofapplicability (SOA), organisations have at their commandan information management desk which is also the nu-cleus for comprehensive value chain cockpits.

Step 4: Implementation and continuous review. SinceISO/IEC 27 001 describes requirements for a manage-ment system it does not specify sets of mandatory ac-tions. As a result businesses have more leeway in theISMS implementation according to individual needs. Theyare just obliged to lay down and log e.g. their risk mitiga-tion planning and execution. Moreover all activities fromStep 1 to 3 should be reviewed appropriately:� Verifying the completion of all measures from Step 3(‘planning and provisions’)

� KPI evaluation and completeness check of risk invento-ries on a regular basis

� At least once a year: Reviewing the ISMS to ensure that

Süd IT (Munich, Germany) helps to secure the intellectual proper-ties of smaller and mid-sized enterprises by a comprehensive,tailor-made portfolio

www.sued-it.de

Pictures

:Stock

Imag

es

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it is still viable for the organisation and stays in line withever-changing requirements.

These continuous checks are not only meant to increasethe effectivity of planning but also to make the ISMS moreagile. Permanent revision makes it more responsive to newthreats, technologies, and collaboration models inchanging Industry 4.0 environments. Consequently, the2013 version of ISO/IEC 27 001 does no longer refer tothe PDCA (‘plan, do check, and act’) approach. Actually,PDCA is getting more and more replaced by V-models.From most fundamental definitions up to operational de-tails, they add concomitant dimensions of verification, cri-tical scrutiny, and review. Permanent supervision andreflection make V-models indispensable, all the more asfull data and process control is never achieved for good:Actually it’s an infinite task to be completed anew.Moreover, this goes for information security managementand productivity enhancement, alike – as they both de-pend on full process control. As an ongoing mission bothsecurity and productivity are based on continuous amend-ment and innovation.

Security briefing: Improving instead ofdefending the status-quo

The ISMS implementation according to ISO/IEC 27001yields a new level of information security that meets emer-ging business requirements and provides Industry 4.0 pro-cesses with the necessary foundation. In doing so,organisations will gain detailed insight into data commu-nication and also into entire value chains as they are basedon information processing. Providing standardised me-thods and a general framework for the management of vir-tually any business aspect ISMS paves the way to moretransparency, cost efficiency, and competitiveness. En-terprises that take full advantage of their ISMS will bene-

fit from enhanced production intelligence – making it eas-ier to pinpoint vulnerabilities, track down bottlenecks,identify uneconomic machinery and specify the real needfor infrastructure investments.

Road to certification

Before the ISMS is eligible for certification it has to be op-erated long enough to prove that all obligatory processesare effectively performed as planned and requested. Thus,organisations should expect a time frame of at leastnine months from the project start to a successful certifi-cation. This goes generally for mid-sized businesses – larg-er enterprises should reckon with up to two years. Thefinal weeks, however, are nearly the same for organizationsof any size:� First, a mandatory internal audit checks whether theISMS is appropriately implemented, effectively main-tained and fully compliant with all ISO/IEC 27 001 re-quirements.

� Next, a management review is conducted: Here, thesustained suitability, adequacy and effectiveness of theISMS must be demonstrated.

� Finally, the organisation can proceed to the two-stagecertification process. On Stage 1 the successful imple-mentation respectively operation of all core processesmust be verified and documented. Here, the organisa-tion is supposed to have all necessary filings and re-cords handy. Having passed Stage 1 businesses areallowed a reasonable period in which to rectify and im-prove their status if necessary. Stage 2 foresees the de-cisive certification audit. If failing organisations will begranted a respite of usually 90 days for amendments.

After passing the audit the certificate will be valid for threeyears. However, surveillance audits need to be conductedby the certification body each year.

Source

:Sü

dIT

2017

Security briefing:Improving insteadof defending thestatus-quo

Axiomatic

Strategic

Tactical

Operational Implement

Plan Check / Verify

MeasureObjective

Purpose Review

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Mr Stenberg, congratulations to your new posi-tion as CEO of Hexagon PP&M. Can you describewhat will change for Intergraph with the newCEO?Not too much, because this is not a broken businessthat needs fixing. Intergraph is a well-running com-pany. I am not here to change things in order to putmy stamp on it, saying ‘I have done this and that’. In-tergraph in itself is a success story, and my job ismaking this business grow even faster. It is moreabout tweaking and tuning than revolution. That is im-portant to say.As I mention in my keynotes, there are a couple ofthings I may input: I come from the Hexagon parentcompany, meaning that from this point of view I havea broader view of what we do in the other divisions.The opportunity of integrating the portfolio of Inter-graph with the other ones is now completed. Howev-er, when you have a new leadership whether it is meor someone else there is always a chance to re-invig-orate. I have done this for the past weeks, goingaround, meeting employers, introducing myself aswell as most important listening to their feedback. Ihave been talking to customers and try to get newenergy into the business.

What are the key messages to your Central Euro-pean clients?On this trip for the conference I have met a couple ofthe big clients here in Germany and I am on my wayto Italy. My message is introducing myself. Intergraphhas a long relationship with these customers and Iwant to listen, get feedback how they are using ourproducts as well as what their experiences are. So farthe feedback is very positive and it is more the ques-tion: What can we do more. So my message is: ‘Don’t

“Cloud isn’t a productit’s a delivery method”

During a pause in the cegugproceedings in Darmstadt,Germany, we talked to the

new CEO of Intergraph PPM,Mattias Stenberg.

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uct. I see it more as a delivery method. Whether the cus-tomer wants it on-premise or in the Cloud — we can offerboth. The response is mixed. Some customers are reallypushing us and also driving us in that direction, becausethey want to go to the Cloud. Some other customers arequite hesitant; they are concerned about security. Five toseven years ago you would be concerned about doingbanking transactions via mobile phone, but today it isstandard.

In which technologies will you invest heavily?I want to highlight a few. On top is the owner/operatorand the whole operation part of it. We want to invest inconstruction, for sure, especially in BIM. The constructionmarket is a growing one and we should try to capitalise onit worldwide. We have a good Cloud offering but we shouldinvest more in it. Finally I would say the whole project con-trol and intelligence, predictive maintenance, using moreartificial intelligence to recognise patterns.

Hexagon markets BIM with Intergraph but equallywith Autodesk. How do you plan to manage this po-tential competition?I don’t see any competition. They offer software packages,but the uniqueness we offer is the connection to the sen-sors. We are aggregating different sources of informationin particular 3D information, in one Cloud platform. It is aunique proposition. For me I still see a lot of opportunitiesin the market and in the construction BIM space.

Thank you very much for your statements!

Interview: HEIKE MENSINK

worry, we will continue to support you and take care ofyou’. We will not to anything dramatic in terms of productchanges. It is more about evolution than revolution.

Are there remarkable changes in that market?Yes of course, there are! This is an industry that comesfrom ten years uninterrupted double digit growth. Now itis going down. It is dramatic in that sense. New technolo-gies starting to make introductions to this industry, suchas Cloud computing, and this industry is a bit traditionaland slow moving in a certain way. But the technology iscoming and there will be a change.

Is it a question of age? The digital natives have thepre-suppositions to deal with the new technologies.Yes, I think it would be naive to say otherwise. But I don'twant to make it an ‘age thing’. I see people in Intergraphwho are a lot older than me and they are really updatedwith the latest and greatest technology. So you have tosee the individual, some people are more driven and inte-rested than others. We need a mix to grow. We have a lotof people working for Intergraph for a long time, but wealso try to recruit young people.

How are your Cloud computing offerings appreciatedby your customer base? Are you able to address newtarget groups with that offering?Not really new target group. I don’t see Cloud as a prod-

Intergraph PPM (Huntsville, US state of Alabama) is a leading pro-vider of engineering and geospatial software.

ppm.intergraph.com

The independent organisation of users of IntergraphPPM products, cegug e. V. (Oftersheim, close to Mann-heim, Germany), has invited to its annual conference toDarmstadt, Germany, on March 7 and 8, 2017. The eventis usually packed with keynotes, customer lectures andworkshops. But the highlight of this year was the intro-duction of the brandnew CEO of Intergraph PP&M, Mat-tias Stenberg, done by Günter Mauß, Vice PresidentIntergraph Central & Eastern Europe.Mr Stenberg background is Hexagon. Since 2008, hehas worked in the field of strategic acquisitions and cor-porate management. Since January 2017 he haschanged to Intergraph. Living in London he will move toAlabama with his family.

Evolution versus revolutionMr Stenberg analysed in his presentation the busi-ness areas in which Intergraph is involved: the oil andgas industry segment has gone dramatically downand there is hardly any prospect of improvement inthe future. Power is constant. Iron Ore and Mining de-clined as well as shipbuilding. There is an expectedlong term growth in megaprojects in the infra-structure segment.The next strategic keynote can be summarized in oneword: Industry 4.0. Hexagon has a wide-spread port-folio of tools to obtain integrated data of the virtualasset. Operating a physical asset becomes morevisualised at any time for every user by using this vir-tual asset information. www.cegug.org

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