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Kieran O‘Connor, SAP – Moderator Vivek Bapat, SAP Pat Kennedy, OSIsoft

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Presentation on theme: "Kieran O‘Connor, SAP – Moderator Vivek Bapat, SAP Pat Kennedy, OSIsoft"— Presentation transcript:

1 Insights, Challenges and Opportunities for CIO‘s in Capital Intensive Industries
Kieran O‘Connor, SAP – Moderator Vivek Bapat, SAP Pat Kennedy, OSIsoft Paul Kurchina, KurMeta

2 Agenda Introduction Vision of the Perfect Plant Energy Management
Asset Management Closing Q & A

3 Collaborative Ecosystems Business Process Experts – BPX.SAP.com
BPX allows ecosystem customers and partners to accelerate co-innovation Lowers costs to scale and manage partnerships and alliances Collaboration on projects and new solutions can span departments, companies, and industry boundaries

4 Community Involvement Through BPX
Corporate Social Responsibility - https://www.sdn.sap.com/irj/sdn/bpx-csr Governance Risk and Compliance - https://www.sdn.sap.com/irj/sdn/bpx-grc Manufacturing - https://www.sdn.sap.com/irj/sdn/bpx-manufacturing Blogs + Forums + Articles Perfect Plant In Pursuit of the Perfect Plant Sustainability Collaboration Workspace Energy Management Asset Management

5 Communication Across Discussion Platforms
BPX facilitates the cross-community communications essential in the quest for manufacturing excellence

6 Introduction Perfect Plant Blogs BPX.SAP.com Book Information

7 Chapter Outline – “ In Pursuit of the Perfect Plant” Book

8 Vision of the Perfect Plant
Vivek Bapat

9 Static Business Models are challenged Supply Chains evolving to Supply Networks
Contract Mfg Outsourcers Suppliers Customers Mfg New Customers 3PL’s New Sales Channels New Suppliers Shared Services Co-Innovators New Products Demand Driven Supply Globalization Demand-Driven Innovation Business Drivers Globalization leading to supply & demand volatility and risk Network complexity increases need for visibility Rising costs and shrinking margins Differentiation based on superior customer service

10 Intermediate customer order
Deliver Efficiency and Responsiveness: Continuously Sense, Evaluate, & Respond to Network Dynamics SENSE EVALUATE RESPOND Contract Mfg Outsourcers Suppliers Customers Mfg New Customers 3PL’s New Sales Channels New Suppliers Shared Services Co-Innovators New Products To “Network” From “Chain” Economist: Business 2010 Control & Command Intermediate customer order Chaos-Intolerant Efficiency Connect & Collaborate End-customer demand Chaos-Tolerant Responsiveness “The 2010 organization will be more dependent on the flow of data between different locations inside and outside the boundaries of the organization” traditional supply chains, static roles and responsibilities of each company, processes optimized for pre-defined roles, As Supply Chains evolve from Linear Supply Chains to Supply Networks, the focus should be on the delivery of the End-to-End processes. In the past the roles and responsibilities of each company were more or less static and the processes optimized for these pre-defined roles. Roles are evolving and changing. Everyone has to work in concert to deliver value to the end customer.

11 Processes: Flexible, Extendable Visibility: Network Wide
Deliver Efficiency and Responsiveness: Continuously Sense, Evaluate, & Respond to Network Dynamics SENSE EVALUATE RESPOND Contract Mfg Outsourcers Suppliers Customers Mfg New Customers 3PL’s New Sales Channels New Suppliers Shared Services Co-Innovators New Products To “Network” From “Chain” What’s Needed Processes: Flexible, Extendable Visibility: Network Wide Control & Command Intermediate customer order Chaos-Intolerant Efficiency Connect & Collaborate End-customer demand Chaos-Tolerant Responsiveness traditional supply chains, static roles and responsibilities of each company, processes optimized for pre-defined roles, As Supply Chains evolve from Linear Supply Chains to Supply Networks, the focus should be on the delivery of the End-to-End processes. In the past the roles and responsibilities of each company were more or less static and the processes optimized for these pre-defined roles. Roles are evolving and changing. Everyone has to work in concert to deliver value to the end customer. 11

12 The Corporate IT Challenge: Bring together Processes and Information
Responsiveness Information Collaborative Network Information + Process Collaborative Network Coordinated Network Unstructured Visibility Automate Build Supply Efficiency Process Coordinated Network Structured How businesses move between zones. Concept of “dead zones” What happens in the zone of complacency – commoditization ( others catch up – e.g. Dell, Walmart) What happens in the zone of complexity ( innovation occurs – e.g. Apple releasing new products) Market rewards companies that do both well – eg Apple – (Share wratings information). As businesses innovate across innovation ( product or service), manufacturers must maintain a balance between the two Unstable Stable Demand

13 The Impact on Manufacturing: M&A, Heterogeneity, Fast Moving Products
Global Coordination Source: AMR Research, 2006 Number of Plants More than 40 21-40 11-20 6-10 2-5 1 Local Execution Source: Aberdeen, 2006 BIC All Others Reduce Inventory Costs Shorter Lead Times Required Increasing Demand Uncertainty Increasing Product Mix Shrinking Product Life Cycle Operations Production High supply network inventories Poor asset utilization Delayed product introductions Increasing defects, high WIP Poor compliance, recalls Missed customer due-dates

14 The Impact on Manufacturing: M&A, Heterogeneity, Fast Moving Products
Global Coordination Source: AMR Research, 2006 Number of Plants More than 40 21-40 11-20 6-10 2-5 1 Information & Process Source: MESA Metrics Survey, 2006 IT Functions or Software Applications in Use Spreadsheets ERP ISO and Document Mgmt. Labor/T&A EAM or CMMS Data Collection – Bar Coding Production Dispatching Product Track & Trace Work Instruction Delivery SPC/SQC Process Management MES Plant Dashboards Resource Allocation & Status CAPA and Workflow Advanced or Finite Scheduling PLM/PDM RFID High TCO- multiple systems Multi-plant deployment difficult Data redundancy and latency IT Local Execution Source: Aberdeen, 2006 BIC All Others Reduce Inventory Costs Shorter Lead Times Required Increasing Demand Uncertainty Increasing Product Mix Shrinking Product Life Cycle + Operations Production High supply network inventories Poor asset utilization Delayed product introductions Increasing defects, high WIP Poor compliance, recalls Missed customer due-dates

15 SAP Manufacturing Platform Delivers Information and Process Integration
Coordination Responsiveness PLAN MAKE DELIVER Operations IT Execution Efficiency MAKE Production

16 Integration/Intelligence Mfg Composition Environment
SAP Manufacturing Platform Delivers Information and Process Integration Coordination Responsiveness PLAN MAKE DELIVER Operations IT Integration/Intelligence Mfg Composition Environment Reusable Components Manufacturing Platform Execution Efficiency MAKE Production 16

17 SAP Manufacturing Platform: 1. Network Wide Visibility
Enterprise Supplier Processes Integration/Intelligence Mfg Composition Environment Reusable Components ERP SCM PLM MII Distributor Processes LOB Contract Manufacturer Devices Inspection/ Equipment Testing Weigh Scales SCADA / DES HMI Plant Data Collection RFID Sensors PLC Device Integration Environmental Building Management Plant Historian

18 SAP Platform: 2. Process Continuity
Supplier Processes Mfg Composition Environment ERP SCM PLM MII business process platform Distributor Processes Reusable Components Contract Manufacturer Integration/Intelligence Inspection/ Equipment Testing Weigh Scales SCADA / DES HMI Plant Data Collection RFID Sensors PLC Device Integration Environmental Building Management Plant Historian

19 SAP Platform: 3. Process Composition
SCM ERP PLM MFG Restart Production Redesign SKU Replenish and Replan Update BOM’s Produce new revision of the SKU QA Identifies Lead in paint on a product Stop all production Notify Suppliers Notify Customers Check Warranty Compliance Notice Identify range of defective lots Hold defective lot(s) in warehouse Identify all shipments Recall all Shipments U.S. product recalls have increased about 85% since Items made in China are not the only ones that have been faulty or tainted, but as that country has entrenched itself as the global factory, it has become the key trouble spot. About half of the 467 products recalled in 2006 were made in China, according to the U.S. Consumer Product Safety Commission, up from 110 in In August, Mattel recalled almost a million toys that were made in China and decorated with lead-based paint. That followed recalls of pet food tainted with melamine and toothpaste laced with an ingredient found in antifreeze. And Foreign Tire Sales, a 13-employee distributor of tires manufactured in China, has recalled about 450,000 tires suspected of being defective. The company's Chinese manufacturer, Hangzhou Zhongce Rubber, has denied responsibility. Although FTS plans a court battle, U.S. decisions aren't often enforceable in China, and the company will likely have to shoulder the estimated $90 million cost of the recall. "I wasn't in tune to the fact that this could be a big problem," Richard Kuskin, the company's president, told BusinessWeek.

20 SAP Platform: 3a. Design New Processes across silos
SCM ERP PLM MFG Restart Production Redesign SKU Replenish and Replan Update BOM’s Produce new revision of the SKU QA Identifies Lead in paint on a product Stop all production Notify Suppliers Notify Customers Check Warranty Compliance Notice Identify range of defective lots Hold defective lot(s) in warehouse Identify all shipments Recall all Shipments U.S. product recalls have increased about 85% since Items made in China are not the only ones that have been faulty or tainted, but as that country has entrenched itself as the global factory, it has become the key trouble spot. About half of the 467 products recalled in 2006 were made in China, according to the U.S. Consumer Product Safety Commission, up from 110 in In August, Mattel recalled almost a million toys that were made in China and decorated with lead-based paint. That followed recalls of pet food tainted with melamine and toothpaste laced with an ingredient found in antifreeze. And Foreign Tire Sales, a 13-employee distributor of tires manufactured in China, has recalled about 450,000 tires suspected of being defective. The company's Chinese manufacturer, Hangzhou Zhongce Rubber, has denied responsibility. Although FTS plans a court battle, U.S. decisions aren't often enforceable in China, and the company will likely have to shoulder the estimated $90 million cost of the recall. "I wasn't in tune to the fact that this could be a big problem," Richard Kuskin, the company's president, told BusinessWeek.

21 SAP Platform: 3b. Save Process into Repository

22 SAP Platform: 3c. Re-use Process
IT Integration Platform Mfg Composition Environment Reusable Components PLAN MAKE DELIVER Process Continuity Operations Manufacturing Lean Production

23 Components & Influencers
But, Platform is not enough: Planning, Execution, & Assets must be aligned The Perfect Plant Perfect Plant Components & Influencers Responsive Planning Adjustments are not driven primarily by unplanned events in manufacturing but rather by demand shifts and other factors. Manufacturing is able to mange these changes more rapidly and reliably. Operational Planning Efficient Execution is monitored and nearly event free due to proactive monitoring and automated event handling that is tightly coupled with EAM and the enterprise Manufacturing Execution Asset Performance and Utilization are monitored and events are triggered automatically. EAM processes are optimized and all asset content is available in a single source. EAM process are tightly linked to Manufacturing Processes The perfect plant has all critical components for execution aligned combining Asset Performance The perfect plant is comprised of 3 Pillars Asset Performance and Utilization Planning Manufacturing Reduction in variability in Operations Planning can be influenced by variances in Asset Performance and Manufacturing Execution. The Perfect Plant is the ultimate goal to optimize utilization of your assets.  In the Perfect Plant you have visibility into all operations including production performance and your assets, providing a 360 degree view of your operations. This visibility into your plants provides the ability to respond faster to operational issues and minimize impact to your business and bottom line.                     There are 3 levers that influence the Perfect Plant: Asset Performance- Movement from “preventative maintenance” to “collaborative maintenance” to improve asset performance and utilization.  By leveraging new capabilities you can improve your Asset Management business processes. Improvements can represent millions of dollars for each percent increase in efficiency and asset performance. Manufacturing Execution- The ability to move from reactive to proactive management of your manufacturing process to improve manufacturing performance. xMII enables increased visibility into and control of your manufacturing process. Significant savings in manufacturing costs have been realized in as little as 90 days. Operations Scheduling- Variability in Operations scheduling in heavily influenced by Asset Performance and Manufacturing. This can be reduced immediately buy addressing Asset Performance and Manufacturing execution and improve on-time delivery. Combined with SAP ERP, SAP xApps, xMII and VIP provide you the ability get a complete view in to your plants. With xMII you can connect to your plant floor systems and assets, monitor key performance indicator trends and trigger actionable alerts such as plant maintenance notifications and quality issues in manufacturing. VIP gives you a complete view of all relevant content and workflows to maintain your assets. Combined, these capabilities give you a complete view into your plant assets.

24 Your Perfect Plant with SAP: Efficiency combined with Responsiveness
Enterprise SAP Business Suite Coordination Planning Inside Plant (MOM) : APO, LPO, Visiprise Partners Asset Mgmt Execution Connectivity, SCADA, HMI Inside Plant (Automation) : Partners Shop Floor Process Control

25 Your Perfect Plant with SAP: Efficiency combined with Responsiveness
Coordination Planning Integration/Intelligence Mfg Composition Environment Reusable Components Asset Mgmt Execution Connectivity, SCADA, HMI Shop Floor Process Control 25

26 Your Perfect Plant with SAP: Efficiency combined with Responsiveness
Composites Equipment status visualization Order GANTT Chart Production Line Visualization Production Order Details xMII Integration Templates PP, QM, PPPI, IDOC Templates ISA 88, SP 95 Spec Sheets Sample Projects Co-Innovation Ecosystem Coordination Planning Integration/Intelligence Mfg Composition Environment Reusable Components Asset Mgmt Execution Connectivity, SCADA, HMI Shop Floor Process Control 26

27 SAP Value: Orchestration, Composition, Execution
1 Operations Single Vendor Solution Connect End to End Processes Mergers and Acquisitions Design, Mfg, Build anywhere Compliance across value chain Shop Floor Process Control Connectivity, SCADA, HMI Execution Planning Coordination Intelligence / Integration Manufacturing Data Services Business Logic Services Asset Mgmt Orchestration Enterprise Standardization IT 2 Standardization across plants Open, customizable applications Balance Central/Local Control Credible Solution to Plant Floor Composition Empower Plant Personnel Production 3 Autonomous operation Integrated in ERP/Automation Reliable, 24x7 decoupled ops Flexibility with upgrades Execution

28 Energy Management Pat Kennedy

29 Perfect Plant – A Definition
Three Flows (Energy, Mass, Info) Emmanuel Savas (1965) “Computer Control of Industrial Processes" Maintained, Monitored, Actionable Self Healing Future Proofed Plant Minimized Footprint Financial, Environmental, Profitable & Sustainable 29

30 Today’s Energy Context
Significant increase in energy prices in the recent years Petroleum1, 30 to 40% in 3 years Natural gas1, 20 to 30% in 5 years Coal1, 5 to 10% in 2 years Electricity, 3 to 10% per year Direct effect on production costs Heating/Cooling operations Steam production Operation of heavy equipment and motors Material movements Cannot overcome “laws of thermodynamics 1 Source - USA Energy Information Administration Pricing of oil (3 main factors why prices are driven higher and higher) : cost of drilling going up, less reserves, demand is going up as well. 30

31 Business Opportunity to “Perfect Plants”
Energy & Environment More energy = more emissions Outside US World (Kyoto): 6% reduction of the greenhouse gases between 2008 and 2012 Based on 1990 levels Carbon Credits Relate - Business – Energy – Environment “Industrial greening” is not business as usual Significant Unprecedented Global Business Opportunity to “Perfect Plants” Why is this so significant. Because it is global reach. The world that’s a big market. The carbon credit exchange will be the single largest market cap within the next 5 years. 31

32 Energy Management In the Perfect Plant
Kodak Case Study

33 Largest Manufacturing Sites
Kodak Park Largest Manufacturing Sites Located in Rochester, New York Referred to as a “City Within a City” 1300 Acres (5,200,000 sq m) 150 Buildings Nearly 30 Miles of Roads 11,000 Employees Operates Its Own Fire Department, Railroad & Water and Waste Water Treatment Plants Operates Two Power Plants 33

34 Utilities Consumption
125 MW Electrical Demand 35,000 SCFM Compressed Air Load 80,000 Tons Refrigeration Capacity 2,000,000 lb/h Steam Load 30,000,000 g/day Process Water

35 Keeping Track of Consumption / Utilization
600 Electric Distribution Meters 600 Additional Distribution Meters for: Steam, Chilled Water, Brine, Compressed Air, Process Water, Nitrogen, Natural Gas, etc. Significant Metering Used within the Power Houses to Manage the Generation Side Measurement points 125 concurrent users/180 + views 27 Systems interfaced 30-40 electric meters already tied in A project will be addressing 40 more later this spring 35

36 Kodak Park – Data Sources
BAS (Building Automation System) Rosemount - Fix 32 Siemens - Apogee Emerson - Delta V SQL Based Historians DCS (Distributed Control Systems) Fisher Provox Westinghouse WDPF Westinghouse Ovation Taylor Mod 300 Emerson DeltaV

37 This just shows that everyone is looking at energy – note that this is on the SAP Enterprise Portal as an iView. In particular it is the HR Portal where people can look at bonus so everyone checks every day on resouces.

38 Just some more overall resource consumption.

39 This is their major power consumer, just showing the decrease in both a and c wings.

40 This is really interesting – the peaks are use of steam to regeerate catalyst and note that one is at 4pm – the peak power consumption at NY ISO so they talked to the process people and the result was the next slide.

41 They eliminated two of the 4 regen cycles as unnecessary and also moved them away from the 4pm, was both an absolute savings and a peak savings

42 Harvest Time The Energy Information System (EIS) has been an essential tool to help us reach our goal of “One Powerhouse for Kodak Park” Collectively these efforts have yielded savings > $20 millions annually All leading up the the BIG BANG – they reported $21MM in annual savings just into the proect (maybe 18 mo) and last month they reported that this number had climbed to $28MM in annual savings – real money.

43 James Breeze, Engineer and Project Leader, Eastman Kodak
“ We are identifying savings opportunities on a regular basis. OSIsoft products have exceeded our expectations. They are viewed as critical tools to help us assess and meet our very aggressive site energy reduction goals that amount to several million dollars annually ” James Breeze, Engineer and Project Leader, Eastman Kodak

44 Energy Management In the Perfect Plant
How to pursue the “Perfect Plant”

45 Team Energy

46 Lessons Learned at Kodak
Capital Spent on Faith No BIG BANG – 1000 little bangs Continuous Improvement Process Combined Capital and Intelligence Operation Infrastructure Approach Lowers the Cost of Curiosity Culture Change

47 Top Questions for Energy Management
Can you measure because if not you cannot manage. Is it on line – if not – you do not get collaboration Do you know the tariff’s – sometimes minimum energy is NOT minimum cost Time scale – data received after the fact only good for assessing blame Granularity – must have 4 x nyquist frequency Delay – people lose interest Training – collaboration is key Continuous Improvement – Kaisen, Incident Investigation, Recommendations, Follow up

48 Asset Management Paul Kurchina

49 “ Plant Ecosystem ” Energy Management Clean Safe Profitable
Plant Personnel Production Execution Engineering and Design Secure IT Personnel Plant Operations Business Personnel Asset Management Materials Management Operate Technology Platform Maintain Business Systems Environment Health & Safety

50 Plant Stakeholders and Values

51 Asset Management Challenges

52 Physical and Digital Plants
Physical Plant Digital Plant Tools required to enable Hammers Wrenches Saws Welders Meters Etc. Tools required to enable Data historians Document Management Systems Maintenance systems Reliability-centered maintenance Mobile devices Etc.

53 Plant User Experience and Integration
Enterprise Asset Management and Analytics Predictive Analytics Fleet-Wide Monitoring Monitoring and Diagnostics Centers Real Time Data Foundation Wireless Wireless Sensors RFID Tags Wireless Warehouse Mobile Rounds MaintainenceATM

54 Journey to the “Perfect Plant” – Example
Dashboards Energy Management 3D Models Real Time KPIs Voice Activation Leverage Technology EAM Maintenance ATMs Wireless Sensors Predictive Analytics Wireless Warehouse Mobile Operator Rounds Tool Management RFID Create the Desire Dare to Dream Pilot Tests IT and Plant Collaboration Vision Standards BOM’S Data Historians WIFI Network Fix the Foundation

55 Plant to Fleet – Data Foundation
KPI’s Dashboards Fleet Optimization Process Costs, Asset Health, Operational Performance, Market Value, Discrete data Limited value Actionable Information Bus Intelligence Reliability, 4-Block Outage & De-rate (UCF) Maintenance & Market Analysis Framework (PI, ProcessGuard, SAP, UCF, P3M, Predictive Monitoring, NeuCo, LIMS, Plant View ..) Expert Systems Predictive Monitoring, Optimization Equipment and Process Monitoring Closed Loop Process Optimization System Dashboards Subject Matter Experts WEB Visualizing Plant Alarm, DCS Real-time WEB Graphics Easy Access to Information WEB Visualization Engineering Applications PMAX, Digital Fuel Tracking, Fuel Cost Framework Process Discrete to Data PMAX, DFTS, eNote, Fuel Cost Framework, Alarm Management Distributed Control Systems (DCS) Distributed PI Historians Large Population of Data DCS, PLC & PI

56 Top Questions for Asset Management

57 Closing and Q&A

58 The pursuit of the “ Perfect Plant ” is a Process, a Journey
Conclusions The pursuit of the “ Perfect Plant ” is a Process, a Journey Solutions from SAP and the Partner Ecosystem are available today to enable the " Perfect Plant " “People” are the main actors in a “ Perfect Plant ” – Business and IT “ Perfect Plant ” is socially & environmentally “Responsible Business Entity” “Perfect Plant” knows it Performance in Real Time Resource Management requires Cultural Change including Business and IT as “ One Team”

59 Questions ? Vivek Bapat - SAP Vivek.Bapat@SAP.com
Pat Kennedy – OSIsoft Paul Kurchina – KurMeta Business Process Experts Community BPX.SAP.com

60 Copyright 2008 SAP AG All rights reserved
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