The Intersection of Information & Energy

Considering 3rd Platform Options in the Energy Industry

Martin Richards, José María Sotomayor, and Rune Olsen

In recent years years, many analysts and CIOs have been observing a significant IT trend: the move to the 3rd Platform. This trend is being driven by innovation from software vendors, as well as underlying changes to the speed and manner that businesses are transforming their IT systems.

A significant factor that is driving IT departments to consider new systems is the speed of change that is occurring at the business level. As market conditions change overnight – such as how low oil prices are impacting the oil & gas industry – or as business priorities change – such as increased investment in renewable power sources – IT must be able to adapt to meet these changing requirements. And the reality is that most legacy applications cannot be changed quickly or inexpensively.

As a result, software vendors have adjusted their focus to deliver new options for their customers. In addition, new vendors have entered the market, providing cloud versions of critical business systems. Market and business pressures, as well as new options available to CIOs and IT managers, has created both an opportunity and a dilemma: the opportunity to deliver considerable value to the business comes with the dilemma of choosing where to deploy the system.

Let’s take a closer look at the options available to customers in the Energy industry, as well as look more closely at each’s pros and cons.

Managing Your System On-Premise

For some Energy sectors, the decision is simple. Security requirements and government regulations often preclude cloud deployment for nuclear power plants. While the security available in most cloud-deployed systems meets stringent security requirements, in some industries, cloud deployment is simply not an option.

Total cost of ownership is a factor that often drives the conversation – or at least impacts the decision. When deploying a system to address near-term challenges, such as a project to design and construct a power generation plant, it’s often extremely cost-effective to leverage cloud solutions that feature subscription pricing. The capital investment is very low, and since the subscription can be canceled when the project is complete, a long-term commitment is not necessary.

For systems that you plan to run for a decade or longer, however, the scales often tip in favor of hosting and maintaining a system internally, rather than many subscription models. It’s useful to analyze the situation more closely to determine where the break-even point is between on-premise and cloud systems.

Subscribing to a Public Cloud SaaS Solution

Many IT departments set off on most new IT projects with the goal of identifying a public cloud, SaaS solution, and it’s not hard to understand why. These solutions are easy to access, simple to deploy and manage, and often with new, easy-to-understand user interfaces. In addition, the regular subscription costs associated with these solutions can be accurately predicted and planned for. Further, the ability for the subscription services may be scaled up or back delivers the flexibility that many businesses require.

In the Energy & Engineering industries, we see a lot of interest in subscription cloud options for project-related requirements. The ability to rapidly get a new system set up and in production, as well as the flexible subscription options, both meet business requirements and help to contain deployment and maintenance costs.

Finding a Middle Ground

Sometimes, neither organizations need a middle ground, and a third option that we see IT departments adopting is in the private cloud.

Despite concerns about public cloud security, these solutions often meet the most stringent requirements, with features including individual and role-based access controls, encryption both in the cloud and during transit. Despite these features, customers have some very valid concerns about storing sensitive information in the cloud, especially when many other customers are accessing the same system.

Private cloud solutions offer a compromise, providing greater level of security provided by your company’s network and firewalls while still delivering simplified deployment and management of the system. Many vendors also provide additional customization with this option, which may be a requirement for some systems.

At the end of the day, it’s less about advocacy of a particular option, and more about understanding the right questions and most important requirements. There are factors that may pull IT decisions one way or another, and it’s important to do a thorough analysis before moving forward.

The good news is that there are many choices available to customers when deploying new systems or considering options for existing applications. The bottom line is that, while the availability of cloud deployment options is important, it is at least as important to find vendor solutions that offer choices that enable you to meet your overall business requirements.

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