Vision to Value: How the Energy Industry Can Maximize Cloud Investment
The industry is at an inflection point where business leaders are looking to cloud technology to redefine resilience, boost competitiveness and prepare for a sustainable energy future.
The energy industry is in transition, experiencing fundamental change—from decarbonization to decentralization—at pace. These changes are putting pressure on traditional ways of doing business, requiring companies to transform their operating models, processes and even culture. But why is there so much struggle across the industry when it comes to making this move? Craig Davis, head of cloud success services at SAP North America, explores how energy leaders can turn vision into value through cloud transformation, realizing the exceptional benefits this technology can bring to the sector.
The energy industry has witnessed unprecedented disruption over the last decade due to falling costs of renewables and energy storage, the world’s accelerating pivot to non-fossil fuels and tougher environmental policies and regulatory reform. Against this backdrop, the industry is at an inflection point where business leaders are looking to cloud technology to redefine resilience, boost competitiveness and prepare for a sustainable energy future.
And for good reason. According to recent data from Gartner, 95 percent of new digital workloads will be deployed on cloud-native platforms (up from 30 percent in 2021) and global cloud revenue is expected to surpass $474 billion in 2022 (up from $408 billion in 2021). As one Gartner VP, Milind Govekar, put it, “There is no business strategy without a cloud strategy.”
But if the consensus across the energy industry is that cloud technology is essential, why is there so much struggle – and even outright failure – when it comes to making a move? Why are most forays limited to migrating functional processes instead of truly scaled adoption? I would argue it is because far too many are focused on a solution, one without a vision for what is truly possible. One focused on cost … but not value.
Embracing Flexible New Business Models, Adapting to Disruption
Like it or not, disruption is the norm for energy business leaders. Whether it is industry-specific disruptors like aging infrastructure and adoption of renewable and distributed energy sources or
life-altering disruptors like COVID-19, industry players should operate under the assumption that the tried-and-true practices of today may be irrelevant when they wake up tomorrow.
But siloed operating models create a process complexity that hinders the ability of energy leaders to react quickly and flex to these disruptions and shifting priorities. That is why the sector needs a new kind of vision, one dedicated to agility and adaptability — for anything that comes along.
We can’t predict the future, but the flexibility and visibility inherent in the cloud can enable us to view and analyze challenges and opportunities through the lens of insightful next-generation tools and technologies. Whether it is AI, machine learning or advanced data and analytics, today’s energy leaders can embrace the cloud to help streamline existing processes, enhance product offerings and serve customers better.
For example, real-time data and analytics can help energy leaders harmonize field service processes and quickly react to external events, such as weather disasters. Imagine how much easier it would be to control customer experience during outages with cloud-connected IoT technology monitoring key infrastructure. Not only could companies respond to the outage faster, but they could trigger notifications to inform the customer that they are working to repair it before they are even aware.
Disruptive ideas don’t have to be complicated ones. It is not always about out-thinking competitors. Sometimes, it is just about finding the simplest, fastest way to deliver a solution to the customer. The cloud offers the vision necessary to do just that.
See More: Reducing Your Cloud Computing Climate Impact
Transforming Mission-Critical Systems, Aiming for Future Growth
Especially in the current climate of significant disruptions and change, agile and innovative solutions in the cloud that help companies strengthen their core business processes and innovate for the future are key. However, energy leaders can’t just have vision alone. They must be able to draw a direct line from vision to value.
This is partially because what the energy sector is currently experiencing is something even greater than “disruption” — it is a whole-scale change to the way they typically function and operate.
Let’s look at the example of Chevron, a company aiming to build reliable, affordable and ever-cleaner energy across its operations in order to keep pace with the massive changes affecting the oil and gas industry. They wanted a standard cloud product that would increase its overall speed and agility, decrease its total cost of ownership for its business solutions, and drive greater digital innovation overall. That’s why it embraces a digital foundation that enhances production efficiency and drives faster, more informed decisions.
By leveraging cloud technology, energy companies can better navigate complex implementation scenarios and achieve new efficiencies across the organization, completely rethinking their digital transformation and allowing them to develop resilience in an inherently volatile and cyclical industry. This technology unites the company under a single source of truth and leaves it poised for future growth.
Gaining Efficiency, Funding Innovation
With industry priorities shifting, the cloud value proposition for energy companies has never been greater. Truly embracing the potential has become a business imperative. Cloud providers are eager to help by building and investing in custom solutions for the energy industry and laying the groundwork for mass adoption. But turning vision into value is not solely the responsibility of this technology.
While the cloud can help drive energy sector innovation — and help boost top-line, bottom-line and green-line growth — it is only part of the journey towards continuous improvement. Businesses must take action with their cloud technology, using its data to garner maximum business value across their company-wide processes, whether via analytics, application development or database management.
They must find ways to work with the CFO and other leaders to upgrade technology strategically, whether it is about showing immediate value in the short term or planning for deeper value in the long term. Simply put, embracing a grander vision from the outset will ensure stronger value in the end.
Energy leaders should ask: Where should our cloud investment begin? What is mission-critical for success? Would it be effective to go all-in, all at once? What’s the plan for actually implementing it? Are you being intentional about the planned adoption and consumption of cloud software?
These are just some of the questions as the energy industry pursues cloud transformation. Because while you may know you need to invest in the cloud, you still need to understand why. That’s what leads to success.
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