By Tommy Miles
June 17, 2022
Accelerating digital innovation has become a priority for the oil and gas industry. According to the Gartner 2021 CIO Survey, 85 percent of CIOs in the industry are taking responsibility for creating a change-enabling technical platform. It’s for good reason: Innovation is critical to staying ahead of the competition and most companies cannot afford to be left behind.
Cloud computing has become an important component of digital transformation. However, while key business applications have transitioned to the cloud, energy/commodity trading and risk management (E/CTRM) solutions have been slow to evolve due to the sensitive nature of transactional data and lack of maturity in E/CTRM cloud deployment.
Here we talk about how cloud hosting E/CTRM systems promise to benefit business and explore hesitations energy companies may have about modernizing their energy and commodity trading and risk management and why the time is especially ripe for transformation. We also offer advice to help you address potential concerns and build an effective business case for moving your E/CTRM platform to the cloud.
Why Move Your E/CTRM to the Cloud? Let’s Look at the Benefits.
Cloud hosting paves the road to innovation without disrupting your existing business ecosystem. It’s also a powerful way to future proof. By removing the limitations of costly physical hardware, cloud hosting provides organizations with the ability and agility to scale technology based on their ever-changing needs.
Cloud-based technology offers flexibility around managing costs, enabling teams to ramp up their investment for a defined period of time and to redirect the costs during times when the solution is no longer needed, for instance in between projects.
IT production and QA environments can also be easily adjusted, perhaps to accommodate the work week or meet evolving business needs, further optimizing spend.
By empowering IT departments to eliminate the operation and maintenance requirements of on-premise hardware, they can redirect internal resources to provide higher value to their organizations. IT staff can, for instance, spend time fine tuning applications and becoming experts in cloud management to create greater efficiencies for their business.
What’s Stalling Cloud Adoption and Digital Transformation & How to Address Concerns.
E/CTRMs have massive responsibility, charged with capturing data from the trading floor to commodity delivery while managing enterprise risk and protecting profits. The complex solutions often handle hundreds of thousands of transactions each day, some regularly accessed by 200 to 300 users.
While E/CTRMS are mission critical, many energy companies are relying on antiquated solutions that aren’t built for the cloud. What’s holding them back from modernizing the technology?
There are many reasons for the slow pace of change. One of the most pressing is simply uncertainty. Cloud hosting pricing models are complex and require significant knowledge to optimize. Without this experience and knowledge, organizations struggle to define and support a business case which demonstrates a cost reduction and performance improvement by moving to a cloud hosted solution. Along with the “sunk” cost of on-premise hardware, this creates a challenging barrier of entry to justify movement to a cloud hosted solution.
In addition, E/CTRM cloud deployment is a less mature platform which leads to skepticism for some. Until recently, some E/CTRM applications were not supported in cloud deployments which slowed the transition from on-premise to cloud deployments.
There are also integration issues to contend with. Because E/CTRMs often reside at the center of a complex ecosystem of business processes, integrating data from various applications, including CRMs and ERPs, there may be concern that data touch points will no longer integrate properly in a new solution.
Security and access to proprietary and valuable trading information also remain a concern for energy companies, as does budget. Significant investments have been made in on-premise hardware and supporting infrastructure, making it tough to justify a change. And, there’s often a lack of clarity around cloud-related costs and the necessary expertise to manage vendor supported solutions.
However, these concerns are dwindling as cloud technologies evolve and the oil and gas industry recognizes the numerous benefits of modernizing their business by moving their E/CTRM systems to the cloud.
Partnering with MRE Consulting to Modernize Energy Trading Risk Management.
According to a 2022 State of the Cloud Report, 80 percent of enterprises (defined as companies with 1,000+ employees) spend more than $1.2 million per year on cloud solutions. Moving additional workloads to the cloud is an initiative for 57 percent of those surveyed. They are largely motivated by the ability to eliminate the technical debt associated with operating and maintaining on-premise solutions.
Energy companies looking to move their E/CTRM to the cloud may choose to deploy on an on-premise data center, a public cloud that they manage, or choose to partner with an expert to handle the transition and overall maintenance.
Today, most Cloud hosting options for E/CTRM are provided by a single provider and there are few alternatives. A lack of alternatives can be especially troublesome for organizations with digital transformation goals that include reducing or eliminating on-premise or in-house cloud managed environments in favor of vendor provided hosting.
MRE Consulting now offers an alternative by partnering with an enterprise hosting provider who can provide scale, availability, security, and cost efficiency. MRE Consulting is now positioned to serve as your cloud hosting business partner, bringing more than 20 years expertise across the spectrum of E/CTRM systems and the energy industry. We are ready to guide your organization through the process of cloud migration and ensure your E/CTRM systems work flawlessly.
We’ll help you build a solid business case for gaining approval on your cloud investment, pinpoint the right solution, and provide initial configuration, operational management and tuning, and the ability to assist and troubleshoot performance and stability issues throughout the lifecycle of your solution.
Above all, we promise service quality and consistency. People like working with us and we have decades of experience to show proof of the service we provide. We also bring transparency to the relationship, earning your trust by eliminating surprises.
Are you ready to move E/CTRM to the cloud?
Whether you are solving for performance or scalability issues with your current E/CTRM, looking to comply with digital transformation goals or working to implement an E/CTRM solution for the first time, consider this:
Choosing to implement in the cloud from the get go will save you significant hardware and infrastructure costs and help you ramp quickly.
If you’re already running an E/CTRM in an on-premise data center, moving to the cloud is always a consideration, but you’ll save considerable time and cost if you make the move as part of your natural upgrade cycle. Your team and your budget will benefit from synergies in testing, migration and touchpoint integration.
For more information on how MRE can help you transform your E/CTRM by moving it to the cloud, reach out to us below.