How are energy and utilities industry leaders utilising cloud to reduce pressure?

The key motivators, advantages and challenges for tech leaders

Energy and Utilities organisations are currently facing a number of growing challenges. As material and labour costs rise, so has the pressure from regulators and backlash on price rises. Add to that growing sustainability expectations and the expanding data and cyber security risks, and most organisations are now feeling the pressure from all sides.

Many have adopted cloud and all that comes with it (machine learning, AI, serverless, etc.) to help manage these compounding demands. But cloud itself is not without challenges. CIOs particularly are facing a unique challenge to fit the adoption of new cloud technology, in amongst other organisational goals, challenges and costs.

To better understand the unique challenges in the industry, as well as the benefits of cloud and how migration and modernisation is being used to meet the pressures they’re facing, SXiQ, in partnership with AWS and IBM, held a roundtable discussion with technology leaders from across the industry.

Here, we outline the cloud experiences, concerns and developments that they shared to better understand how these sectors can maximise cloud technology to pivot to meet changing expectations and pressures.

Cloud capabilities helping organisations relieve the pressure

According to the Gartner Utilities CIO Agenda 2023, close to a third of organisations have already deployed cloud, with 25% more planning to do so within the next two years. The implementation of AI and machine learning is not far behind, with similar percentage of companies having implemented AI or having serious plans to do so.

Industry challenges are a key driver behind accelerated adoption, with cloud seeming to be an obvious solution to help simplify and streamline operations and improve sustainability, efficiency and security.

At the Roundtable, technology and business leaders provided insight into some of the highest value results of their cloud journey to date. These included:

Time to market – speed to market and improved efficiency has been recognised by many organisations as a true benefit of cloud adoption.
Attracting and retaining talent – Less people want to or know how to manage DC environments, while more want to work on more exciting tech projects – something cloud allows.
Managing and interpreting data – Running the data is expanding exponentially, and leaders are recognising that future of data is not centralized. Thinking is changing towards how quickly organisations can generate insights and share these back into the business.
Automation and machine learning – this is one of the areas where organisations are seeing real impact and cost advantages.
Flexibility and agility to meet industry challenges.
Security – cloud has offered a more secure environment, with organisations noting their security posture is uplifted now they are in the cloud.

Cloud cost remains the biggest challenge

There are clearly a lot of benefits that Energy and Utilities organisations can and have experienced with cloud – and there is no doubt technology leaders recognise these opportunities and are invested in adoption.

But while cloud has serious capabilities to help provide agility and flexibility in the face of challenges and changing markets, organisations face another challenge – cloud cost.

The cost of cloud migration, modernisation and optimisation was the one constant challenge raised again and again by attendees at the event. Ensuring costs are properly controlled and predictable (and that investments were delivering return) has proved hard throughout their journeys. Some of the key challenges that were shared included:

Pressure from leadership to reduce costs – sticker shock and unexpected bills are creating concern from leadership and adding to pressure for IT teams when it comes to deploying cloud.
Cost of additional service adoption post-migration – some organisations who have moved into cloud with a Data/AI platform are seeing concerns around cost profile as adoption of the service increases.
The cost of getting it wrong – there is the constant threat that as they move through the cloud journey then implementation might be done incorrectly, cost more and be less successful.
High running costs – some have found the ongoing running costs of cloud are higher than expected, and that backs ups have proven to be expensive (although capital spend is close to zero).

Overcoming these cost challenges isn’t only important from a financial perspective. Failing to do so can also have huge implication on cloud deployment and success, potentially minimising ability to build well architected cloud infrastructure.

When costs can’t be managed and communicated effectively, it can leave CIOs and IT teams without the buy in needed to move forward.

How to get more from cloud while managing costs

Achieving effective cost management and efficiency across the entire cloud journey comes from the way it is planned and implemented. Cloud should not be viewed as a quick fix, instead, it should be seen as a change in approach and mindset of your entire IT capability.

This provides the opportunity to continuously improve cost management throughout the process, and experience uplift as a gradual shift. Here are four ways we suggest organisations better manage cloud costs and futureproof investments:

Weed out inefficiencies

More than adding capability, cloud should be approached and implemented in a way that also uncovers inefficiencies. By taking an application-centric perspective of how alternative cloud technologies can achieve the same business outcome more efficiently, it will add cost savings beyond what cost management optimisation tools alone can do. This will also help embed processes as a repeatable activity and establish continuous cost management ethos into the business.

Bring your people along for the ride

Cloud is not just about transforming infrastructure, but transforming operations. By changing the way IT teams operate in the cloud, you can ensure savings and efficiencies are realised both across the technology and human aspects of operations. Ensuring teams are trained and educated enables them to better forecast ongoing cloud consumption costs back to the business to improve cost transparency and business confidence in cost management.

Continuous optimisation

A multi-phased approach can help identify and then deliver savings, with the objective of delivering savings early and regularly throughout the process. By embedding Cost Optimisation principles methods and tools throughout the migration, you ensure your environments are highly optimised.

Go cloud native

Cloud native platforms deliver faster time to market, higher scalability, simpler management and reduce cost through containerisation, microservices, automation and DevOps practices. All which can improve cost .

We published case studies on two successfully completed projects. The first project was with Beach Energy, where we needed to separate Origin systems and practices into existing or new environments within a 6-month timeframe. The second project involved migrating Orica’s data from multiple legacy data centres across the globe to the cloud, in line with Orica’s cloud-first strategy. Both of these projects serve as examples of how businesses can harness the power of the cloud to achieve their goals while managing costs effectively.

Cloud provider and planning plays a crucial role in success

Discussing current challenges and wins with leaders across Energy and Utilities sectors made it clear that the attitude towards adoption is positive, but there are still some hurdles in the way of effective and efficient deployment – predominantly cost.

It’s promising to see that organisations are using cloud to not only advance their digital transformation strategies, but also solve industry-specific challenges. Now, the focus should be less of how and what cloud can ‘fix’, and more on how it can be maximised to minimise costs and shape overall IT capability uplift across organisation.

Learn how we can help

At SXiQ, we specialise in Cloud Migration and ensuring Cloud Cost Management is deeply embedded. Our Cloud Cost Optimisation methodology is battle-tested and has helped many of our customers gain control over their cloud spend, delivering 20 – 30% reduction in ongoing cloud costs for the customers and culminating in the implementation of a mature FinOps framework.

Our experience has demonstrated how businesses can obtain faster and larger return on investment through broader adoption of cloud native services. We would welcome a conversation to discuss your cloud strategy and how we might be able to help you leverage cloud to transform your business.

Contact me at J.Hanna@sxiq.com.au