Best Practices to Improve Agility and Reduce Costs in the Energy Industry
Every industry now faces a strategic inflection point, requiring a change in the way IT investments are planned and executed. Enterprises that pursue a “business-as-usual” IT strategy will find themselves boxed into a corner, unable to benefit from the more nimble technologies and business models available today.
The energy industry is especially at risk in this regard. Facing tighter margins due to falling oil prices, energy companies have placed a renewed focus on operational efficiency and cost reduction. But those business objectives are difficult to achieve with a costly and rigid technology estate.
Luckily, next-gen technologies and the as-a-service economy are converging to unlock tremendous business value for the energy industry — enabling a new approach to technology that lets companies spend less on maintaining their current environment and more on transforming it.
Energy companies that want to improve agility and reduce costs should follow the following best practices, which are based on CSC’s years of experience delivering PetroEdge, an industry-specific solution that enables oil and gas companies to benefit from modern technologies and business models:
1. Focus on time-to-value
The changing market influences the way companies formulate and execute fundamental business strategies. Enabled by technology, companies now can shift their IT focus to spend less on maintaining systems while redirecting resources to more innovative uses, such as improving workflows and optimizing existing processes.
An important first step in a company’s transformation is identifying the critical business processes that need to be optimized. By optimizing critical processes, such as establishing a joint venture for oil exploration and the associated IT systems, a company can reap a significant improvement in time to value. This laser focus shortens the time it takes to realize cost savings and improve agility.
2. Prioritize transformation activities
While it may be tempting to put transformational activities on the back burner during the current environment of increased cost pressures and declining revenues in the energy sector, companies must ensure that strategic initiatives do not fall prey to short-term tactical demands.
Without proper prioritization, daily demands will divert attention away from strategic, transformational initiatives, while yielding fewer returns. Therefore, it is critical to ensure that line-of-business and CIO stakeholders maintain transformational activities as a high priority in order to benefit from modern technologies and today’s as-a-service business models.
3. Conduct a comprehensive assessment
A haphazard approach — such as migrating an IT environment to the cloud as quickly as possible — can lead to less than optimal returns. An initial assessment of critical processes, workflows and application portfolios is key to successfully navigating the path forward.
4. Optimize business architecture
Before embarking on an IT modernization effort that leverages a hybrid cloud environment, companies must ensure that they are optimizing the business architecture, processes and workflows. Drive out near-term costs through an initial assessment, and lay a foundation for the future with an enterprise reference architecture. Then, optimize business processes, eliminate redundancies and increase efficiency through innovative hybrid platform services.
5. Develop a reference enterprise architecture
Many modernization approaches fall into the trap of creating point solutions rather than taking a comprehensive approach, resulting in inconsistent architectures and incompatibilities among systems. By developing a robust enterprise reference architecture and contextual roadmap to drive the modernization approach, a company can expertly leverage the cloud and take advantage of optimized IT services.
6. Establish a migration roadmap
It is important to demonstrate immediate return on investment (ROI) when performing a large-scale transformation of business processes and the application portfolio. A migration roadmap ensures that a company migrates its business processes and applications in a manner that guarantees immediate ROI.
7. Establish a hybrid cloud environment
Leveraging the cloud is a critical component in reducing costs and improving agility. To avoid the risk of vendor lock-in and ensure the benefits of all the major cloud environments (including private, community and public clouds), it is important to select an appropriate architecture. CSC refers to this as a hybrid cloud environment, which supports all the major cloud platforms, including Microsoft Azure and Amazon Web Services (AWS), as well as a private cloud capability.
8. Select a proven partner
To take full advantage of the cloud, it is vital to select a proven partner. With our PetroEdge solution, CSC has carried out all the aforementioned best practices for a major oil company. Our team of experts has performed all the critical assessments, and we have strong alliance partnerships with Microsoft Azure, AWS and AT&T.
Digital disruption is real and having an impact on all industries. In response, energy companies must learn to operate within the modern as-a-service economy, and that requires a transformational approach to IT architecture. CSC’s PetroEdge is a differentiated solution that enables energy companies to leverage a hybrid cloud strategy, effectively transforming and optimizing business processes to reduce costs and improve both agility and time-to-value. The solution gives companies the next-gen technologies needed to meet today’s demands.