July 7, 2021 — Best Practices
It’s time to talk about cloud-based data solutions
More companies in the renewables sector are embracing cloud solutions to run their operations and store their data, but some are still resisting the trend.
Matthew Lush looks at the momentum in cloud-based data solutions and shares the key questions.
Is now the right time to embrace cloud-based solutions to manage your plant data?
Half of the world’s corporate data is now stored in the cloud. This figure was reported by business data specialist Statista in May 2021 and is a rise from 30% in 2015. This represents a significant tipping point for corporate data strategies.
The cloud-based software-as-a-service (SaaS) market is growing fast too. Research by The Business Research Company in April 2021 said the SaaS market increased in value by 20.8% in the last year to $272.5bn in 2021 and would reach $436.9bn in 2025. Cloud computing is a trend companies in the renewables sector can’t ignore.
Equally, we know that opting for cloud-based service providers, rather than on-premise solutions, is an area where the owners of wind and solar projects can struggle to get comfortable. Many owners in the renewables industry believe asset performance data is less secure and harder to access when stored in a cloud-based solution run by a third-party, meaning that any breach could disrupt their operations.
In this article, we’re going to introduce some of the long-term and short-term trends that are contributing to the growth of cloud-based data solutions. We will also help you to assess the opportunities and risks if you are considering making the shift, with a focus on the key concerns of security, economics and environmental impacts.
Why are owners embracing the cloud?
Owners of renewables projects are embracing cloud-based data solutions for a few reasons. A couple are unique to renewables and the other is more widespread.
The first is that the sheer amount of data that owners need to manage at projects is growing rapidly. Wind and solar projects produce trillions of data points every year. The scale of the data challenge facing operators is naturally moving owners towards the cloud, because increasing portfolio capacity has little to no impact on operational efficiency with a such a provider. It also means operators can leave the responsibility for the technical side to those with the right levels of skill and experience.
The second is that owners in the renewables sector are under increasing pressure to run their assets and operations more profitably. Cloud-based services can offer them economies of scale compared to the cost of on-premise technical solutions, as well as savings from not having to pay skilled people to manage servers on their own premises. This is a financial benefit when owners are facing stiff competition, because it allows them to focus on profit impacting activities and workflows as opposed to managing IT infrastructure.
And the third is that companies in all sectors, including renewables, find that cloud-based systems are less cumbersome than facilitating data on their own premises. They see that third-party cloud service providers are able to invest time and attention on security and efficiency, which helps keep their software systems up to date in a way that few firms can when they are managing systems on their own premises. Many owners work with one or many third-party cloud service providers to remove the responsibility of managing their own technical solution.
Why are some owners still reticent?
Yet there is another side of the story. Some owners have been reluctant to move to cloud-based data solutions. Here are some identified concerns:
One common concern relates to the security of sending sensitive commercial data via a third-party service provider. The attack by ransomware group REvil on US renewables operator Invenergy in June is a powerful reminder for companies about the need to protect data, and it is a concern that leads some firms to favour on-premise technical solutions in the belief that they are more secure.
The main risk here is not necessarily the performance data itself. Facts and figures on how wind or solar farms are operating are not especially commercially sensitive. However, the risks include disruption if there is a security problem, and whether you have the know-how to address security problems if they occur.
Another common concern is about the cost and environmental efficiency of working with a third-party cloud service provider. Companies in all sectors are more aware now than ever about the need to demonstrate strong credentials on environmental, social and governance (ESG) issues, and renewables owners are under particular scrutiny. Some owners can be reluctant to outsource issues of strategic importance.
These are a couple of concerns we hear from companies that have so far chosen not to move to cloud-based solutions. But it may now be time to reassess.
We plan to run a series of articles in the coming months focused on these common concerns. Until then, here are five questions you should ask yourself to work out if a cloud-based system for storing and analyzing project data is the best option for you.
5 essential technical solution questions when it comes to managing data
1) How can optimal data management help you achieve your business goals?
Before working out what systems to put in place, you need to ask yourself what kind of organization you are and where you’re heading. More specifically, what do you need from your technical solution today and in three years’ time?
If you are looking at fast-paced expansion and diversification of your asset portfolio, you need a technical solution that can enable fast-paced decision-making, grow with you, and won’t cause your team to experience significant practical problems. For that, cloud is your friend. If you’re clear on your strategy, then it will be simpler to put in place digital systems that help you to meet those goals.
2) How will the changing energy market shape your approach to data management?
As well as your own business goals, you also need to consider how the renewable energy market is changing. Over the last five years we have seen huge competition for renewable energy assets, which has only increased following the Covid-19 crisis because renewables have been seen as a safe haven for investors. If this continues then the pressure to squeeze more profitability from assets will grow in future years – and pairing cloud-based technical solutions, could help you to do so.
In addition, higher penetrations of renewables on electricity grids worldwide is likely to put owners at additional risk of cyberattacks. This is an emerging challenge.
3) Can your in-house security systems match a third-party company’s?
One of the most common questions we receive about cloud solutions is about security credentials: can cloud-based systems be as safe as on-premise solutions?
However, if you are considering moving to a cloud-based technical solution then we would urge you to think about this from the other perspective: are you confident that systems on your premises can match the security offered by a third party? You need to ensure that you have sufficient technical competency, and that you will continue to do so as your business grows and evolves.
If you manage your data via a third-party cloud service provider then you will benefit from the operator’s laser-focus on keeping data secure for all their clients, with dedicated security teams who demonstrate proven and mature security protocols as part of their core business. It is impossible to generalize in this piece, but it is worth making the point that storing data in-house isn’t always the secure option.
4) Do you need to develop a better awareness of your rivals’ systems?
We asked you earlier to consider your own strategic goals, but there is also a value in knowing the approach that your rivals in the market are taking too. Digital asset management is still an emerging area for many operators and so, if you know that your rivals are using cloud-based systems, it makes sense to ask yourself why. Do they have a better answer to the question than you have? Can you learn from them?
This is not simply a case of copying the competition. There is a major consideration here about whether their systems will enable them to squeeze higher returns from their assets – and will therefore be able to out-compete you in the long-term.
5) How quickly can your in-house team move when you evolve or run into problems?
Every software system will have problems at some point. If you choose to continue with an on-premise data solution, then you must be confident that your in-house IT team can also move quickly to fix the issues that will arise.
In June, we saw an outage of many high-profile news outlets and other websites in the UK because of an issue linked to Fastly, a cloud computing company that supports the sites. This will likely have given more companies pause for thought about their cloud computing strategy.
However, the aspect worth remembering here is that the websites were back up and running again within an hour.
As your business evolves, problems such as internet outages are not unique. But depending on the level of IT expertise that you implement, they could well be interpreted in that way. This is perhaps a major difference to a cloud service provider that leverages the knowledge of the ‘human cloud’ in continually addressing and learning from problems that occur from a vast customer base.
Ultimately, every company has a different set of strategic priorities and concerns that they bring to these questions. Some are happy to use cloud-based service providers, while others would prefer to keep it under the lock and key of their own premises. There are no wrong answers, on the condition that you ask the right questions to begin with.
But the continued growth and evolution of the cloud computing market means this is a strategic question that you should ask periodically. If you don’t, it could cost you.