Willbros Group

Jason Cradit

Remember those IBM commercials from the late 90’s; asking, are you scalable? What a problem to have, upward scalability was all that mattered. Every year, you needed more power, more storage, more compute. Really, that hasn’t changed today but margins are smaller and over provisioning just isn’t a sanctioned practice any longer. You need exactly what you need, when you need it. Hence, cloud computing is the new norm in many sectors, even Oil and Gas. The IT utility model has made high-quality infrastructures available with all the upward scale, but the more interesting thing here is downward scalability.

“The IT utility model has made high-quality infrastructures available with all the upward scale, but the more interesting thing here is downward scalability”

With oil prices, Brent and WTI, in the 40’s the effects are reverberating around the oil and gas industry. Producers are tightening their belts along with distribution, refining and all those services companies. In an industry that spends only around 2 percent of all revenue on IT, things just got a bit tighter. Yet, with a shrinking budget, doesn’t come lower expectations for the IT service. In fact, I see quite the opposite; a want for more technology advancement to make things quicker, more secure, and more available- just spend less to get it.

In a known lagger on the technology front, many oil and gas companies find themselves with an incredible amount of technology debt. Those depreciation costs really make it hard for advancement on a new, tighter, budget. This is especially true when the company starts to shed employees. The down market is seeing consolidation, workers leaving the industry and the graying workforce is driving retirements that go unback filled. Now that technology debt is piling up and the IT allocation model is broken because your costs remain the same despite the reduced user count; you are charging more for the same service, finding yourself wishing you would have moved more core services to SaaS providers. Just imagine, if you had taken that call from Google and moved your email, IM, eDiscovery, collaboration, MDM, intranet, and video conferencing to Google for work. The predictability of the costs at $10/user/month could have saved your allocation. You’d have all the upward scale you need for these core services, but in a down market as we see today, as those users leave, so does your costs. Downward scalability, as it turns out, is far more interesting of a feat; moving those capex costs into your opex.

So you are able to scale to provide the exact amount of service, as you need it. You are on the SaaS treadmill and able to slow down and speed up as required, however what’s great about this particular treadmill is while you control the speed, the provider controls the feature sets- providing enhanced features weekly, monthly, quarterly or whatever frequency they determine; managing all the CM duties and the headaches of deployment. Once on the treadmill, they just start showing up without more or less investment, you get it when everyone else get’s it. Truly a commoditized service. However, many companies didn’t have moved to SaaS technologies, for a variety of reasons; the offerings weren’t nearly as robust, even just a year ago. Most SaaS providers didn’t allow for offline access. Most didn’t have the feature parity of their boxed counterparts. Most were silo’d and wouldn’t work with a specific identity provider. Most of these ‘mosts’ are gone; as I type this in my Google Doc, offline, driving through Kansas.

Of course, many CXO’s reading this article will point to some security concern. When these concerns come up, I can’t help but ask what type of research they have done. IT Security should be a risk management job that many treat as a technology-police role where they set the rules and you’d better follow them. This is generally missing the point. Are there risks in moving to SaaS/Cloud? Of course. Are they more than on-premise? Maybe. Are they manageable? Of course. The key here is you will have to change your risk management framework and understanding of mitigation techniques. You will have to expand your vendor lists to that of a cloud ecosystem to take on things like SIEM and DLP. Of course, as the CIA triad points out, InfoSec isn’t just about confidentiality, there is also that availability. Moving to a SaaS provider means you’ll have a SLA to watch instead of manage. There will be failures and misses. As Bezo’s pointed out - everything fails, and it fails all the time. Yet, most SaaS providers have built upon robust infrastructures that you can’t replicate at the same cost for their services, when there is an outage, it’s on the front page news and you are watching the recovery live on the internet.

Agility and a better finance model for a known cyclical industry, yet cloud adoption has been slow. When it rains, it pours and right not this oil and gas industry is flooded with laggards yet again. There are those that have made the shift before the downturn and are likely surviving, at least in IT, by being able to scale downward. Still, we are perched with the ability to scale upward, seemingly forever. So even in a down market we are able to innovate and create technologies to support our business. Then, there are those that will take advantage of cloud SaaS technologies now and find their way out of the technology debt laden waters they are in. Of course that leaves those that won’t. Those that are continuing to fight their way upstream against the CFO, looking for more CAPEX, more people, and continue to get rejected. As it turns out, IBM may have been right- it really is all about the ability to scale. It’s just clearer now, that the ability to scale downward is where the real magic is.