Market Advantages of Cloud Computing: The Industry’s New IT Player

Market Advantages of Cloud Computing: The Industry’s New IT Player

By Mariana Somensi

Cloud computing has been widely spread among companies due to its beneficial commercial use. The technology’s simple software system builds vast computer networks that secure data and enable new business opportunities.

Yet, the energy sector, always extremely averse to cyber threats, has a slower adoption rate than other sectors when it comes to the cloud, so the technology is still a new feature among oil and gas companies. The oil price collapse in 2014, however, brought up a wakeup call and pushed the petroleum industry to reinvent itself. For this matter, cloud computing comes as an important ally, serving as a great tool to reduce the sector’s IT costs and improve its business management.

How Does It Work?

Cloud computing generally consists in any hosted technology providing software and information technology (IT) infrastructure, together or separately, as a service. Instead of having to build up computing infrastructures in house, the technology enables companies to easily and quickly consult their data through a virtual machine, storage or application. The cloud covers a wide range and can be implemented in three different deployment models: public, private, and hybrid.

Public clouds are often delivered by third-party service providers through the internet. “This type of software is typically referred to as ‘software as a service’ (SaaS) and includes services like Google Drive, Windows Azure, Microsoft Office 365, or Salesforce,” the UK-based Oil and Gas Council explains on its official website. The service is sold by demand and customers pay for the CPU cycles, storages, or bandwidth consumed.

Private clouds are closer to IT infrastructures. They are hosted in datacenters for internal use and are secured by firewalls. “This model offers the versatility and convenience of the cloud, while preserving the management, control, and security common to local data centers. Internal users may or may not be billed for services through IT chargeback,” according to the TechTarget Network.

Meanwhile, hybrid clouds provide a combination of public and private services. The hybrid system holds the practicality of the unified public infrastructure, while still securing confidential data.

The Best Cloud Implementation for Oil & Gas

In order to adopt cloud computing in their IT systems, petroleum companies must evaluate which of the three deployment models would better meet the firms’ business requirements. Considering the oil and gas sector’s concerns regarding cyber hackers and the large amount of geophysical and financial data files, public clouds may not provide the industry with the security its delicate information demand. Accordingly, choosing between private and hybrid clouds would be more logical.

Although there are ongoing solutions being developed to better serve large data files, such as those of the petroleum market, the recent improvements still do not fit the oil and gas requisites entirely, which means that adopting the technology would require a personalized implementation within the oil and gas sector. “Data processing and graphical modeling requires workstations with very powerful processing capabilities and powerful graphics cards. This is not standard IT equipment and falls outside of the usual scope of a cloud based system,” the Oil & Gas Council points out. Therefore, maintaining the existing workstations overseen by specialists while simultaneously integrating the software of the workstations with the cloud system would be a practical option to benefit from the new technology without bringing the company’s guard down, as the Council further suggests. “This results in a true hybrid, not two systems running independently of each other with a convoluted link, but two systems that appear to operate as one. This hybrid model addresses the very real concerns of oil and gas companies and gives them the very best of both worlds,” it adds up.

Practicality and Impacts

The implementation of upcoming technologies can be a delicate step due to the costs of application and the necessity of adapting to something new. However, the proved benefits of cloud computing have been dissipating fears. The cost-of-entry of the clouds, for instance, is considerably lower if compared to other IT services, and its pay-as-you-go characteristic is highly attractive for oil and gas companies.

Furthermore, the cloud’s centralized support facilitates data access and management, as technical support can be provided quickly at one spot, avoiding time-consuming operational developments and enabling fast responses to information demand. As the name suggests, the cloud is not linked to ground operations and do not require on-the-ground IT consultants for maintenance and amendments.

“By nature of the industry, oil and gas companies often have the requirement to link multinational offices. A centralized system gives staff immediate access to the information they need, when they need it,” the Oil & Gas Council defends. As petroleum companies tend to manage some level of file versioning, the manual processes result in a large margin of error due to the difficulty of assessing data though multiple locations and the increase of human error, duplication or data loss. “Having a centralized file server with a place for everything and everything in its place eliminates file management frustrations,” the Council additionally notes.

In line with the reduction in costs, errors, and delays, productivity is potentially boosted with the usage of the cloud. Working as a platform for immediate knowledge transfer and collaboration across the company, the technology drops time-consuming bureaucratic procedures and communication barriers.

Moreover, cloud computing secures sector companies while sharing confidential files with their stakeholders. “Having a shared space on your network with controlled permission based access gives oil and gas companies the ability to share sensitive files without risk or hassle of transferring them via email or through the internet,” according to the Oil & Gas Council. The organization further discloses that, as remote working is currently the norm form multiple petroleum operations, the possibility of having the entire company network available anywhere gives stakeholders a high level of connectivity that brings enormous market and business advantages to the companies where the system is implemented.

Security: Pros & Cons

Storing data in clouds is extremely handy when there is the need to access this data from different locations. When an employee is traveling or moving to any different location, this advantage brings additional security. If a businessperson needs to access data while out of the office, the confidential files saved in laptops suffer from considerable risk if something happens to the device, whether it breaks down or gets stolen. Accordingly, the cloud not only enables the employee to access it from any place, but also assures the data will still be available in case of mechanical failures or other problems involving personal and/or corporate devices.

Additionally, “the storage of sensitive files and data is only perceived to be safe behind the locked doors of an office, until the day the office is ransacked, burnt down or flooded. With multiple offices, often in inhospitable regions around the world, the potential risk is magnified. Placing storage in the cloud negates the need to manage and maintain onsite storage and complicated backup solutions. Professional cloud based solutions are hosted in physically secure datacenters behind secure firewalls, completely eradicating the worry of file storage and file security,” the Oil & Gas Council highlights. Accordingly, it is easier for petroleum companies to recover from localized errors and breakdowns in the company’s devices, requiring just the purchase of a new device, internet connection, and signing up to the virtual desktop.

On the other hand, cloud computing’s reliability on internet access poses a major security concern: the cyber hacking threat. The alarming scandal involving the US’ National Security Agency (NSA) exposed by Edward Snowden, a former NSA contractor, is one of the major cases that awoke the world to this problem. As Snowden affirmed, the NSA was able to hack information from Google and Yahoo sent through fiber optic cables. The case brought the vulnerability of internet-based data to the spotlight, and, as cloud computing depends directly on internet access and transfers, the technology is highly seen with skepticism.

The ability of easily sharing data among employees and partners is one of the main benefits of the cloud to oil and gas companies; however, it can equally be a weak point. “It is not just the risk of our private data accidentally leaking to other tenants, but the additional risks of sharing resources. Multitenancy exploits are very worrisome because one flaw could allow another tenant or attacker to see all other data or to assume the identity of other clients,” Security Adviser Roger A. Grimes wrote to the CSO.

“Every large cloud provider is a huge user of virtualization. However, it holds every risk posed by physical machines, plus its own unique threats, including exploits that target the virtual server hosts and the guests. You have four main types of virtual exploit risks: server host only, guest to guest, host to guest, and guest to host. All of them are largely unknown and uncalculated in most people’s risk models,” Grimes added.

Yet, although the risk of cyber hacking do exist, the level of vulnerability is not a consensus among IT specialists. “The degree of security, whether within cloud-based or on-premises systems, is determined by two factors. One is the planning and technology that goes into engineering the security solution. The other is the organization’s ability to operate systems in proactive and secure ways,” David Linthicum wrote to the InfoWorld. Accordingly, the vulnerability of data within the cloud greatly depends on each company’s security protocols, and not only on the cloud’s features, as often believed.

Internet Reliability

Another concern regarding cloud computing’s reliability on internet is the possibility of internet connection loss or slow speed. In 2015, for instance, both Google Drive and Google Docs went down for one hour due to an error, leaving many people clueless about how to proceed with their tasks without the data stored in the clouds.

When internet connection is lost, alternative ways of accessing data is costly. “One IDC estimate said the average cost of mission critical application failure can run as high as $500,000 to $1 million per hour for Fortune 1000 companies,” John Brandon wrote to the CIO. In case internet connection is slow, it makes it harder to complete projects and establish communication and data transfer within workers, possibly delaying important operations in the company.

However, both connectivity concerns can be overcome or mitigated. Built-in data encryption and automatic encrypted off-site data, for instance, are extremely helpful in case of internet loss, equally speeding up processes in case of slow connection. “One of the keys to keeping employees productive is to develop a contingency plan. IT consultant Chris Gerhardt says that every application in your Software-as-a-Service portfolio should have an alternate option. For example, if workers depend on Google Drive for their sales presentation, they should have an on-premises file storage option that still allows them to access mission critical files,” Brandon stated.

As problems with internet connection and speed are already expected, many IT companies provide cloud computing with offline synchronization at reasonable prices. “If the Internet is down or there is a network problem, the user can keep working locally. When the access is restored, the app will automatically sync the files,” Brandon disclosed. He further explained that many employees panic when access to the cloud is limited or interrupted by internet oscillations. In order to prevent workers from losing their productivity during internet breakdowns, oil and gas companies can train their employees on how to stay productive while the problem is being amended.

A Risk worth Taking

As industry companies adapt to the new rules of the oil game, technological innovation remains as the key to overcome competition in the harsh market environment. Although cloud computing is still a new feature among the oil and gas sector, the technology’s security advances can potentially calm the sector’s fears of cyber threats, while providing massive scalability and collaboration capabilities, fast and well-established business network among workers and partners, and potentially reduction in IT costs.


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