The energy sector is undergoing a period of change in several ways; geographically, it’s an industry that’s increasingly global, with well-funded competitors entering the market from new parts of the world. Industrially, emerging technologies such as renewables and battery power are beginning to establish themselves at scale and are lowering in price as a result. And digitally, the rapid growth of the online world is empowering users, and hence creating an ever greater need not just for cost-competitiveness but for great customer service.
Energy consumption is projected to increase 34% between 2015 and 2035 but fluctuating oil prices are requiring companies to find new revenue sources.
In circumstances like these no energy provider of any size or aspiration can afford to stick to the status quo. They need not just to move with the times but, if they can, to get ahead of the game – and the best way they can do that is to embrace the opportunity of digital transformation.
Embracing digital transformation
Digital disruption and new technologies can empower not just consumers but the organisations that serve them. It’s about taking advantage of interconnection, creating new cloud-based business models that bring together customers and partners across the digital supply chain to improve service delivery, create new offers and manage costs. For example, here at Equinix we’re seeing energy businesses make use of our Interconnection Oriented Architecture™ (IOA™), a transformative approach to IT that directly connect people, locations, clouds and data by leveraging the power of digital ecosystems across almost 200 global data centres through a secure, private and low-latency interconnection model.
A prime example here is US-based Hess Corporation which were looking to separate business systems and data to streamline its business focus on energy exploration and production. The company leveraged Equinix Professional Services for Cloud to migrated approximately 300 servers based in the Eastern United States in half the time that it would have taken using physical servers while minimising security risk.
We’re such firm believers in the importance of interconnection that in August this year we announced the Global Interconnection Index (GII), a new global baseline that tracks, measures and forecasts the growth of interconnection bandwidth in terabytes per second (Tbps), a measure of the capacity to transfer traffic via direct, private interconnection outside the public internet.
Per this Index, Europe’s energy and utility industries are expected to have a 65% compound annual growth rate (CAGR) in interconnection bandwidth capacity between 2017 and 2020, from 20 Tbps in 2017 to 89 Tbps in 2020, making this market one of the fastest growing sectors in the digital economy.
It’s growing this fast for a reason; energy companies increasingly require low latency network connectivity, access to cloud service providers in top global markets and interconnection with customers and partners across their digital supply chain to run their businesses, and they are establishing themselves in geographical areas that match these requirements. From this stable base of interconnection they are better able to evolve into the digital businesses they now need to be.
Listen, learn, leverage
Digitally transformed energy organisations have insight not only across their entire supply chains and out to every customer touchpoint but also within their own infrastructure. Cloud-based services, apps and computer power provided on an as-a-service basis, and remote devices and sensors enabled by the Internet of Things (IoT) bring everything together.
It means, for instance, that companies can at last see in real time how production systems are working; how minute-by-minute peaks and troughs in demand can be accommodated; and how maintenance schedules can be determined by actual need rather than by an arbitrary calendar.
However, it’s key to find out what partners, suppliers and peers are doing. Ask questions, engage with your solution architects and get some use cases from people you can learn from.
Armed with these insights, it also means they can develop lean operating models; they can improve their customer offer and their customers’ experience; they can partner in the service of regional communities – genuinely ‘thinking global and acting local’; and they can better meet their regulatory compliance obligations in every geography.
Organisations in the energy sector have geographically dispersed infrastructures and supply chains, and large and international customer bases – which is why they, possibly more than businesses in any other sector, are best placed to take advantage of the opportunity that digital transformation and interconnection represent. It’s a world in which change is a constant and flexibility and insight are necessities.