Dubai: While cloud computing has become one of the most widely discussed technology concepts in the region, many companies — including a large portion of the oil and gas (O&G) sector — are still weighing up the opportunities versus the risks when considering whether to adopt cloud solutions. On one hand, cloud enables increased collaboration and can result in decreased operational costs due to reduced infrastructure investments, quick deployment, and flexibility of use. But on the other hand, IT security remains the number-one priority for the industry, and many IT decision makers continue to harbour doubts about the security of cloud and the ability of cloud providers to offer data privacy.

According to a recent IDC Energy Insights survey of O&G companies operating in the Middle East and Africa (MEA), only 30 per cent have already implemented a private cloud solution, and just 15 per cent are currently using public cloud services. Such low adoption rates, particularly when compared to other tech-savvy industries, can primarily be explained by the concerns that many decision makers have regarding the impact of cloud solutions on data security. But other factors are also being taken into account by industry leaders, with uncertainties on the return on investment, concerns over integration with existing IT systems, and doubts over the maturity of cloud technologies all being cited as reasons for delaying cloud implementations.

However, there is clear evidence that the O&G industry, both inside and outside the MEA region, is becoming more receptive to cloud technologies. Indeed, cloud computing was ranked in a recent IDC Energy Insights survey as the most important transformational technology for regional O&G companies in terms of its impact on technology strategy and operations. Collaboration, which can be facilitated by cloud solutions, is becoming critical for most O&G companies due to skills shortages, the internationalisation of operations, and the growing importance of collaborative work with the industry ecosystem.

The cost of capital investment in IT infrastructure is also contributing to increased interest in cloud computing, as many companies are actively looking for opportunities to reduce their infrastructure costs. More importantly, as the data volumes collected by O&G companies grow (+30 per cent per annum on average), companies are increasingly looking to cloud services such as infrastructure as a service (IaaS) in an attempt to manage it all. In addition, the rapid growth in collected data is increasingly leading O&G companies to utilise business intelligence applications through software as a service (SaaS) delivery models. Even the most traditional objection to cloud solutions (i.e., the security concern) seems to be fading away, since IDC Energy Insights’ most recent surveys show that O&G companies currently consider mobile solutions, big data solutions, and social business solutions as much more challenging to secure than cloud applications.

As a result, O&G organisations are gradually evolving through the “hype” phase of cloud adoption. With this, IDC Energy Insights anticipates significant uptake in the near future, with 55 per cent of the region’s O&G companies expected to have implemented a private cloud solution by the end of 2016 (compared to only 30 per cent now). The progression will be even more rapid for public cloud, with 50 per cent of the region’s O&G companies having implemented a public cloud solution by 2016 (compared to only 15 per cent now). Cloud solutions are increasingly being praised by O&G companies for their flexibility and scalability, their ability to reduce costs through the improved use of resources, the simplicity and rapidity of maintenance and upgrades, the faster deployment of IT resources, and the facilitation of better access to IT skills.

There is clearly little doubt that cloud computing is set to gain considerable traction over the coming years; but interestingly, the functions delivered to O&G users through cloud are likely to change over time. Currently, the cloud solutions in highest demand among regional O&G companies are collaboration applications like instant messaging and email, security as a service (content filtering, network security solutions, Web filtering, identity and access management, etc.), human resource management applications, and project management applications. In 2015 and 2016, these applications will continue to be of interest to O&G companies, but the new cloud implementations will be focused on other types of services.

Indeed, IDC Energy Insights anticipates rapid growth in the uptake of business intelligence and analytics solutions delivered over the cloud to O&G companies across the MEA region. Similarly, there will be a significant increase over the next couple of years in interest within the O&G industry for on-demand server/storage capacity, while desktop as a service and database as a service will also gain a wider audience. Meanwhile, the more mature functions will continue their progression in the industry, particularly collaboration and productivity applications. All this points to quite a reversal in fortunes for cloud services providers targeting O&G companies in the MEA region, with increasing awareness and greater familiarity of the concept set to deliver a welcome surge in demand over the next few years.

The columnist is group vice-president and regional managing director for the Middle East, Africa, and Turkey at global ICT market intelligence and advisory firm International Data Corporation (IDC).