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Markets & Trading 28 | 26TH MAY - 1ST JUNE 2017 | UTILITY WEEK Market view C loud computing has been identified as one of the Top 10 transformation tech- nologies in the utilities sector. It was a key topic of interest at this week's Utility Week Live. However, Utility Week's own research has shown that, while the utility sector is embracing the cloud, across the industry, levels and reasons for take-up vary signifi- cantly. While 83 per cent of utilities reported at least some use of cloud technology, 17 per cent reported no use, 26 per cent see complete cloud migration being at least five years away and 28 per cent reported that cloud migration "will never be complete" in their organisations. While complete cloud migration may be a way off, take-up of cloud-based solutions for some business functions is increasing significantly, with one of them being energy trading and risk management (ETRM). At Contigo, for example, over the past two years we have seen 65 per cent of new customers choosing our cloud-based, rather than our on-premises, service. The reason for this take-up has per- haps come about through necessity. With increased competition, costs rising and new regulations coming into force, margins have been squeezed and profit has become harder to find. Market changes have meant that companies' energy trading and risk man- agement processes have become outdated and they have been compelled to find more cost-effective ways to procure a more up-to- date and flexible ETRM solution that enables them to respond to change and streamline business processes. ETRM in the cloud provides a number of business benefits. The initial cost of procure- ment is lower, as there are no upfront licence fees and no hardware, third-party soware, or infrastructure services required. Instead, the buyer pays a monthly fee that includes usage of soware and hardware infrastruc- ture, upgrades, and support. The speed of deployment is usually faster, and upgrades and new functionality can be provided by the vendor and automatically applied to the soware. This ensures users stay up to date with industry changes, security updates and performance requirements, providing greater business agility. It also means that there is a lower demand for IT resources in-house and usually a lower total cost of ownership. With a shiing market there will be a requirement to make changes, so organisa- tions need to ensure they have systems that can cope, quickly and inexpensively. It is perhaps the flexibility and future-proofing of cloud deployment that brings the biggest benefits for business. It enables users to keep up to speed with new developments and effectively change their hardware as technol- ogy advances. Regulation has made its mark, and is set to bring more change. Perhaps the largest changes in the energy industry for decades are well underway: the changing genera- tion mix; the move away from legacy assets; and dramatic changes in trading patterns. This all means systems will have to cope differently. Companies running legacy systems are likely to have to dra in expensive consult- ants or pay for upgrades to deal with these changes. A move to a more modern system supporting fast upgrades can enable organi- sations to protect themselves from this risk. The era of the cloud has arrived for trad- ing and risk management because it offers a cost-effective and agile approach at a time when the industry demand for such solu- tions has risen. Not all cloud is cloud Purchasers should be aware, though, that not everything that looks like cloud is actu- ally cloud deployed. Only a small number of next generation vendors have developed ETRM solutions based on the most modern technologies with cloud deployment in mind. Companies should be aware that, while most ETRM ven- dors will claim to offer a cloud approach, many will simply use screen-scraping so- ware like Citrix to provide cloud access to their legacy application. Unfortunately, the benefits of cloud deployment are oen lost using a screen-scraping approach, because the underlying soware was never designed for the cloud. To obtain the cost and agility benefits offered by the cloud model, users must scru- tinise ETRM solutions to ensure they are truly built for the cloud, with browser-based front-ends accessible via a secure web con- nection. They must ensure that the vendor has the ability to provide secure hosting ser- vices complete with back-up and recovery. And they must ensure that the vendor can offer a flexible services model both in terms of pricing and delivery of both soware and services. Contigo's soware, for example, is avail- able hosted in the cloud in a single tenanted environment, allowing it to offer a cus- tomised version of its soware, while still delivering significant cost-savings and other cloud benefits. Energy markets have changed rapidly over recent years, and this change looks set to con- tinue. Organisations will have to be flexible and efficient in order to adapt, which in turn will allow them to benefit from new oppor- tunities. Taking advantage of the opportuni- ties brought by cloud hosting will be key to achieving the flexibility and speed required. Tim Rogers, head of business development, Contigo Get your head in the cloud Key business applications are increasingly being moved to a cloud- based model, which offers flexibility and future-proofing at a lower cost than maintaining legacy systems, says Tim Rogers. Key points Energy trading and risk management ap- plications are increasingly porting to the cloud. The cloud offers a cost-effective way to ensure system are always up to date. Long-term costs of ownership should be lower than owning infrastructure. Flexibility and future-proofing are key business benefits. Buyers should ensure they get an applica- tion written specifically for the cloud rather than one that has been adapted.