ETRM IN THE CLOUD
Cisco says ...
..global cloud traffic will account for 64% of total data centre traffic by 2016. It was 39% in 2011.
Advantages Driving Adoption First and foremost is the shape of the cost curve.
The traditional license plus maintenance, local installation model has a huge up-front cost. That is particularly relevant when you consider that ETRM implementations frequently fail. Failure is a much cheaper outcome under a monthly subscription model. As of this writing, at least 2 ETRM implementations are on the wrong side of $1 billion. And the digging continues. As Brady CTO Jon Hobbs notes, cloud based solutions have a “lower cost entry point” and “no peak in the cost curve”. Contigo founder Simon Piercy puts it this way: “Many ETRM implementations fail. They are inherently complex and high risk. The cloud, with no huge up-front investment and long term commitment, would seem the prudent choice.”
With roots in metals, Brady has expanded into
energy, recycling and softs and agriculturals. The stock is up 120% over the past 5 years.
Contigo - the up and coming vendor behind enTrader - is focused in northwest Europe. Fuel
logistics and energy retail portfolio management are sweet spots
I can’t go the extra step and say that SaaS is actually cheaper. It may be, but I don’t have the data to make that case. It certainly should be in terms of the total cost of ownership. There are economies of scale that the vendor will reap which can be expected to flow through to pricing. The vendor will bring deep expertise to the management and delivery of their application that would be virtually impossible for clients to replicate. It’s also easily scalable. Let’s say your business quadruples. This could be disruptive to a local installation. Rather than each client wrestling with the infrastructure and licensing implications, the vendor handles it. And your 300% increase might amount to only a 5% increase in hosting load, perhaps even less if the kind of common tenancy model popularized by
Salesforce.com is in use. Put simply, there is no requirement for a local DBA. It’s also going to be much cheaper for one vendor to respond to changing market and regulatory requirements rather than for many clients to have a go. The same applies to patches and upgrades which can be seamlessly rolled out at one location. Yags Savania, sales director at Aspect, tells the upgrade story this way: “The upgrade is announced in
advance and then rolled out over the weekend. The next time the customer logs in, they’re on the upgraded version. No muss, no fuss.” Aspect Enterprise Solutions is a relatively new
entrant that has boldly staked out the cloud space. The word ‘cloud’ appears throughout their
59% of all new spending on the cloud originates from
North America. Western Europe accounts for 24%. Source: Gartner
advertising. In terms of pricing, they post it on the web. By the way, it’s $1,250 per user per month for the standard edition, and I understand volume discounts are available. However, pricing data is not readily available from other vendors. But anecdotes abound. Hugo Stappers at
Softsmiths, who market SaaS with the elegant tagline: No hardware. No software. No headaches., sees “the cloud economic advantage coming after 3 years”. Mark Taylor, Managing Director at Vuepoint, reports that “one client estimated the cost of traditional licensing and implementation at 10 times the annual subscription”. Their own internal calculation worked out to a more modest but still impressive 6.5 times.
SoftSmiths serves the North American
power and gas segment with an emphasis on physical delivery.
UK based Vuepoint delivers energy
trading decision support services to the Defense and Energy markets.
Faster! Here is an undeniable structural advantage. In
delivering a standardised – though configurable – service over the web, there is no need for a large implementation team to deploy to the client site. I have spent the past 14 years implementing enterprise ETRM systems. In my experience,
• • • • • • • • • •
Costs Avoided With SaaS Servers
Operating System Database
Datacenter Space Cooling Power
Hardware support Software support Disaster Recovery
Application Management March 2013 71
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