HOW ENERGY IT BUDGET SURVIVES $30 OIL
As compared to 2019 and the years before that, oil prices are expected to drop significantly in 2020. The question for most energy companies CIO is How to survive $40 oil in this environment. “This year, the oil market is expected to stabilize at a lower marginal cost given: higher inventory levels to begin the year, the continues beat in 2019 shale fabrication growth amongst small observed cost inflation, weaker than previously expected demand growth expectations and an increased low-cost production capacity,” Analyzed by Goldman Sachs Damien Courvalin and Jeffrey Currie.
This was further explained by other analysts and they said, “The oil market has priced in an extremely pessimistic growth outlook, i.e. setting the stage for rates to recuperate, provided the global growth does not go below 1.5%.”
When energy prices are dropping, the CIO gets pressurized to reduce the operating cost when the business is facing lower operating margin. However, the following factors explain why they can’t reduce the budget;
- The annual software maintenance fee is increasing every year and some increases even more than 20%
- The system needs to upgrade due to the running of an outdated operating system and servers
- The system needs to upgrade due to security and government regulations
- Point 2 and 3 can sometimes cause system upgrade fatigue. Upgrade never ends! When you finish upgrading one system (say 6 months), you’ll need to start any other system upgrade. This process can cost you a lot of time and money
- More systems mean more system interfaces and headcounts/IT employees
As a result, the CIO will be left and surround with no good options.
However, here are the reasons why EnHelix can help reduce the cost of IT operating cost.
- EnHelix uses subscription-based that can save maintenance cost by 50%. Therefore, annual operating budget on software licensing will reduce significantly.
- The EnHelix ETRM/CTRM software has so many features they offer and can replace most of your energy business applications. With EnHelix as your integrated software, say goodbye to messy data interfaces between so many systems and no more lagged time in getting business-critical data. Overall, fewer systems mean significant cost savings and fewer upgrades or no more system upgrade fatigue
- EnHelix runs the latest version of Windows operating systems having the latest technologies and best in class user interfaces. It is also easy to install and maintain. So, no more endless system upgrades
- EnHelix software works on cloud and even comes with blockchain and artificial intelligence
For CIO and IT leaders to succeed with digital business optimization and transformation, they must give IT financial information while using mature budgeting practices allowed by actionable financial transparency. Based on the research carried out by the world’s leading research and advisory company Gartner, IT budget on software maintenance cost is about 21% of overall budget.
Consequently, for energy IT operation budget to survive the energy price volatility and the recurring business cycle, they need to adopt a smart and prudent IT budgeting approach that includes an integrated and enterprise software like the EnHelix software.
Feel free to contact us for more information.