TRANSITION FROM SCADA TO A CLOUD SOLUTION: MARKETING, DESIGN, RESULTS. D GOLOVACHEV TODAY’S AGENDA 1. Project background 2. Market drivers for changes 3. Risks & benefits 4. Costs analysis 5. Change management 6. Implementation 7. Results SHORT BIO Degree in physics and management Spent 12 years in venture industry as the founder (hardware&software projects with complex physical basis) Now with Trimble in NZ – tech lead in VSS project What do you know about Russia? It is cold there during long winter (down to -70C) The largest country with 140 mln of population Only 25% of people live in Siberia which is 80% of territory People are straightforward WHAT IS THE PROJECT Automate distributed system of wells Increase energy efficiency – 40% of all costs is energy in upstream Get data from wells – analyse (hydrodynamics) – send commands to pumps Typical distances ~1000km, no roads, weak communications, multiple regions PROJECT BACKGROUND - PROBLEMS Classic SCADA system architecture ~1Tb of data 16 bytes per sec per device >10000 devices 16kBit/sec CRITICAL APPLICATION – COSTS OF PEOPLE AND VISIBILITY Single customer 2000km 5000km 15000km 1000km MARKET DRIVERS – OTHER ISSUES Service quality Long time to react on support cases customer Costs on infrastructure and licenses (CAPEX) Traffic costs Horizontal scalability – system response time Customer personnel trainings Support costs of different instances of the same system for different customers Maintenance costs of the solution Integration with corporate systems 30% of CAPEX per year Time to deliver new features for a Costs BUSINESS MODEL – PERFORMANCE CONTRACT COST SAVING TO FUND OPEX – key for profitability COSTS ANALYSIS – CHARTS - COMPARABLE AFTER (per object) projection BEFORE (per installation) CAPEX - $2mln CAPEX - $5k – average installation Hardware - $1.4mln Hardware - $5k Software - $200k Software - $0k Installation costs - $400k Installation costs – $2k OPEX - $600k per year OPEX – $280k In-premises personnel - $0k In-premises maintenance - $0k Trainings - $100k Trainings - $100k Software & infrastructure - $80 Other costs – $100k Other costs - $100k In-premises personnel - $300k In-premises maintenance - $100k Performance contract IRR ~11% Performance contract IRR ~15% Investment required ~$4mln Payback period ~2,5 years SOLUTION – CLOUD SAAS Common infrastructure IMPLEMENTATION – TAKE SOMETHING TO THE CLOUD UI Security UI Integration Analysis System DB Analysis Azure Tech algorithms Local DB Data abstraction Low-level equipment Object 1 System DB Data replication Data replication Data transportation Security Ad-hoc communications Data transportation Tech algorithms Local DB Data abstraction Low-level equipment Object 2 BENEFITS - RISKS Corporate security rules violation Business critical data is under third-party control Communication channels – failure leads to loss of control “Tighter” connections between customer and contractor Interaction with corporate systems (GIS, finance etc.) Transparent transition & data migration Legal liability Low reaction time in case of software failure No need of trained personnel on- premises Continues delivery of features Ability to build “emergency centers” Horizontal scalability Lower costs (CAPEX) Much lower costs (OPEX) KEY CHALLENGES Seamless integration with existing corporate systems Reduce communication channel risks Create high barriers for competitor to reproduce the solution Step-by-step transition to cloud solution to reduce investments Saxe's Elephant A LOT MORE STAKEHOLDERS THAN EXPECTED IT & Security Core customer division Senior management Other contractors Project CLOUD PLATFORM – AZURE Hybrid cloud (2010) Decision making feature MS certified as a platform provider for customers Multi-cloud backup Smooth integration with MS software and identity providers Cheaper MS SQL License mobility https://msdn.microsoft.com/en-us/library/hh871440.aspx BABY-STEPS STRATEGY Security issues Data migration SOA Monolithic application Private cloud Move some services Split to public into services could Hybrid cloud SaaS KEY RISKS – CHANGE MANAGEMENT – DETAILS RISKS GRAPH Changes in business processes of customers Changes in staff costs Motivate customer to switch to cloud solution Cultural changes Lower costs Changes in investment programs – Lower risks of accidents Lower delays in decision making Focus on core processes Promote reliability, flexibility&support by continues delivery Faster feature development Emergency center – collaboration between offices company capitalization Internal Customer How it impacts KEY METRICS Metric Isolated solution Cloud solution System availability 99,7% 99,9% Time to react after emergency 48 hours 8 hours Real-time data delays 5 min 5 min Number of people to support one system 16 4 Time to deliver feature\fix bug 2 months 1 week Time to connect new object\install new system 2 months 3 weeks RESULTS – CUSTOMERS ARE HAPPY AND WE ARE HAPPY 25 10747 4951 1189 IRR by customer (%) 20 4983Б 10750 4951 6623 6857 6701 6226 10758 4917 2224 6858 15 10 4983Б 6013 2224 6624 290 6623 6013 7035 6704 6859 436 6634 5 6143 6858 6624 6226 6857 6701 6704 290 1189 4917 6492 7035 10758 6492 6634 10750 10747 6859 436 0 0 5 10 15 20 25 30 35 40 45 50 Reaction on an accident (hours) 55 60 65 70 75 80 85 SUMMARY Takeaways for the solution Key points OPEX down Not everything goes to the cloud Scalable for other customers Cost savings Competitive advantages Steps (not everything at once) More stakeholders than expected SUNNY SUMMER