Transition from SCADA to a cloud solution: marketing, design, results.

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