The cloud has proven to be a useful tool for many energy companies, but which cloud and where appears to be shifting. A recent survey conducted by Rackspace Technology found many companies report moving their data from the public cloud to private, on-site clouds.
“Many organizations in the energy sector have previously looked to move all their workloads into public cloud, but there have been many challenges in doing so,” said Simon Bennett, Rackspace’s chief technical officer for Europe, the Middle East and Africa. “Now, many energy companies are taking stock and recognizing that the public cloud may not be the best answer at this time.”
To tackle some of the challenges, many companies are repatriating their data in private clouds. They survey results showed 64% of responding energy companies taking this approach.
Bennett said that the public cloud is great for workloads that can be elastic and scale easily, “however, in many cases, this can require significant effort to renovate the existing application to achieve this.”
A private cloud, however, is useful “where a customer has legacy applications that are inelastic or where the use is static in nature,” Bennett added.
The survey by Rackspace gathered responses from 1,420 information technology (IT) decision-makers across manufacturing/logistics, retail, hospitality/travel, energy, healthcare/pharma/biomedical, government, media/entertainment, and financial service sectors in the Americas, Europe, Asia, and the Middle East. Of all survey respondents, data security and compliance remain a key focus, with an overwhelming majority (96%) of organizations surveyed saying they have established procedures and policies for data privacy and compliance in cloud environments. 42% of respondents also report that they are leveraging AI for advanced security and threat detection.
More than half of the energy companies responding to the survey (56%) reported data security and compliance as the reason. Other reasons they gave were integration with on-premise systems (51%), cost (44%), and infrastructure (34%).
Hybrid and Multicloud Options
The shift from public to private cloud use, however, isn’t always an all-or-nothing proposition.
Some companies are looking at hybrid cloud environments, which blend the use of public and private clouds, “hosting applications where they are best suited and interlinked by networking and robust security between the two worlds,” Bennett said.
The full results showed that more than 90% of respondents said they plan to make significant changes to their cloud strategies over the next 2 years. Of those respondents, 48% said that a hybrid cloud for multienvironment deployment will be critical to their IT operations over the next 12–24 months.
Multicloud use can refer to various scenarios, Bennett said, such as running the same application across multiple public clouds or using different clouds for specific workloads.
“The adoption of multiple public cloud providers and the ability to run a given workload on a different cloud allows choice and prevents lock-in with one cloud provider,” Bennett said. “This appears to be an active discussion within several organizations.”
AI Integration
A major driver for the shift in cloud strategies for energy companies appears to be the integration of artificial intelligence (AI). Of all the survey respondents, 84% said they have taken steps to integrate their AI and cloud strategies. When asked about the business outcomes that were driving the integration of AI and cloud, 49% said that their goal is to enhance operational efficiency and 45% said they are using AI to improve the insights generated by data analytics.
Of the energy companies surveyed, half said they needed to integrate cloud strategy for AI applications.
“As AI continues to drive rapid advancements, IT leaders are reevaluating their approach to workload management. Instead of updating existing infrastructure, they are designing entirely new cloud strategies to meet evolving demands,” said Srini Koushik, president of AI, technology, and sustainability at Rackspace.
About half of the energy companies surveyed (49%) said they are integrating AI with the cloud to improve efficiency, followed by the need to enhance data analytics/insights (49%) and efforts to advance security and threat detection (42%) and optimize costs (40%).
Although IT leaders are bullish on the prospect of cloud and AI integrations, talent and resource shortages remain major pitfalls that could limit their ability to fulfill these goals. Of all survey respondents, 40% cited a lack of skilled cloud professionals as being a constraint and 37% said that insufficient budgets are limiting their ability to meet business demands.
While the marriage of AI and cloud computing can be an appealing proposition for energy companies, 42% of respondents from energy companies said resistance to change among revenue-generating units is hampering their efforts to align AI strategies with revenue goals. Other challenges include a lack of cross-functional collaboration (41%), inadequate data or technology infrastructure (35%), and insufficient budget or resources (35%).
“There’s a lot of talk but less action when it comes to AI,” Bennett said. “Many are experimenting, but the costs of scaling versus measurable business benefits remain hard to quantify. For instance, saving 30 minutes with Copilot might simply lead to longer coffee breaks without clear productivity gains. Thus, more robust measurement protocols are needed.”
The Future of the Cloud
According to the survey, companies remain positive about their efforts to integrate AI and more advanced cloud strategies. Half of the respondents listed cloud-enabled 5G services as one of their top priorities, followed by cloud-native AI services (47%), cloud-based robotics (40%), and cloud-based sustainable computing (34%).
“The future of cloud technology is very interesting, especially as we speculate on the next big advancements and novel uses of current technology.” Bennett said. “Reliable mobile data services, driven by innovations like 5G at the edge or even 6G, will be key. As signal reliability improves, edge services will thrive, enabling real-time data processing and augmented decision-making that combines AI and human input. Technologies like 5G and beyond will serve as critical enablers for advancements across industries.”
