Build vs. Buy: The Case for Energy Industrials Buying Software

Energy industrials — now more than ever — are working to squeeze every drop of efficiency, reliability, and sustainability through their operational excellence programs.

Software plays a crucial role in helping the energy industry achieve operational excellence by enhancing efficiency, reducing costs, improving safety, and progressing sustainability goals. By using software, teams are empowered to focus on problems worth solving as opposed to supporting manual, time-consuming processes that can be prone to human error.

If your organization is making the decision on building versus buying software, it’s important to understand what software helps you achieve and which risks and benefits to consider for each approach.

Software can support a number of positive outcomes for your business, including:

Predictive Maintenance: Software systems — such as GE Vernova’s SmartSignal — use data analytics and machine learning to predict equipment failures before they occur. By analyzing patterns in near real-time data, such as temperature or vibration levels, the software helps operators schedule maintenance, minimizing downtime and extending the lifespan of assets.

Asset Tracking: Energy companies use software to track the condition, location, and performance of assets (e.g., turbines, pipelines, transformers), giving a check-in from asset to enterprise and reducing the risk of asset failure.

Near Real-Time Monitoring: Software — such as GE Vernova’s APM Health — allows for near real-time monitoring of energy production from various sources (e.g., wind, solar, oil, gas, or geothermal). This helps operators run plants efficiently and identify areas for improvement.

Automation and Control Systems: SCADA (Supervisory Control and Data Acquisition) and Distributed Control Systems (DCS) help control processes in power plants. These systems can adjust operations automatically based on near real-time data, improving energy output while reducing waste.

Supply Chain Coordination: Software tools help hone the logistics of moving raw materials, such as oil and gas, to refineries or power plants. They can predict demand, track shipments, manage inventories, and help plan efficient routes to reduce transportation costs and emissions.

Energy Trading: Software systems help companies manage energy markets, predict price fluctuations, and enhance trading strategies. These tools allow companies to buy and sell energy at the most advantageous times to increase profitability.

Regulatory Compliance: The energy industry is highly regulated. Software can help operations comply with local, national, and international regulations by automating reporting, maintaining records, and tracking compliance metrics. Software — such as GE Vernova’s APM Integrity application — is engineered to support safety and compliance for static assets.

Safety Management: Software enables safety management systems (SMS) to track safety incidents, identify risks, and support safety protocols are followed. In the oil and gas sector, this is crucial to prevent accidents and mitigate environmental hazards.

Big Data Analytics: Energy companies generate massive amounts of data from operations, and software can use big data and advanced analytics to process this data and extract valuable insights. These insights can lead to better decision-making, such as identifying inefficiencies, forecasting demand, or improving energy production schedules.

AI and Machine Learning: AI-powered software can analyze historical data to predict energy demand, balance energy usage, and improve maintenance scheduling, leading to cost savings and increased operational efficiency.

Carbon Emissions Management: Many energy companies use software to track and reduce their carbon emissions. Software solutions— such as GE Vernova’s CERius™ — can monitor greenhouse gas emissions in near real-time, helping organizations stay on track with sustainability goals and comply with regulations.

Renewable Energy Integration: Software helps integrate renewable energy sources into existing power grids. By anticipating the variability of renewable energy (e.g., solar and wind), software supports a reliable power supply and supports maximum utilization of low-carbon power.

Smart Grid and Metering: Software in smart grids supports better management of electricity demand and distribution. Consumers can track their energy usage in near real-time, while utilities can increase supply, prevent outages, and lower operational costs.

Energy Efficiency Programs: Energy companies use software to provide customers with tools to monitor and reduce their energy consumption, which helps both the consumer save costs and the provider manage demand more effectively.

Cost Optimization: Software solutions for budgeting, financial analysis, and forecasting allow energy companies to identify cost-saving opportunities, finetune operations, and improve financial performance. For example, GE Vernova’s APM Strategy application is engineered to assist with prioritizing overall asset strategy investment allocation based upon criticality, risk, and operating context.

Risk Management: Software helps in identifying, quantifying, and mitigating financial and operational risks, such as price volatility or natural disasters, that may impact energy production or distribution.

Software empowers the energy industry to streamline processes, sharpen operations, and improve safety and compliance. Through technologies like AI, machine learning, and IoT, energy companies can help create a more efficient and sustainable energy future.

With so many reasons to use software, the next question is whether an energy industrial should build or buy a solution. There are benefits and risks to each.

For many organizations, building in-house stems from an idea within a small group or team that is looking to solve a problem on their own. The issue? Many times, these teams are not staffed with software experts to guide development that is scalable, secure, and cost-effective. This holds true for both on-premises and cloud applications, however, more companies are using microservices in cloud to spin up data pipelines or pseudo-applications.

What many do not prepare for is the servicing and support of homegrown applications. Often, they are built and never iterated on. For many industries, this can lead to an increase in technical debt, which creates more potential for cyber threats and lower application performance.
Internal builds risk pitfalls such as:

Despite the above pitfalls, there are cases where an approach can be taken to build analytics in a controlled environment and with proper parameters. For example, GE Vernova's APM includes a bring your own analytics functionality are investigating the use of advanced AI capabilities for data science experts. To learn more, I encourage you to read my colleague’s blog: Understanding Bring Your Own Analytics, and How It Can Work for Your Organization.

Deciding to purchase generally available software reduces time to deployment and offers a multitude of benefits, especially when deployed in the cloud. SaaS software offers enhanced security and scalability, and a continuous pipeline of enhancements driven by the customer base that can be industry-specific. All of this offers a lower total cost of ownership (TCO) and enhances adoption.

In addition, many software vendors are now offering solutions that can be customized using internal resources. Whether this accommodates a bring-your-own-analytics strategy or provides low- and no-code development, many vendors understand the need for tailored offerings and the desire to control customization internally. As such, energy industrials can have the best of both worlds.

For many software vendors in the energy space, investments are being made to build a flexible architecture that can provide a perfect blend of readily available technology and security — along with opportunities for expert users to build their own models or light applications for specific needs while still having the security and support needed to say online.

Below are a few examples of how organizations can get the best of both worlds by leveraging a software vendor:

While the reasons to deploy software for increased operational excellence are many, the reasons to buy software outweigh the journey to building in-house. And, with software like GE Vernova’s Asset Performance Management suite, energy industrials have the ability to customize to meet their unique needs and outcomes. Contact us to learn more about how we can help put your asset data to work.