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What Low Oil Prices Mean for #Cloud Industry By @IanKhanLive | @CloudExpo

Perhaps regionally and industry wide, cloud may see a lower amount of investments coming in from energy companies

We all are well aware that oil prices have dropped to almost $45 per barrel as of mid-January 2015. Global economies are feeling the pressure from a sudden drop in crude prices, with a chance of a looming recession in some economies. What does this mean for global business and the cloud industry?

What Is Happening?
Maybe we had forgotten that a few select nations, the so-called OPEC members that include Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela, control a majority of the oil that is produced in the world today. These oil-producing nations together control the decisions around global oil production, oil supplies and as a result a large part of the global economy.

Canada and the United States
As major oil-dependent countries, both Canada and the United States are likely to be heavily affected. This is in spite of the fact that a lot of oil is produced within Canada and the United States today, but the laws of supply and demand are a major factor. For example, Alberta, which had a budget surplus of $1.5 billion a few months ago, is now facing a deficit of $500 million. Canada, as a country, is facing the overall pressure with some of the biggest companies slashing jobs (Suncor) and cutting almost $1 billion from next year's budget. Should the drop in prices continue, there will likely be much higher cutbacks.

What Does This Mean for the Cloud Industry?
The cloud industry spans numerous verticals. Perhaps regionally and industry wide, cloud may see a lower amount of investments coming in from energy companies. Work that's related to capital projects by oil companies are likely to be put on hold, cancelled or deferred. The cloud industry overall is likely to see a negative effect as a result, the full extent of which would be entirely dependent on the outlook of the global energy industry.

Regional Impact
Regionally OPEC countries are likely to experience minimal impact from the emerging crisis. Non-OPEC countries especially in the developed world are likely to be affected the most. Economies such as India and China that have a fast and stable GDP growth will probably remain stable, although they are likely to feel an impact as well.

How to Survive This Downturn?

  • Step 1. Conserve cash: Avoid heavy capital investments until the markets bounce back. If there are things that you can wait for, don't hesitate to take that option.
  • Step 2. Invest in Sales and Marketing: Improving your bottom line can only be done by going above and beyond what you are doing right now. A knee-jerk reaction would be to cut down on your efforts, but that would be a mistake. Ramping up parts of your business that will drive additional revenue and pave the way for a cash inflow should be given preference. This includes supporting marketing and creating a value proposition for your customers that they cannot refuse.
  • Step 3. Speed up the Funnel: Enable your whole organization to become leaner, faster and more aggressive. This includes empowering your sales and marketing teams to be able to move prospects down the funnel faster and to close opportunities even faster than before. Invest the cash you conserved from Step 1 into training your teams to live on the edge and capture the market.

More Stories By Ian Khan

Ian Khan leads Innovation & Marketing initiatives at Solgenia, a global Cloud services provider with more than 3500 enterprise customers globally that includes Top Fortune 100 and Fortune 500 companies. An advocate of Cloud computing and a thought leader driving change within the industry, Ian is a catalyst for collaboration and Cloud solutions.

He has written for multiple industry publications, presented at various industry events worldwide, and brings more than 15 years of in depth technology experience across various industries.

Ian is a PMP Certified Project Manager, MCSE, and an Instrumentation Technology engineer.

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