The Cloud in Indonesia: Seeing the Silver Side – Academia

Prabaharan Gopalan and Thomas Hansmann

Jakarta ●
Friday, January 13, 2023

Cloud Computing, Cyber ​​Security, Business, Industry, Mining, Digital Data, Customers

Countries around the world, including Indonesia, are moving to the cloud for its disruptive and transformative capabilities, as well as its remarkable value potential.

There are huge advantages to cloud technology in the energy and materials industry — and energy, metals and mining companies in Indonesia that were early adopters of the technology are seeing the results. Over the past year, McKinsey research has shown a recurring effect of reducing costs by 5 to 7 percent and improving productivity by 10 to 15 percent in the mining and agricultural sectors.

For example, a mining company invested in building a remote operating center at its isolated mining site, enabled by fully digital data capture with monitoring and reporting capabilities, which included a mobile app for the front line to perform standard operating procedures. It paid off. Performance increased, with productivity improved by 10 to 15 percent and costs reduced by 7 to 8 percent.

Businesses can get tremendous value from the cloud through cost optimization and value-oriented business use cases. McKinsey Research estimates that the potential value creation of Fortune 500 companies could reach $1 trillion in EBITDA by 2030.

The energy, metals, and mining sectors can benefit from cloud adoption in three areas — cost optimization, value-oriented use cases, and new ways of working.

For example, oil and gas show an EBITDA impact of around 30 to 60% as a percentage of EBITDA in 2030, and base materials around 10 to 20%. Chemicals, electric power and natural gas offered about 10 to 18 percent and 5 to 7 percent, respectively.

Major technological trends also help. Artificial intelligence, machine learning, and the digitization of processes and bots enable massive amounts of data to be stored on the cloud, and provide more computing processing power and the ability to run machine learning algorithms and models.

Energy, metals and mining companies in Indonesia are on the cusp of the cloud revolution

Firms in the industry need to be flexible – price volatility, sustainability, ethical requirements and shifting value pools require them to be highly efficient, adapt quickly to disruptions, and find innovative solutions to enhance operational efficiency.

One such solution is cloud technology. Fast-moving players in Asia have recognized its advantages and leveraged its capabilities to drive impact and customer satisfaction.

Energy, metals, and mining companies that want to move to the cloud for its vast potential need to consider the challenges it faces: security and infrastructure issues, clarity about business enablement, talent and capabilities, and finally, privacy and regulatory constraints.

Companies can consider scrutinizing their cyber security architecture and operating models: are they sufficient to prevent hacking? Sensitive data is particularly vulnerable to attack as are remote networking infrastructures, monitoring and management of cloud resources across service providers.

Leadership must be clear on business enablement and the roadmap for achieving this, as well as the rigorous change management required to drive adoption across their organization.

As cloud adoption spreads globally, so does the demand for talent across the technology park. Companies must identify the people they need and devise ways to attract and retain them.

With the rapid development of the cloud, the regulatory environment must constantly adapt, which leads to unclear governance. Companies are likely to face regulatory implications, such as rules for storing data based on national security considerations and consumer data privacy.

The good news is that the cloud journey is navigable the right way. Our experience traversing it revealed different insights.

A clear overall cloud strategy beyond work migration is critical to success. Its core value doesn’t come from lowering the cost of technology or IT upgrades – it’s how the cloud enables business innovation through automation, machine learning, and emerging technologies.

Security concerns may be well-intentioned; However, it must be demystified by experts in the field. For example, faulty implementations such as a lack of integrated governance can lead to further challenges.

Aligning business and IT is critical to ensuring a return on investment – companies can achieve this by streamlining investments and accelerating time-to-impact from around five years to just over three years to maximize uptime benefits

Employee acquisition and retention is another factor to consider. With the rapidly increasing demand for cloud talent globally, the right employees are vital to success, as well as building deep capabilities.

Finally, strict change management is critical to ensuring adoption. Organizations need to embrace the mantra: use equals value.

The cloud is rapidly changing how businesses operate. Cloud transformation should be seen as a way to create non-negotiable strategic value. To get the most out of the cloud, energy, metals and mining companies in Indonesia that want to migrate should start important business strategy talks as early as possible.


Prabaharan Gopalan is an expert associate in the McKinsey office in Jakarta, with Thomas Hansmann serving as partner. Vivek Jha, engagement manager for McKinsey’s Jakarta office, and Azam Muhammed, senior partner in the Singapore office, contributed to the article..

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