Why are cloud based solutions becoming more popular with Utilities?

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Having worked in the utility industry implementing Customer Information Systems (“CIS”) and Enterprise Resource planning (“ERP”) since the early ’90s, I have seen a very slow moving trend from premise-based towards cloud solutions being deployed by utilities. On premise solutions have gone from the only option to just one of three available today including cloud solutions and hybrid or managed solutions. Hybrid or managed solutions are either cloud solutions managed by the utility or premised-based solutions managed by third parties.

Cloud Based Solutions for Utilities

Starting in the early 2000s hosted or cloud based solutions became available on a very limited basis for things like CIS and ERP for utilities. Historically cloud computing or hosted solutions were seen as an alternative to premise-based solutions only when IT resources were scarce. Premise-based solutions were perceived as more secure, more reliable, and if you wanted to, you could touch it!

Concerns about data security and interfacing hosted solutions with premise-based solutions were challenging. With advances in network security, network speed, virtual computing, and hardware many hosted solutions now outperform premise-based ones.

Utilities have slowly started outsourcing some key systems such as e-mail, phone systems, and desktop solutions. In the past five years, with the influx of new systems tied to Automated Meter Reading, Operation Data Stores, EBT’s, settlement, and more, utilities have been forced to either dramatically augment their IT resources or look to alternatives such as cloud based solutions. Combine this with the other issues facing utilities including rate pressures to lower costs, the risks and associated costs of any downtime, the need for disaster recovery solutions, and many retiring IT professionals, utilities have to think outside of the box to solve these problems. In addition, utilities have recognized the significant ongoing costs of maintaining premise-based systems.

When comparing all factors including the complexity of the regulatory landscape, cloud based solutions are being recognized as a more cost effective alternative with significantly less risk. Here are some of the key factors being analyzed by utilities today.

Disaster Recovery

cloud based solutions disaster recoveryWhen you assess all of the costs associated with creating, maintaining and testing Disaster Recovery Plans (“DRP”) you quickly realize that it’s not just double the costs of your production environment. It is often 125-150% more expensive as many of the costs associated with your production environment are often shared. For Disaster Recovery Centers, the costs tend to be all net new. When additional production systems come alonline, they need to be backed up and replicated in Disaster Recovery. So along with the procurement of the physical assets such as hardware and licensing, you also need to take the time to updated and test your DRP.

However this problem does  not completely go away with cloud based solutions. With most cloud based services, both the Production and Disaster Recovery centers are a fraction of the costs of maintaining a premise-based environment. This allows utilities to focus on maintaining and testing their DRP – which ensures business continuity in the event of a catastrophic situation.

Security

This one area has probably seen the most dramatic swing in opinion over the years. The risk of theft of intellectual property or confidential information has never been more of a concern and we see this in the news every day. With breaches at some large companies like opens in a new windowTarget, opens in a new windowSony, and many federal opens in a new windowgovernment agencies, the complexity and opportunity for hackers has never been higher. The systems and IT expertise required to keep these unwanted attacks away are both very expensive and in high demand. Cloud solutions have been battling this concern since their inception and as a result have developed very strong and complex infrastructures designed to prevent unwanted breaches in security.

Scalability

Cloud based solutions scalabilityAdvances in both hardware and software have made it relatively easy to create scalable solutions. Virtual environments can be created and spun up with relative ease and also expanded when necessary. The benefit of cloud based solutions is the creation of new environments or the expansion of existing environments is done and paid for on an as needed basis. With premise-based solutions, you still need to pay today for your future growth. IT professionals will oversize hardware knowing that systems will change, new systems will be required, and more users will be added and so on and so on. The challenge for utilities is that you are buying an asset that you are waiting to use instead of paying for it when it is needed. The other challenge is you hope that your IT professionals have estimated the growth correctly; otherwise you are forced to incur capital purchases that were not part of your original Cost of Service. When you have 4-5 years between rate filings, the financial risks can be significant.

Speed to Market

One of the main benefits of cloud based solutions is that they are already running. The environments are setup and the software is installed. In many situations you j just need to configure your systems, load your data and you are ready to go. This reduces the burden on your IT resources and staff so they can focus solely on configuration and deployment. Often times, cloud solutions such as Customer Information Systems (“CIS”) or Enterprise Resource Planning (“ERP”) have existing interfaces with many other products and solutions that make both the overall costs and implementation a fraction of premise-based solutions.

For example, if you have a cloud based CIS solution and want to add an Integrated Voice Response (“IVR”) or a Document Management solution to your software, integration and base setups are already pre-configured. Many times the solutions just need to be customized to the utility and can be operational in a quarter of the time it takes for premise-based alternatives.

In Conclusion…

As utilities are forced to use and manage an increasing amount of disparate systems, cloud based solutions are becoming more and more preferred by utilities. Choosing cloud based solutions really are a great choice for Ontario’s utilities.

For more information on cloud based solutions for utilities, click here.

Written by Todd Ross, Director – Customer Relations at ERTH Corporation. To reach Todd, call 1-888-317-8893 extension 279 or by e-mail.create new email