It’s a changing world where information infrastructure is concerned. Companies in every industry are embracing the cloud as an alternative to their own physical infrastructure. Even utilities are moving in that direction—slowly—as their information systems approach a respectable old age. The average utility CIS lives to see 15 to 20 years.
Utilities’ adoption of new technologies has tended to be somewhat conservative. The cloud is no exception. A certain amount of caution is warranted, when considering a change to the way you manage your billing and customer relationships. Replacing a CIS with something new can seem risky, not to mention expensive.
A recent IDC Energy Insights report reveals an interesting dichotomy though. It found 63 percent of utilities are nervous about ceding control to a cloud provider. Yet even more—74 percent—say the cloud is a dominant part of their long-term information platform strategy. What’s changing their minds?
Let’s examine why the cloud isn’t the scary word it used to be for utilities.
Data centers are an expensive proposition
Until the cloud, most utilities maintained their own data center. At the very least, they leased dedicated space, equipment and access in a private data center. The equipment, the staff and the security access were their own.
But data centers are an increasingly expensive proposition. Real estate and utilities are a constant expense, as is purchasing, maintaining and replacing servers and other infrastructure components. Managing the data center requires dedicated staff, diverting precious resources away from the core mission of providing reliable and affordable services to end customers.
With the cloud, the cloud provider maintains the data center, the equipment and the access. It ensures the physical infrastructure is up to date and in top shape, so a utility doesn’t have to.
Staffing and training for an aging utility CIS is never-ending
As your utility CIS ages—perhaps approaching its 20th birthday—the staff that keeps it running also ages. The technologies your utility customer management solution was built on are no longer in demand. The talent pool of persons that can maintain and enhance the equipment and software is shrinking. When you do have to replace personnel, it can be difficult and expensive to find the right skills.
When you move to the cloud, facilities staff becomes a non-issue. Your monthly fee includes not only the equipment, but the time and expertise of the data center staff. Plus, when your new utility CIS is cloud-based, the vendor also keeps the software up to date for the life of your contract. They’ll add new features and capabilities as part of the package, no archaic programming languages required.
Security risks aren’t what they seemed
One of the historical concerns about the cloud has been security. That is, your data is “out there somewhere” and therefore out of your control. What if the cloud provider cannot provide the same level of security as your own personnel would?
The reality is the opposite. A whopping 76 percent of utilities say cloud providers can provide better security than their own IT staff. Why? A cloud provider’s very business depends on providing a secure environment for its customers and their information. Just as it maintains dedicated facilities and software professionals, the cloud provider keeps top-notch security staff with the latest skills and certifications. So once again, you don’t have to: it’s part of your monthly fee.
Lower total cost of ownership and more
It’s no surprise most survey respondents—82 percent—said overall cost is the most important factor in considering the cloud. All the reasons above can produce significant cost savings.
But Vertex knows there’s more to this picture than costs. We have 20 years of experience in hosting and managing CIS solutions for utilities. There are more reasons the cloud isn’t so scary anymore. Some of these include being able to:
- Adapt quickly to new and changing business requirements
- Scale effortlessly to growth in data volumes and/or customer numbers
- Improve reliability and performance, while adding comprehensive disaster recovery capabilities, guaranteed service levels and predictable cost of ownership.
Today more applications are being developed for the cloud, rather than for on-premise installation. Acknowledging this, NARUC (the National Association of Regulatory Utility Commissioners) resolved this week to encourage state regulators to consider whether cloud computing solutions should be treated like on-premise solutions. Specifically, whether such costs can earn a rate of return and be included in rate base calculations.
When it’s time to consider replacing or enhancing your existing utility CIS, there is no need to fear the cloud anymore. A cloud-based alternative isn’t the risky proposition you may have thought. With regulators considering now moving the question of capitalization forward, it might not even mean a radical change for your cost accounting. And as another IDC Energy Insights report found, at the right subscription price, the TCO for a cloud-based CIS already delivers a substantial advantage over on-premise.