Cloud-based software has been a boon for just about every industry, enabling businesses of all sizes to take advantage of security, speed, and scalability ensured by massive services providers like Amazon Web Services (AWS). It has also helped software companies rapidly deploy, refine, and update their offerings with features and enhancements in ways that were impossible for software installed on a local machine in someone’s office. Most enterprise software providers are now cloud first, and their best features are only available in their cloud offerings. So why is that a challenge for utilities?
Utilities have historically (and understandably) been risk-averse, and thus slow to integrate new technologies into how they operate. In the United States, when a utility company makes a large software investment—let’s say in a field service management solution—a one-time purchase is treated as a necessary capital expenditure, and some of this expense can be passed on to the customer. With a perpetual investment in cloud software, the same solution is now treated as an operational expense. Regulators expect utilities to keep operational costs down in order to keep margins and profitability higher, and as such don’t allow these expenses to be paid for by customers.
Not upgrading to the latest software means losing out on efficiency, profitability, and service quality gains enabled by modern, best-in-class solutions. But taking on a large investment as an operational cost has an immediate and sweeping impact on profitability. Until fiscal regulations catch up to how the business world buys software, many utilities will struggle with moving their tech infrastructure to the cloud.
New cloud business model for the energy industry enables energy exploration and production through evolved next-generation applications and decision support tools, while IT concerns become a utility which can be used according to one’s needs without the burdensome of ownership.
The benefits of cloud in the utility and energy industry don’t differ too much. Besides cost, flexibility, and speed, which translates into more agile and responsive services, the main benefit for the utility industry is the global entry of smart grid and advanced metering infrastructure into utility operating models.
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