It’s not an approach to distributed energy resources. It’s not home automation. It’s not modernizing grid infrastructure. In 2016, the watchword for utilities is cloud software. That’s according to Oracle, which reports that almost every utility in the United States — 97 percent — uses cloud-based applications already or plans to in the future.
Image credit: Oracle Utilities.
It’s a remarkable finding in an industry that’s often painted as slow to change. “Technology that used to be characterized by large homegrown systems managed by internal utility staff is transforming into more nimble partnerships with outside providers,” Oracle says. Here are a few quick hits from Oracle’s survey, which polled 100 American utility executives about their cloud technology investments.
- Roughly half (45 percent) of U.S. utilities use the cloud today. Another 52 percent say they’re planning on it.
- The vast majority of utility executives, 78 percent, are using or considering software-as-a-service. A smaller subset is interested in hosted cloud solutions.
- A whopping 89 percent of the executives Oracle surveyed said they will send meter data management (MDM) data to the cloud in the next three years.
- Likewise, 69 percent plan to use cloud technology for their customer information systems within three years.
What’s driving the change?
At a first glance, it’s a little surprising that the great unifying force in 2016 is software, not hardware. “Utility cloud technology” garners a lot less press and conference attention than smart meters, solar panels, storage batteries, or smart thermostats. But utilities’ role in tomorrow’s energy landscape may have less to do with installing these kinds of devices, and more to do with connecting them — both to the grid, and to customers. Utilities are uniquely positioned to collect the enormous amount of data that the smart grid produces, analyze it, and use it to optimize grid operations and customer experiences. And that requires software. "With the rise of distributed energy resources, a smarter grid, and the need for more advanced analytics, technologies for utilities continue to become increasingly sophisticated and complex,” Oracle explains. “The cloud is the answer to this conundrum; no longer are utilities required to invest substantial funds to upgrade and replace their legacy systems with in-house solutions." By leaning on dedicated technology companies for software innovation, utilities are freer to do what utilities do best: manage the grid and the customer relationship. Nearly half (48 percent) of all executives surveyed said that cloud technologies would help them focus on their core competencies, and more than half (58 percent) said it would reduce their spending on software infrastructure.
Image credit: Oracle Utilities.
What opportunities will utilities go after in 2016?
A whopping 89 percent of survey respondents said they’ll take MDM to the cloud between now and 2018. And 86 percent intend to use it for big data applications. A lot of utilities already are. Opower’s platform alone has processed more than 500 billion meter reads from nearly 100 utilities. Companies like FirstFuel and Enervee are helping our clients do even more with their data. Oracle calls MDM and data analytics “sweet spots” for the cloud, and expects that they’ll become ubiquitous among utilities within a few years.
What should your utility look for in a cloud software provider?
It goes without saying that new software comes with new challenges. A successful rollout depends on asking providers the right questions and nailing the details.
- In Oracle’s survey, privacy and security clocked in as utility executives’ number one concern about cloud-based applications. It’s critical that software providers prove that they’re capable of handling customer data with the utmost care and protection. And it’s up to potential buyers to grill them on it.
- System integration was another area of focus. Oracle notes that “utilities are becoming increasingly connected across their organizations, not just in terms of applications, but data as well, so there is a need to ensure that cloud technologies fit well into the broader organization.”
- Ultimately, that means understanding and choosing software not on a program-by-program basis, but at an enterprise level. Oracle found that utilities don’t have a centralized decisionmaking apparatus for cloud technologies. It’s a collaborative evaluation process, and “alignment among business and IT groups is essential to ensure the long-term value of the cloud, and that it truly serves the business needs of the utility."