What Makes Cloud Essential for the Digital Transformation of Utilities

by sagacity

In April 2020, Deloitte anticipated a period of stunted growth for the utility sector owing to vastly reduced market demands amidst COVID-19. The pandemic was pushing almost every business to the brink, and utility companies were no exception.

During the same time, PwC’s COVID-19 CFO Pulse Survey came out elucidating the top concerns of power and utility businesses. These concerns were centered on the impact on capital resources, employee productivity, supply chain, infrastructure security, consumer confidence, and decision-making.

One thing was clear – the utility sector lacked a contingency plan in case of an economic downturn or crisis like this one. As a result, they were forced to look for solutions that could help:

  • plan in advance for downturns
  • take proactive measures to mitigate risks
  • create value differentiation to stay ahead
  • innovate and optimize the current infrastructure

At this juncture, cloud emerged as the answer to the aforementioned problems. Although Cloud has always presented itself as a viable digital transformation solution, the adoption in this industry has been relatively slow (which shouldn’t be the case from here on out).

For the purpose of brevity, let’s take a look at the top reasons why Cloud is absolutely essential for utility companies.

  1. Cloud is Affordable – Reduces Operational Costs

High capital expenses (CAPEX) and operational expenses (OPEX) are detrimental to a utility’s sustenance, especially when much investment should be lent to R&D activities. Purchasing and maintaining fixed assets to cater to a highly dynamic technological environment is a costly affair, let alone a tedious one.

However, by shifting from on-premise to cloud, CAPEX and OPEX can be significantly reduced. For instance, a company looking to address the overwhelming CAPEX can adopt a pay-as-you-go public cloud model. Contrarily, one looking to keep OPEX in check can look forward to a private cloud solution managed by an in-house team. Favorably, a combination of both can be accommodated through a hybrid cloud.

  1. Cloud is Secure – Reduces Cybersecurity Risks

Deloitte Global Industry 4.0 survey reveals that the “increased threat of cyberattacks” remains one of the top negative forces plaguing the electricity market. It’s, thus, essential for utility companies to rethink their digital strategy.

Contrary to the numerous myths around security prowess, cloud cybersecurity architecture is touted to be the best in the market – regardless of the industry it serves.

  • First off, it’s homogenous, i.e., the built-in application security remains consistent throughout the network, unlike terrestrial networks that are complex and fragmented.
  • Second, centralized security deployment is easy to manage, especially when it comes to administering patches and upgrades.
  • Third, security is an inherent part of the cloud model. The electronic data in a block of cloud storage is end-to-end encrypted.

A survey of CXOs by Oracle reveals that most organizations consider cybersecurity to be the most prominent advantage of using Cloud, and rightly so.

  1. Cloud is Lean – Optimizes IT Infrastructure

Utilities are often faced with the problem of managing massively distributed facilities. From a business standpoint, the sheer size of the operation is a huge asset. However, from an IT standpoint, it’s a huge liability. A scenario like the one the pandemic cultivated could be detrimental to an on-premise infrastructure that is already overburdened by the growing network complexity.

With Cloud, companies can optimize and streamline their IT infrastructure by:

  • Reducing the staff requirements (and associated costs) for running and maintaining IT systems and servers.
  • Reducing dependency on legacy systems and infrastructure i.e., legacy systems can be migrated to a cloud environment.
  • Allowing for better utilization of resources by automating tasks that do not necessarily require human intervention.
  1. Cloud is Proactive – Facilitates Data Analytics Real-time Reporting

With technological advancements fueling the growth of urban spaces, communities, and businesses, in general, utilities have been tasked with meeting the demand for power that is growing exponentially.

As a result, they’re literally inundated with data. This enormous amount of data can be a gargantuan burden for a diverse group of experts to handle. However, a cloud-based solution can do most of the heavy lifting.

In short, companies can utilize real-time analytics to:

  • Promote better customer engagement through personalized campaigns.
  • Enable better business operations through real-time situational awareness.
  • Support transparent corporate governance through increased transparency in decision-making.
  1. Cloud is Reliable – Constantly Monitors and Maintains

Reliability is key in the utility sector precisely due to the nature of the industry. A business interruption resulting in the loss of power can be detrimental to the common life; hence, it’s crucial to address all contingencies for any outage.

Fortunately, Cloud provides a superior level of reliability and ensures a resilient system with regards to uptime monitoring and management. For instance, if a circuit or power outage occurs, the company will immediately be notified via email or a mobile app. Furthermore, it can even manage and communicate remotely with field crews and utility workers for an individualized response plan.

  1. Cloud is Efficient – Helps Fuel Innovation

Smart/Intelligent Grids are a testament to Cloud’s efficiency and applicability in the industry. For example, real-time data analytics can be used to understand system loads and identify peak load times. In the same vein, utilities can also better manage peak power by strategically clearing transmission lines during peak hours of usage.

In fact, a 2021 Infosys analysis promotes cloud adoption by quantifying global profits to be well above $414 billion with 77 to 100% operational efficiency, considering the assimilation is on the granular level.


Assessing the Readiness of Utilities Sector for Cloud Adoption

The question is, now that the sector has been offered a plethora of advantages by adopting cloud, is it ready to adopt them?

“100% of players in the energy market expect it to be completely turned upside down by digital disruption within the next five years.” — Capgemini.

So, the answer is a resounding yes!

In a nutshell, the aforementioned benefits of the Cloud can help solve a range of unorthodox problems in the utility industry. The bottom line is that Cloud will continue to be a catalyst for digital transformation in this industry.


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