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Why utilities are moving IT applications to the cloud

Like many industries, utilities have had to come to grips with the idea of moving information technology (IT) applications to the cloud. Some have only contemplated this for their own operations. Others realize that they have the scale to provide solutions not only for themselves but also for smaller players. At the recent Oracle OpenWorld trade show in San Francisco, both perspectives and that in between were shared by speakers on a panel from Greater Cincinnati Water Works, Suez and Verizon Enterprise Solutions.

In this panel discussion moderated by Creighton Oyler of Oracle, the group tackled why and how utilities should move their IT applications to a cloud computing platform. As an Innovation Session at OpenWorld, Oyler described it as an emotional journey as opposed to what one would expect at a technical nuts-and-bolts seminar.

Suez

As the first to take the microphone, Bertrand Schweisguth, director group applications and water business systems, Suez, described his business as a mix of wastewater and drinking water that manages its supply through 173,000 miles of pipes. Having that quantity of infrastructure in the ground and 4,000 water contracts with municipalities in Europe, Latin America, North America and other parts of the world, Schweisguth finds the IT requirements challenging for all these different customers.

“Municipalities demand more operational data in real time,” Schweisguth said. “After spinoff from GDF, an opportunity to revisit the IT architecture was created.” This led Suez to take a cloud-based approach to its IT, according to Schweisguth.

In order to provide this operational data Suez created an Open Data store. And because security is very important to Suez and its customers, it went hand-in-hand with the Open Data store, according to Schweisguth. That is because the data requirements of municipalities can vary.

“Some cities want raw data,” Schweisguth said. “Some want a customer self-service website.”

And as contents related to these websites range in size, scalability of solutions is important, according to Schweisguth. “The scalability of the service has to match the variety of the digital maturities (of the cities and end-customers).”

To meet the needs of its contracted cities and their end-customers, Suez employs agility with its data services, according to Schweisguth. So Suez concluded that a Cloud Service Brokerage would be the next logical step. With a Cloud Service Brokerage, Suez gets secured and quick access to its data store, increased operational performance and flexibility to provide new services and faster time to market.

Greater Cincinnati Water Works

As the oldest municipally owned and operated utility in Ohio, Greater Cincinnati Water Works (GCWW) provides both retail and wholesale drinking water and wastewater services to 1.1 million customers via more than 238,000 meters. However, the business situation for GCCW has been changing. Water consumption has been on the decline, but the utility has avoided increasing rates in order to keep customers happy. So what can a utility do in this kind of situation, trapped between a rock and a hard place?

“We had to look at a solution for more revenue,” said Gary Wiest, commercial services superintendent, Greater Cincinnati Water Works. So it occurred to GCCW management that with its expertise in billing it could provide this as an outsourced service to other utilities. “Being a utility we understand other utilities,” Wiest said.

But first GCCW had to get its own billing solution house in order. With the help of IT consulting firm Wipro, GCCW moved its Customer Care & Billing (CC&B) from an 18-year-old system to a hosted Oracle solution at a Tier 1 Wipro data center. With this service bureau model in place, GCCW now provides a Tier 1 solution to Tier 2 utilities, according to Wiest. Specifically, smaller utilities can achieve improved functionality, quicker implementation and lower total cost of ownership (TCO) with a Tier 1 CC&B solution that only incurs an operating expense (OpEx) and no large capital expenditure (CapEx), according to Wiest.

Overall, GCCW got its new CC&B solution up and running in 13 months compared to the usual 24 to 36 months associated with such projects, according to Wiest.

Verizon Enterprise Solutions

Wrapping up the introductory remarks, Mark Vesterby, manager, strategy and product development, Verizon Enterprise Solutions, presented an “expansive vision” on the Internet of Things (IoT) for taking out complexity. The goal: take the cloud to the next level by starting with private infrastructure and creating a fully managed solution, according to Vesterby.

“This will include pre-integrated world-class cloud infrastructure, private and secure network communications and leading utility applications,” Vesterby said. “By offering a single Platform-as-a-Service, it will ease entry, increase visibility and control and eliminate network and platform management and maintenance.”

In addition, this offering makes it simple to integrate, deploy, configure and manage devices and data. “It gives utilities insight beyond AMI,” Vesterby said, “while reducing or eliminating capital investments.”

After spending 12 months building the solution, Verizon launched its IoT vision to simply grid modernization in July 2015. The service is now rolling out on a business-as-usual basis, according to Vesterby. “We can ship meters and the service starts working (for utilities) as soon as (they’re) installed,” he said. All policies are in the cloud, all costs are covered and it offers full redundancy and data backup, according to Vesterby.

Cloud security

A topic that all utilities bring up when thinking about the cloud—security—was also addressed by the panelists.

According to Schweisguth, Suez thinks differently about security, separating data types by their security needs. “We created a matrix to match risks,” he said. “Risks range between one to four—low to critical. Then we sourced the appropriate systems.” All Suez critical systems were submitted to cloud testing and passed according to Schweisguth.

At GCCW, they rely on their solution providers for security, according to Wiest. “We don’t do (security) that well,” he said. “We rely on our vendors to scale security up and down quickly.”

For Verizon, the No. 1 question is about security when it comes to the cloud, according to Vesterby. “We want customers confident about utilizing data in the cloud,” he said. “Network connections have to be secure end to end.”

Utility cloud regulatory environment

As a heavily regulated industry, Oyler asked the panelists what legal obstacles they have seen in the utility sector.

The obstacles vary by the nature of the data, according to Schweisguth. “The Department of Defense won’t let data into the cloud. Some data can’t be published.” Otherwise, there are no legal concerns beyond the normal local privacy concerns, he said.

As to its own legal affairs, after the spinoff from GDF, the New York Stock Exchange was on Suez to separate its financials from going through its former parent company’s infrastructure. The easiest and quickest way to separate them was to move them directly to the cloud from on premises, according to Schweisguth.

And when it comes to regulatory concerns for Verizon, Vesterby gave a telling anecdote: the company has more lawyers than salespeople, he said. “As a company we did extensive research as part of product development. We made sure that the product meets utility regulatory requirements.”

Cloud business case: build vs. buy

When it comes to deciding to move IT applications to the cloud, utilities always need to ask about building their own capability vs. buying a solution. From Verizon’s perspective, the advantage that it offers is that its platform can accommodate hundreds if not thousands of utilities. 

For example, scales of economy allow Verizon to accommodate large utilities with large numbers of meters. A small utility cannot scale like that, according to Vesterby. Another benefit that utilities gain with Verizon’s platform is its existing infrastructure that scales the cloud for customers for a known cost. Meanwhile, utilities can have a certain figures on paper for IT cloud applications, but unforeseen considerations can cause scope creep, Vesterby said, and those figures no longer apply.

In general, when considering the IT business case of build vs. buy, utilities should always compare project alternatives on a five year cost basis, according to Schweisguth. For on-premises vs. cloud IT solutions, the financial differences are not appreciable when utilities build their own solutions, according to Schweisguth. But they are significant when purchasing, he said.

Derek Handova is a veteran freelance journalist and corporate content marketer who contributes regularly to B2B News Network, Infotech Lead and Intelligent Utility. He can be reached at handovafreelance@gmail.com

 

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