Why Utilities Are Finally Flying to the Cloud

Despite unique industry challenges, utility organizations are increasingly adopting cloud-based infrastructure. In this blog, we focus on the specific operational benefits a move to the cloud (or to a hybrid architecture) can achieve. In short, quality cloud infrastructure allows utilities to implement more powerful capabilities than ever while streamlining IT management and enhancing strategic agility.

For a deeper dive into the issues discussed in this blog, please see our whitepaper here, which focuses on Oracle Cloud Infrastructure (OCI) as a concrete example of a powerful, flexible cloud infrastructure platform for utilities.

Why Cloud Matters for Utilities

Utilities have historically faced unique challenges in adopting cloud-based technologies, namely:

  • Concerns over the security of sensitive data stored in the cloud.
  • Hesitance to give up existing on-premise systems that are serving the business well.
  • Regulations which allow a rate of profit on capital expenditures (CAPEX, including servers and other on-premise IT equipment) but not operational expenditures (OPEX, such as cloud services).

Today, however, the benefits of the cloud have become too valuable to ignore, and more and more utilities are overcoming these challenges to take advantage of the unparalleled flexibility cloud-based infrastructure can provide. Cloud storage is safer than ever, on par with on-premise storage solutions. But even when utilities need to keep sensitive data onsite, a “hybrid model” can offer the best of both worlds, allowing utilities to store sensitive data onsite while implementing cloud-based analytics. (We take a deeper look at possibilities for hybrid models in our whitepaper here).

In terms of cost, skewed cost recovery rules remain an issue that many utilities are working with local regulators to fix. But regardless of these impediments, many utilities are finding cloud services to be an enticing alternative to traditional on-premise IT infrastructure. Below, we illustrate how the cloud can drive savings including reduced infrastructure maintenance costs, streamlined IT staffing needs, and scalable infrastructure that eliminates the need for costly excess capacity.

Important Operational Benefits: Scalable, Flexible, Powerful

Leading cloud infrastructure solutions such as AWS, Azure, and OCI provide a broad array of capabilities, giving utilities the ability to support virtually any application or storage need from the cloud.

Many of these services, including OCI, provide:

  • Cloud storage, including high-performance and low-cost options.
  • Computing power, capable of accommodating the immense demands of Big Data applications.
  • A built-in container engine to help simplify DevOps.
  • Powerful BI and analytics, with built in tools for data ingestion, modeling, prediction, visualization, and collaboration.
  • Machine learning and AI capabilities, with out-of-the-box models trainable with unique utility data.

Crucially, these platforms give utilities the flexibility to pick and choose among these capabilities, keeping some onsite while migrating others to the cloud depending on business requirements. And they allow utilities to implement these capabilities with flexibility that is simply impossible with on-premise infrastructure.

A shift to the cloud enables broader strategic benefits including:

  1. Strategic Agility: the utility can experiment with new capabilities without the large sunk costs associated with onsite servers, dramatically reduce cycle time for deploying new features (or responding to change requests from the business), and leverage Big Data analytics that would be prohibitively compute-intensive for onsite servers.

  2. Scalability: dramatically heightened workloads during periods such as severe winters, gray skies, or quarterly financials mean that utilities are often forced to maintain capacity for user counts that are only required a small portion of the year. The cloud allows utilities to flex IT spending to match actual operational needs and seamlessly add user count when required, while scaling back to reduce costs when work levels return to normal.

  3. Security: IT security is increasingly specialized work that requires constant attention to updates and meticulous vigilance against new threats, ultimately resulting in costly new hires. Cloud infrastructure providers benefit from economies of scale that enable them to institute advanced protections far more economically than would be possible in house, allowing for greater security without the need to maintain security experts on staff.

  4. Backup and Disaster Recover Capabilities: backup and DR are critical to the resiliency of the organization and represent yet another area that requires either additional physical infrastructure or a separate third-party vendor. Leading cloud service providers will offer built in backup and disaster recovery, further simplifying another source of IT overhead.

  5. Getting Out of the Business of Running Servers: running onsite data centers is expensive, demanding work that is outside the core competencies and operational focus of utilities. Cloud-based capabilities allow for dramatically reduced management overhead, more flexible IT staffing, and a much more predictable budget.

Learn More About Planning a Non-Disruptive Cloud Migration Strategy

As the benefits discussed above demonstrate, cloud infrastructure can drive significant value for utilities. It can address pressing operational concerns immediately while setting the stage to implement additional capabilities later on. And it can thread the needle of enhancing IT capabilities while reducing management overhead and staffing requirements. But utilities are justifiably conservative and accordingly proceed with caution! A meticulously planned migration strategy is crucial to shifting to the cloud with zero disruption. Furthermore, the most effective cloud strategy will vary by organization, and an analysis of existing capabilities, operational requirements, and future plans is crucial to building a sound strategic road map.

For a deeper look at how to plan an effective cloud migration strategy, we recommend our whitepaper here. It focuses on Oracle Cloud Infrastructure as a powerful platform capable of driving the benefits discussed in this blog, and the different pathways to cloud and hybrid-based solutions it enables. You can also reach out to us for a focused discussion.

OCI: What It Is and Why It Matters for Utilities

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