A catalyst to support resiliency, flexibility, innovation, affordability and operational excellence
Cloud computing has been a catalyst for the rapid growth of digital-native companies who have disrupted and transformed their respective industries in retail, transportation, entertainment and finance to name a few. A cloud-first approach is an integral way companies can remain competitive by capitalizing on adjacent revenue streams, realizing operational excellence at scale and promoting agile decision making and innovation. Industry giants in pharma and healthcare, manufacturing, aviation and biotechnology have done just that: fully embraced the cloud to advance their strategic objectives. Conversely, the utility industry has been slower to adopt the cloud beyond the basics when compared to these other industries, despite having very much in common with these other sectors in terms of disruption, reliance on highly consequential operational technology and deeply rooted concerns with cyber security of critical systems.
The historical barriers to cloud adoption in the utility industry are quickly coming down, however: from rigid cost-recovery mechanisms to cloud-adverse cybersecurity and regulatory standards, complexities with migration efforts and limited cloud service provider maturity. As the utility sector undergoes another round of modernization fueled by fresh investment in the electric system and decarbonization goals, the cloud plays an integral role in enabling the industry’s strategic objectives of resilience, flexibility, innovation, affordability and operational excellence.
Advantages of the Cloud for Successful Utility Modernization
Reliability and Resilience
Reliability has been a core focus in the utility industry for decades. As the industry focuses on a more resilient energy ecosystem, the importance of maintaining availability while rapidly restoring critical systems in the event of catastrophe is paramount; hosting these systems on the cloud can provide significant benefits. Solutions from cloud service providers (CSPs) are designed for extreme availability and redundancy while leveraging economies of scale to optimize cost and performance. The capabilities of these cloud platforms surpass most on-premise computing facilities and would require significant investment to match. Modern cloud infrastructure at scale incorporates ‘self-healing’ features that dynamically allocate available computing and storage resources, significantly reducing incident rates when compared to on premise operations.
Flexibility and Agility
As utilities face disruption from multiple fronts, the need to quickly pivot and adapt business operations to meet the growing demands of customers and regulators as well as respond to unforeseen events places a significant demand on the elasticity and scalability of existing technology infrastructure. The rapid system provisioning and reduced deployment effort provided by the cloud can help utilities proactively adapt and meet the needs of evolving operating conditions. Harnessing these benefits requires a shift from traditional IT governance models, where rigid business case criteria are typically suited for on-premise technology solutions and cloud options are treated on a case-by-case basis. Establishing a Cloud Center of Excellence (CCOE), which helps broker cloud services between IT and lines of business, is a critical component of this change and is a common practice in other cloud-intensive industries. Resourcing a CCOE requires new skillsets cloud brokerage, cloud resource management, cost optimization and cloud service management which not only help to guide the organization’s cloud direction but also accelerate the realization of the benefits from cloud investments.
Innovation
Innovation is increasingly becoming a strategic imperative in the utility sector, prompted by energy transition disruption and the desire to incubate new ideas that create value for energy stakeholders, inclusive of their own workforce. Comparatively speaking, we often refer to hi-tech and digital-native industries as being highly innovative, not just in how they leverage technology as a differentiator, but also in their willingness to explore new ideas and incubate thought leadership across their organizations. The early utility adopters of the cloud recognized its foundational capability to adopt data-driven decision making and leverage advanced analytics at scale. Now, robotic process automation as a service (RPAaaS) and intelligent automation are just beginning to enter the landscape and will soon inspire utilities to look at next generation operational efficiency programs where automation can be applied at scale. With new funding opportunities for grid modernization investments, utilities can look to the cloud as a virtual test bed for new use cases by rapidly provisioning infrastructure and significantly reducing the research and development effort associated with proof-of-concept activities. As the utility industry rediscovers its innovative roots, the cloud provides a means to leap forward in response to industry disruptions and opportunities by exploiting emerging technologies to meet develop new industry-specific use cases.
Cost Control and Operational Excellence
Energy affordability and utility cost burden is a growing concern for customers, regulators and policymakers alike. Fuel switching, decarbonization and decentralization of the energy ecosystem has brought rate stability and cost of service management to the forefront in cost recovery and investment decisions, forcing utilities to examine operational efficiencies and internal cost management more closely than before. In general, cloud service providers leverage economies of scale to provide services at a lower unit cost than on-premise deployments. Utilities have been quick to recognize the commoditization of infrastructure and have been expanding their infrastructure-as-a-service footprint to manage technology costs afforded by the elasticity of on-demand subscription models. This approach optimizes capacity based on need and usage, rather than overprovisioning upfront which often results in underutilized technology resources and stranded costs. Furthermore, DevOps and cloud-enabled IT operations processes typically require less effort and result in shortened deployment cycles which leads to additional cost savings.
An Integral Solution to Modernization
At TRC, we view the cloud as an integral and foundational component of a utility’s grid modernization and digital transformation efforts. We recognize the complex internal and external challenges with deploying a successful and comprehensive cloud strategy and help our clients navigate their cloud journeys to realize the benefits that tie directly to their business strategy. To discuss your cloud challenges and how TRC can help, contact me at JTellez@trccompanies.com.
Joe Tellez
Joe provides vision for both short-term and long-term strategies to help utilities improve performance through the effective use of technology. He brings over 25 years of industry experience serving in senior leadership roles in organizations including UiPath, Tacoma Power, Utility Integration Solutions / Alstom Grid, and Sempra Utilities (San Diego Gas & Electric / Southern California Gas Co.). Joe serves on the UW-Tacoma School of Engineering & Technology Advisory Board, and served as the Executive in Residence at University of Colorado’s Global Energy Management Program. He obtained a B.S. in industrial and systems engineering and an M.S. in systems architecture & engineering from University of Southern California.