Across industries and geos globally, the managed services model has grown at a feverish pace. One report forecasted that the global market would reach $258 billion by 2022, representing a compound annual growth rate of 11.1 percent from 2017 to 2022.
As managed services have become more mainstream, so have the number of associated delivery options. Today, Software-as-a-Service, Platform-as-a-Service and Infrastructure-as-a-Service are used to deliver managed services. But what’s missing from this growing list of options? A common refrain of customers is that, as vendors’ service and product offerings grow, customers benefit from the greater number of offerings to choose from, but also face uncertainty about which offerings will best meet their needs—not to mention what risks they face if they make the wrong choice.
It’s not surprising, then, that service providers are turning to what their customers truly need: desirable outcomes to meet their business challenges. When customers can focus only on ideal outcomes, not the infrastructure or the solutions needed to deliver them, that’s compelling. In fact, it may even become the prime measure of individuals’ performance in the utility: Did they, or did they not, achieve them? In that light, thinking about implementation, processes and key components can become a distraction. And that’s why understanding desired “outcomes,” and gearing operational processes to achieve them, has fast become the only end game that matters.
A Shift in Delivery Models
One shift in delivery models involves the migration of on-premise software to the cloud. In April, 2018, Gartner forecasted that public cloud revenue would grow 21.4 percent in 2018 to $186.4 billion — up from $153.5 billion in 2017.
The emerging Outcomes-as-a-Service (OaaS) model is essentially a hand-and-glove fit with the cloud, and it has been a boon for companies across industries. As one example, in the utilities industry, cloud-based managed services focusing on desired outcomes have helped in providing:
· Real-time power and natural gas forecasts
· Revenue assurance
· Network management
· Theft, leak and outage detection
· Meter data collection and analytics
· Automated billing management
· Regulatory standards and cybersecurity compliance
The value of OaaS in the utilities sector comes to light if you visualize the many processes it encompasses and manages, such as processes that involve meter-to-cash, grid operations, analytics and data from field devices. OaaS also overcomes the Rubik’s Cube of complexity created by the mandate that a new solution or platform must positively impact cost, security, availability, scalability, performance and application development. OaaS platform providers assume the onus of managing this complexity for utilities.
At Itron, outcomes are offered via two delivery models: as SaaS and as a fully managed service, called Outcome Services. The SaaS offering provides an interim solution between on-premise and a fully managed Outcome Services solution, wherein the utility subscribes and has access to software applications that are installed in the cloud. A cloud services team provides monitoring services to ensure the system is available, while a utility continues to use and operate the system and takes responsibility for attaining its desired outcomes. In the Outcome Services model, the provider operates the systems for the utility, manages select operational AMI processes, and ensures that the utility can achieve the outcomes expected from the platform.
One Utility’s Plans
Texas-New Mexico Power (TNMP), which supports 250,000 customers in more than 130 communities, has expanded its AMI program to run on a standards-compliant, multi-application network that offers fully supported managed services. This approach allows TNMP personnel to focus on operations while the provider keeps the technology current, therefore enabling TNMP to derive the greatest value from key applications. Through a cloud-services model, TNMP is migrating its systems, including meter data management and data collection to the cloud, and is also implementing analytics.
“We’ve broken down our current initiative into four logical stages,” said Bobby Roberts, AMI program manager, Texas-New Mexico Power.
· Implement OpenWay in a cloud services model
· Migrate the currently in-house supported systems over to a managed-services environment
· Update all systems and applications to their latest versions
· Implement analytics to transform its operations
“By using a virtual agent, we are using managed services with the expectation that we can place some of the commodity-based software support on Itron’s shoulders,” Roberts said. “The goal is to make TNMP a better, faster and more nimble operation by fully leveraging those pieces of software.”
TNMP also is taking advantage of the cloud-based analytics that is an integral component of OaaS platforms. Initially, the utility plans to improve revenue protection, theft detection and other applications that require analytics to spot trends, historical performance and other indicators. Roberts added that, with analytics, the utility can better understand what types and sizes of loads it can put on its systems, and when. “That will ensure the best-possible utilization of the assets we have already deployed,” he said. “Since the inception of the program, we have saved about 360,000 truck rolls, turn-ons and turn-offs, and disconnects and reconnects.”
TNMP today services customer requests within two hours, where it has traditionally required 24 to 48 hours. And the OaaS platform has generated over eight million bills from data collected remotely over the air. Using AMI, he said, also allows retail electric providers in Texas to offer creative solutions to TNMP customers. Those include time-of-use rates and prepay options—which were once impossible to offer when the utility lacked access to what he calls “interval data.”
“These are the kinds of outcomes we have been striving to achieve,” said Roberts, “and the OaaS model removes all the barriers.”
A Look Ahead
Utilities are recognizing the promise of the OaaS model and its ability to help them meet their goals in ways both tangible and measurable. But becoming “outcome-centric” is also becoming a corporate imperative.
In an article in Harvard Business Review, Michael Connerty, a managing director at L.E.K. Consulting, said that “Becoming outcome-centric . . . involves a foundational shift in organization and culture . . . and maintaining the discipline to follow through will likely mean the difference between future success and stagnant survival.”
About the author: Aravind Yarlagadda is Senior Vice President and General manager of Itron’s Outcomes business where he is responsible for Itron’s software and services offerings, globally. He has more than 20 years of experience in product management, product development, sales, marketing and business development.