By Chris Lewis, Head of Sales and Marketing, Cognera
“The broad and rich foundation of the Internet will unleash a “˜services wave’ of applications and experiences available instantly over the internet to millions of users.”
There is no doubt that Software as a Service or (SaaS) is the result of the “broad and rich foundation” that Mr. Gates refers to above. Research and advisory firm Gartner estimates that the SaaS market is “forecast to reach $8 billion in 2009, a 21.9 percent increase from 2008″ and “will show consistent growth through 2013 when worldwide revenue will total $16 billion.”
But what exactly is SaaS and how can it help utilities? More important, why is it timely to introduce the SaaS model now?
SaaS refers to an emerging method of software delivery where customers pay a subscription to use software over the internet that is owned, hosted and maintained by a third party vendor.
As a model that has been widely accepted by industries outside utilities like telecommunications and financial services, SaaS offers an “on demand” approach to technology. The most famous example of SaaS is undoubtedly salesforce.com, which has shown the world that it is OK to leverage a hosted solution, as long as you can do it in the comfort and privacy of your own office with your own computer.
Challenges Facing Utilities Today
Historically, Utilities have had their share of technology waves and woes. There have been events that brought fear, like Y2K, that systems would be jeopardized and data lost.
There have also been pressure to keep pace with popular social movements that were considered critical to manage the customer relationship, such as the move to enterprise CRM solutions and the concept of deregulation.
But today’s era seems clearly to be focused on managing customer relationships and communicating (and monitoring) customer behavior. Today utilities are in agreement that there will be a SmartGrid of some kind, and all of the investments previously spent on AMI will come to fruition.
Understanding Technology Expectations and Costs Today
Today, Utilities are being forced to look critically at the nature of their business. Aging infrastructure, very little to actually measure conservation and security threats have all forced the typical utility to reevaluate their IT infrastructure right from the ground up. Add to this pressure the need to manage customer expectations of excellent service, an understanding of increasing costs, how to decrease overall consumption, measuring and reducing the carbon footprint and needs such as self-serve options and web based services. This is an equation for astronomical capital cost.
Enter SaaS. The SaaS model to customer care will emerge as a fundamental necessity for utilities. Specifically, small to mid sized utilities who must look deep into their budgets to find capital dollars for the necessary upgrades that they are being faced with. SaaS provides an opportunity to gain access to outstanding technological tools, from office suites and HR management tools to financial systems and customer relationship suites including billing and online services. The advantages of SaaS are very well documented:
- Save Money.
The economics of the SaaS model are actually quite staggering. The traditional software models must account for a total cost of purchase, ownership, security, maintenance, upgrades and risk. Whereby a SaaS model, has the software and data available in an instant, but hosted, maintained, kept up to date with the latest technological advancements, made incredibly secure and backed up by a professional, specialized vendor for a monthly fee. This is referred to as the Total Cost of Ownership advantage of SaaS.
- Shorter Deployment Time.
IT upgrades can be long, drawn out, painful experiences that can create a definite barrier to the group considering the change. It can often seem easier to stay with the current system or to patchwork legacy software instead of launching a year (or longer) project to upgrade to a new system. SaaS provides the advantage of a quick turn around. Some systems can be literally plug and play with a web based log on and some online training. Others may entail an implementation project, with some small level of customization, but with either scenario the deployment time will be a fraction of a traditional software project and therefore the operations will be up and running quickly.
- Available Anywhere There is an Internet Connection.
Since SaaS is the delivery of software over the internet using standard protocols. This allows for employees and contractors to gain access to the system so long as an internet connection exists. This provides for greater creativity in designing how to best serve the needs of the business and the customers. Opportunities around remote working environments and mobile customer service become a reality.
- Redistribution of IT Budgets to Critical Infrastructure Needs.
There is no question that IT projects can make up a substantial portion of the capital budgets for most businesses. This fact is compounded when discussing the needs of data intensive industries such as utilities. SaaS allows for the redistribution of those capital dollars that would otherwise be earmarked for IT infrastructure projects.
- Continual and Best in Class Technological Updates.
The SaaS model is well known for the seamless and best-in-class upgrades to the system you are working with. It is as simple as the next time you log on you are looking at a new features or user benefits that are often the result of a wide array of user feedback. This continual cycle of improvement builds a very robust system that simply makes life easier for all users.
- Service Level Agreements and Proactive Management of Service.
SaaS provides the ability to track many different metrics and key performance indicators ranging from accessibility to how quickly issues are resolved and also customer measurements that are very business specific. The bottom line being, these measurements help create a proactive environment for partnership management that leads to true efficiency and productivity.
Within the utilities industry there must be a strong focus on meeting looming technology requirements of the smart grid initiative, the energy bill, and carbon reporting; they must address issues of technology upgrade. But, with outside economic pressures an ever present reality, investments must be smart and cautious. Given these scenarios, SaaS provides a fantastic opportunity for innovation for the utilities, and the ability to meet and exceed capital expectations.