Meter Data Management: Important but too Expensive?

Hosted MDM solutions provide the benefits without the high cost.

Savvy executives know meter data management (MDM) is an effective way to manage, process and distribute usage information collected by advanced metering infrastructure (AMI) systems. MDM is a critical enabler that helps utilities deliver demand response programs ranging from time-based rates to various load control solutions. MDM also enables customers to learn about their energy use, encourages enrollment in rate programs, improves customer communications, and increases overall customer satisfaction.

There are many other significant operational benefits made possible by MDM but the typical enterprise-class MDM system is expensive, obliging a utility to make a major investment in information technology infrastructure. That kind of financial commitment can discourage some utilities from implementing MDM. That’s where hosted MDM solutions come in. A hosted MDM solution may provide a lower cost, reduced-risk alternative to deploying these enterprise-class systems on-premise–part of the growing trend of companies buying Software-as-a-Service, or SaaS.

Minimal up-front investment

Hosted MDM systems are significantly less expensive to implement than enterprise solutions, in part because the utility pays no up-front licensing costs or on-going maintenance fees for the software. When a utility deploys a hosted MDM solution, it buys the right to use the application for a certain number of meters serviced by the utility. The approach allows the utility to use the software without paying the total costs associated with it.

The host company also maintains the powerful hardware, network infrastructure, and security solutions necessary to effectively employ MDM. Many enterprises could not afford to maintain this type of infrastructure on their own. In addition, hosted systems can be up and running in a fraction of the time it takes to deploy an enterprise MDM solution. Typically, the hosted solution can be implemented within a few months.

The host company can amortize the costs of maintaining the MDM solution across several different utilities, providing for reduced MDM administration costs while still offering all the features and functions of an enterprise system. Infrastructure and software expenses are covered by a single yearly service fee. Plus, the fees associated with hosted MDM can be budgeted against the utility’s recurring revenue stream. MDM costs go up only when the number of installed meters increases.

Not only do MDM solutions offer lower up-front and maintenance costs, they are extremely flexible and easier to implement because the host company has done the hard work of setting up the software. For example, hosted MDM solutions can be preconfigured to pull data in from any AMI system. They can be used to aggregate and analyze data from existing engineering and analysis, outage management, and customer information systems, ultimately processing this data so it can be presented to utility employees and their customers.

Simplified staffing

The need for in-house IT staff is minimized with a hosted MDM solution. Most IT staffs today are stretched thin, and hosted MDM frees up internal IT resources to focus on systems necessary to operate the utility. Utility staff also benefit from the host company’s technical expertise and understanding about MDM.

MDM systems provide reports that can help customers understand their ongoing usage patterns.
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SaaS MDM systems reduce the burden of maintaining in-house IT resources and eliminate the need for end customers to purchase and install applications that help them understand their usage details and what they can do to better manage their consumption. MDM applications are evolving rapidly, and having a service provider responsible for upgrades allows utilities to get the new features quickly without the risks associated with managing the upgrade process.

Secure data management

Data storage and management are also improved when utility customers employ hosted MDM. The efficient management of a mission-critical usage repository requires specialized database administration skills, which the host can allocate to support multiple utilities. A hosted solution also ensures the usage data and associated utility information is partitioned off separately from the data of other utilities to maintain security. Securing each utility’s data is so important that some utilities employ third-party auditors to ensure their systems are properly protected.

MDM system billing summaries can help customers compare usage data from month to month and estimate how lifestyle changes could affect usage.
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Hosting providers also maintain redundant, failover systems for backup that guarantee data reliability and continuity in case the primary repository fails. Installing a secure and redundant repository for metering data is expensive and requires special expertise. With hosted MDM services, utilities do not have to worry about the costs of systems for data storage, or long-term support and maintenance of these systems.

Testing the waters

Although hosted solutions are designed for utility-wide MDM, these systems are often successfully deployed as interim solutions or in pilots. For example, pilot programs are especially useful in testing the direct benefits of new time-based rate structures to the utility and its individual customers. Among other things, these programs involve promoting and enrolling customers in the program, helping them effectively participate and save money, and managing the billing process.

In the pricing arena, for example, pilot implementations of hosted MDM can help utilities understand how new rate programs will affect customers. In addition, they can test new communication channels that will educate customers on rate options. For example, rate calculators can visually illustrate the annual savings for a customer who switches from one rate plan to another.

Pilot programs conducted on hosted systems can improve communications about the value of a utility’s services, including providing personalized information that will help customers reduce bills. Pilots also offer utilities invaluable information about customer preferences.

An SaaS-based pilot program for Ameren’s Illinois residential customers is proving the efficacy of real-time pricing as a way to induce reductions in energy consumption. The program allows utility customers to modify energy consumption based on hourly prices for electricity. Previously, customers’ bills were based on a traditional flat rate, which in many cases led to some customers paying more annually for their energy than those willing to make basic adjustments in their usage habits. The Ameren solution, which is from Aclara Software, presents critical usage information to customers, allowing them to choose the best times to use electricity.

Preparing for hosted MDM

To successfully implement hosted MDM, it is important for a utility to initiate functions in the MDM system that will offer the most benefit. To do this successfully requires that the utility perform a gap analysis on the standard options provided by the host provider to determine to what extent the product can be used out-of-the-box.

A standard hosted offering is likely to be successful when the primary business drivers are:

  • Data cleansing, including validation, editing and estimation (VEE)
  • Billing determinant calculations required to support time-based rates
  • Online usage presentation for customers
  • Transformer load analysis

When business requirements do not match the out-of-box capabilities of the hosted offering, in many cases special logic and workflows can be configured to address the specific needs of a utility. In cases where new features must be developed, it may make sense to consider implementing the MDM solution on-premise rather than employing a hosted system.

Overall, hosted systems offer a way to manage meter data without making the financial and time commitment required by an on-premise MDM solution. A hosted system can be especially effective when used to pilot or test new billing and pricing programs. With a hosted system, utilities can validate the benefits of an MDM without making long-term resource and financial commitments required to deploy an on-premise system.


Dave Bonnett is vice president of product management for Aclara Software, (formerly Nexus Energy Software) a Wellesley, Mass., software firm specializing in solutions that help utilities and their customers realize the full benefits of their AMI systems. Contact him at

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