Utilities: Is the IT Outlook Cloudy?


Cloud offers utilities many benefits, but it’s not a one-size-fits-all solution. Each is associated with significant pros and cons that depend on the application, operations, service-level agreements and security and contractual requirements. To determine the right cloud solution or even whether a cloud solution is appropriate, an organization must conduct a thorough analysis of the requirements. And analyzing the right information to choose the best applications requires close collaboration between operations and information technology.

Too frequently, the information technology organization hasn’t been viewed as a strategic enabler. Often the perception has been that it’s traditionally expensive and slow to react. The cloud helps bridge the gap between the business and information technology to make the latter more agile and responsive by expediting the process of provisioning resources. With cloud offerings, organizations are positioned to react faster—scaling up or down as demand fluctuates—and responding to business and regulatory changes more quickly.

In addition, cloud-based solutions ensure that utilities pay only for what they use, eliminating the costs associated with resource overprovisioning.


There are options for the use of cloud technology that enable greater financial flexibility than what utilities have had when procuring information technology in the past. Regardless of the cloud option or model selected, a key financial benefit of using cloud is the ability to align information technology costs to the consumption of information technology resources. It’s no longer necessary to overinvest in capacity that is not always needed.

These types of pricing mechanisms are particularly beneficial. From a development phase perspective, many utilities find it advantageous to put their development and test environment in the cloud. This permits rapid deployment of the environment and the ability to ramp down the use and cost of that environment once the heavy development and test activities are completed. Once in production, the development and test cloud environment still can be used for upgrades or as a disaster recovery site.

During a smart meter rollout as meters are deployed and more production resources are consumed, the associated information technology costs can increase with the number of meters deployed. With traditional implementations, the full information technology resource capacity requires an upfront investment and forces utilities to pay for excess capacity until the meter rollout catches up with the targeted capacity. These financial advantages also are applicable for other large application or conversion and migration projects.

Although cloud models can be used to convert capital expenses into predictable operating expenses, other options for cloud can enable utilities to retain information technology asset ownership and therefore retain a portion of the capital investment. In addition, public cloud or private cloud options in a leveraged third-party data center can avoid the fixed facility costs for space, power and water or cutting-edge equipment to protect against theft or natural disasters.


The cloud also prepares utilities to acquire or develop and deliver business functionality through software and services to their markets, either internal or external. For internally developed software, the ability to use infrastructure-as-a-service models, which leverage cloud-based pre-established infrastructure, can reduce the time required to set up the development and test and production environments, shortening the overall development life cycle duration.

Utilities also can benefit from cloud-based software-as-a-service (SaaS) models in which a cloud provider provides the requisite infrastructure and the desired application as a service. By leveraging SaaS, the time to onboard a new application is reduced substantially. Also, there are advantages related to software licensing. With these SaaS models, the utility does not need to procure individual software licenses but pays for the application use on a pay-per-user basis.


One of the most notable benefits to cloud computing involves availability. The consumerization of information technology has led consumers to expect to get online when they want to, where they want to and via their device of preference, and these expectations carry over to the business world, as well. Fortunately, because the cloud can be accessed anywhere there’s Web connectivity, availability exceeds that of many dedicated data centers. And because cloud resources can be located outside the service territory, they have the potential to provide greater service continuity in situations such as localized natural disasters such as hurricanes or tornadoes.


Utilities have options for ensuring the security of sensitive data in the cloud, in addition to standard firewalls, encryption and role-based permissions. Cloud technology supports a wide range of public-to-private security options, with the most secure configurations’ satisfying U.S. government, homeland security and military security requirements.

Security in the cloud can exceed that available in traditional data centers for several reasons. With public clouds, the cloud service providers can invest heavily in security because of the scale and nature of their business. Cloud systems are automated, especially around the provisioning and deprovisioning of cloud instances, and security is built into these automated steps to ensure consistent data protection for each client. Advances in virtualization technology mean that virtual firewalls and virtual Internet Protocols can provide powerful protection at the virtual machine level rather than just the physical server level. Many cloud providers also support the encryption of sensitive data by providing the encryption service and managing the encryption keys for the client or by allowing the client to encrypt the data itself and manage its own keys as it stores sensitive data.


Finally, no discussion surrounding the benefits of cloud would be complete without pointing out that the capability to provision resources efficiently and integrate new capabilities will prove mission-critical for utility providers. As smart grid adoption grows, it leads to a data explosion that likely will present substantial challenges and expense for on-premise data centers. Because the cloud lets enterprises engage resources and ramp them up or dial them down to accommodate fluctuations in demand, it’s the perfect model to handle the volumes of data generated by frequent smart meter readings.

Cloud computing often is heralded as the next big thing, but it’s critical to apply strategic thinking before embracing the cloud platform. Only when information technology and the business collaborate closely to determine which applications and services make the most sense to migrate to the cloud will utilities reap the full potential of the cloud. Flexible financing, reduced total cost of ownership, speed to market, improved service, greater security and a future-proof solution positions the business for the next evolution of the utilities industry.

Anthony Erickson is general manager of the energy industry group for HP Enterprise Services. He determines how to deliver value to energy clients through the development and delivery of industry-specific business solutions built on HP’s strategic capabilities, including security, cloud and big data. Visit http://hp.com/go/utilities for more information.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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