Managed services: more smart grid, less smart grid risk

Managed services: more smart grid, less smart grid risk

Making the jump to smart grid can be overwhelming. Its not just about managing new digital assets in the field; its about everything that comes with them:

  • Field communications systems
  • Applications, skills and application lifecycles
  • Data models and system integration
  • Hiring, compensating, retaining and developing talent
  • Business process re-engineering
  • Challenges in cyber-security and data privacy
  • Field installation processes and standards
  • Increasing demands for IT operational excellence
  • Communications with consumers

Success throughout the design, build and operations stages will challenge any organizations appetite for risk. Utility leadership may realize that having enough internal expertise to successfully implement a comprehensive smart grid program takes more effort than expected, and taking responsibility for everything is distracting them from their core mission. Utilities want to make progress, evolving their service offerings and improving safety and reliability, while managing the cost of service. But utilities and their stakeholders want to proceed prudently with a clear sense of benefits and ROI, along with a clear view of costs and risks.

This creates the conundrum of grid modernization:

  • Do nothing and fall behind peers and competitors
  • Move forward at the risk of overwhelming your organization while under delivering benefits and accepting too much riskwhich is bound to hit the bottom line

However, there are alternatives that reduce risk and total cost of ownership while increasing the business, operational and engineering value driven by this change. Some leading utilities have established operational partnerships through smart grid managed services to reduce risk, transfer new technology scope to the experts, and invest in fixed-price capabilities. These utilities are leveraging investments in modernization to drive results that benefit their core mission instead of scattering their staffs focus across a broad range of technological specialties.

What are smart grid managed services?

Smart grid managed services are about more than simple data center hosting and software as a service (SaaS). SaaS generally refers to cloud-based applications that are managed by vendors or other third parties. Software updates and other software/IT operational support may be provided, but utilities must still apply, integrate and operate the software platforms. Service levels and performance commitments for SaaS tend to be limited to IT dimensions and cover server and application availability, software patching and maintenance windows.

Managed services build on the concept of SaaS, but provide for the full operational execution of systems like AMI, MDM and their associated setup, integration, business process alignment, daily operations and system management.

Managed service performance commitments focus on core business objectives and operational outcomes such as meter data collection completeness, two-way command execution availability, and billing-data quality and timeliness. They focus on strong business, operation and engineering results, not on IT and raw technical metrics.

How do smart grid managed services help?

Smart grid managed services can help utilities manage the core risks of smart grid investment.

Fixed-price. The unknown or unforeseen costs, not just in the design and build stages, but in the cost of operations, have kept many smart grid projects from achieving their intended benefits. A managed service provides fixed costs and a guaranteed outcome backed by Service Level Agreements (SLA) and thus, enables modernization instead of uncertainty.

Risk transfer. Working with new technologies, even if they are simply new to the utility, can bring new risks and frustrations. Managed services transfer much of the risk associated with technology gaps to the managed service partners through business and engineering SLAs. If integration is harder than expected, or radio coverage is not as strong as hoped, the gap is borne by the vendor, not the utility.

Rapid benefits realization. Traditional smart grid projects spend early and take long periods of time to implement and even longer to recover the investment. Managed services allow utilities to implement significantly pre-integrated solutions, allowing for the benefits to start accruing rapidly. This improves NPV and ROI.

Utility focus. Smart grid requires enabling infrastructure and business processes to adapt and change, sometimes swiftly. Asking the internal organization to change broadly and swiftly can be a challenge to any managed services enable utilities to keep focus on their core business throughout the design, build and operations stages.

Source: intelligentutility

Smart Grid Bulletin April 2018

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