Keeping pace with digital change can be a huge undertaking for utility companies, both big and small, especially in today’s rapidly evolving digital age. Continuous technology advancements mean even the newest technology will someday be obsolete, and investing in upgrading equipment can be costly, unexpected and hard to prioritize.
According to research by the McKinsey Global Institute, utilities in the United States have achieved only a moderate level of digitization—well below that of other industries. An increasing number of utility companies are making the digital transformation part of their IT strategy, shifting their IT focus to server consolidations and cloud-computing strategies to optimize services, reduce operating expenses, minimize operational risks and improve performance and customer service.
A Cost-Conscious Move Benefiting Companies and Customers
When migrating IT services to a data center or cloud environment, managed service providers (MSPs) have the physical components, infrastructure, network, virtualization, operating systems and security protections that may otherwise be unaffordable or unavailable to utility companies, especially smaller entities. A successful digital transformation through an MSP is one that benefits not only the company, but customers as well. By utilizing countless digital tools and services for a wide array of uses, digital solutions crafted with the customer in mind can improve accessibility and overall experience. This ranges from smart grids and smart meters to plant optimization and preventive maintenance.
Partnering with an MSP, which essentially leases data center space to the utility, means avoiding the upfront investment for hardware and can reduce licensing fees. This allows utility companies to stay in budget by avoiding the costs associated with replacing and maintaining aging or antiquated infrastructure; managing and monitoring technology in-house; and upgrading hardware and maintaining patching on an ongoing basis. Data center and cloud hosting solutions allow complete control over the operating environment; access to the latest technology and equipment; around the clock IT support; and the ability to better utilize staff to be more customer-oriented.
Security Solutions to Prevent Interruption of Services
Utilities take a risk when they manage a data center in-house. Company outages, service interruptions and loss of data can occur if infrastructure or equipment is impacted by a disaster or cyber security issue. Off-site data centers operated by MSPs are built to withstand risks that could lead to a business outage. In addition, MSPs work with utilities to implement security safeguards that can prevent and analyze threats due to the potentially sensitive nature of information stored in the cloud.
In order to take advantage of the benefits of digital transformation, utilities need to be aware of the risks they are willing to take to meet strategic objectives. Having a pre-defined risk posture that consists of anticipated risks, security policies, procedures and controls is important in minimizing threats and vulnerabilities. While security is an important factor in choosing the right MSP, utility companies often take the provider’s location, culture, pricing, customer support, response times and flexibility into account.
Aligning Company Strategies While Creating a Team Culture
When managing and maintaining operating systems in a cloud environment, utilities ultimately own the data and work with an MSP on where and how the data is stored. It is important for information security and risk management teams to be aligned with the objectives and security programs in place. Working together on an ongoing basis is key to identify and address concerns, implement added safeguards and ensure the technical teams that are managing the day-to-day administration understand the utility’s internal policies and procedures. Other popular strategy considerations include data control and configuration management.
In making the decision to outsource IT operations, utility company leaders, especially publicly owned, need to look at the long-term impact and decide for the business, employees, customers and future. A substantial amount of planning and research is conducted to prepare for a digital transformation. This means a lot of preparations, which include engaging employees and managing a potential internal culture shift. It is second nature to be hesitant of change. Educating employees on the process is crucial in ensuring they are comfortable with change. Finding an MSP that is flexible, communicative and accommodating to business needs is a big separator in the IT industry.
