Business Strategy: Making the Case for SaaS in Utilities

Business Strategy: Making the Case for SaaS in Utilities

This IDC Energy Insights report builds on Perspective: Cloud and the Capex Conundrum in the Utility Industry (IDC Energy Insights #EI251305, September 2014) and explores the issues raised in the previous report in much deeper detail. IDC Energy Insights has built a financial model to demonstrate a capex versus opex treatment of a SaaS deployment of a typical customer information system (CIS) for a utility with 1 million customers to illustrate the difference in deployment approaches. Guidance is provided to utilities, regulators, and vendors that are evaluating the treatment of IT investments.

"The technology advancements of today are being developed in cloud applications first, not necessarily in on-premise applications," according to Jill Feblowitz, VP, IDC Energy Insights. "At a time when utilities need to evaluate and adopt current and emerging technologies more aggressively, regulators, shareholders, stakeholders, and ratepayers need to take a closer look at the true economic impact of the traditional capex/opex model to determine whether the numbers, in fact, make sense for all parties."

Please Note: Extended description available upon request.

IDC Energy Insights Opinion
In This Study
Situation Overview
The Approach
Cost Factors of On-Premise
Cost Factors of SaaS
On-Premise Versus Cloud: The TCO Comparison
Meeting the Business Objectives of the Utility
Strategic Agility
More Effective Use of Resources
Continuous Updates
Built for User Adoption
Improved Security
Time to Value
Future Outlook
Essential Guidance
Actions to Consider
Advice to Utilities
Advice to Regulators
Advice to Vendors
Learn More
Related Research
Appendix: On-Premise Assumptions and Inputs to IDC Energy Insights' Capex/Opex Model
Capital Expenses
Software Enterprise Licenses
Hardware (Server, Storage, and Other Associated Hardware)
External Implementation/Service Provider Resources
Internal Labor (IT and Database Administration)
Operating Expenses
IT Maintenance and Support
Software Application Maintenance
Software Application Enhancements
Regulatory Staff
Financial Expense Inputs
SaaS Implementation Costs
SaaS Subscription Fees
Table: Financial Analysis: On-Premise Versus SaaS
Table: Cost Assumptions: CIS On-Premise Implementation
Table: CIS On-Premise Five-Year Operating Cost Assumptions ($)
Figure: On-Premise CIS Implementation Cost Share
Figure: Five-Year Total Cost of Ownership of a CIS by Category: On-Premise Versus SaaS

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