Navigant Research Blog

Utilities Poised to Join Enterprise Cloud Migration

Richelle Elberg — January 8, 2015

According to a study released by Infosys in November, more than 80% of large organizations are either using or planning to use cloud-based, mission-critical applications over the next 2 years.  Here at Navigant Research, we believe that trend is now extending to electric power utilities, as described in our white paper, Smart Grid: Ten Trends to Watch for 2015 and Beyond, also released in November.

Infosys and Forrester Consulting surveyed more than 300 technology managers and business decision-makers from the United States, Australia, and Europe.  Key findings included:

  • 77% of respondents are either using or planning to use Internet as a service (IaaS), platform as a service (PaaS), or software as a service (SaaS) for a wide range of business applications.
  • 66% of enterprises agree that they should prioritize developing a comprehensive cloud strategy for their IT infrastructure.
  • 70% of businesses want to work with a cloud implementation provider that offers a single point of accountability.
  • 66% of companies are either concerned or very concerned about the complexity involved in managing and governing a hybrid cloud environment.
  • 83% of the cloud adopters surveyed are struggling to consolidate their cloud services – from IaaS, PaaS, and SaaS and from public and private clouds.

The survey also found that agility – rather than cost savings – is now the dominant driver for cloud adoption.  The full report can be found here.

Smart Grid in the Cloud

In Navigant Research’s white paper, we observed that smart grid as a service (SGaaS) is now moving from hype cycle to real world product, driven by the growing complexity of smart grid applications, a dearth of qualified IT professionals at all but the largest utilities, and increasing understanding on the part of utility execs that they may benefit by sticking to their knitting (i.e., keeping the lights on).  Itron, General Electric, ABB, and AT&T have all moved decisively into the SGaaS space over the last 18 months.

From a vendor perspective, the SGaaS model is appealing because it generates recurring revenue, which can help smooth out the ups and downs of direct sales.  Navigant Research expects that the market for managed utility services will grow from $1.7 billion in 2014 to $11.7 billion in 2023.  (For additional analysis and detailed forecasts for the SGaaS market, see Navigant Research’s report, Smart Grid as a Service.)

Annual SGaaS Revenue by Category, World Markets: 2014-2023

(Source: Navigant Research)

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