Written by Drew Millen, CTO, VertiGIS
Today everyone is migrating to the cloud. In fact, the cloud computing market is expected to grow to an estimated $1.44 trillion by 2029, with 94% of global companies using cloud computing in their operations. This growth is driven by factors such as increased digital transformation, the widespread use of mobile devices, and the modernisation of industrial solutions.
The financial merits and technical benefits of cloud computing and corresponding Software-as-a-Service (SaaS) delivery models have been demonstrated across most major industries. These include enhanced security, high availability, ease of use for the customer and lower administration costs. That said, the utility market tends to be slower in cloud adoption than other industries – especially when it comes to critical GIS solutions.
Utilities witnessing a sea-change in cloud adoption
This slow adoption is primarily down to two major issues: perceived security risks and cost implications.
Security will always be at the top of the priorities list for utilities. They have mission-critical business systems which cannot be subject to any unexpected downtime. However, in the last 12 months, we have witnessed a step-change, with every utility that we work with curious about the cloud.
A recent study by Cloud Security Alliance reported that 89% of IT and security professionals consider their cloud provider’s security controls to be “highly or somewhat effective,” highlighting the confidence in cloud vendors’ ability to manage security better than many internal IT teams. It makes perfect sense when you think about it; the entire business of cloud providers is dependent on providing a secure environment for their customers and sensitive information.
With a large customer base in utilities, we’re seeing heightened enthusiasm for the cloud amongst our customers, with the vast majority exploring whether it’s a good fit for their organisational requirements. This cloud curiosity is due to a few key factors.
What’s sparking cloud curiosity?
Firstly, the utilities sector is experiencing an inverse age pyramid, with many IT professionals approaching retirement, yet not being replaced with new staff. This is because fresh graduates aren’t motivated to maintain the legacy infrastructure utilities tend to rely upon. Consequently, this has led to a skills shortage, which is exacerbated when you start to lose resources. This makes it harder to provide good customer service.
Secondly, the cost of keeping up with evolving cyber threats and remaining compliant requires a significant investment. For in-house IT teams to keep abreast of all the changing regulations regularly is becoming increasingly expensive.
Thirdly, the evolving technology landscape is having a profound impact on how utilities run systems and deliver software to the organisation. With containers and Kubernetes, these environments won’t always be client-server or Windows-based – but it’s a quickly changing and dynamic environment, which is why utility companies are looking towards managed cloud providers.
The need to migrate systems and data
There are two other factors that are driving our customers to the cloud. Any customer who is using Esri’s ArcGIS Utility Network must undergo a system and data migration. This is where we are providing a solution to enable customers to migrate their data and systems to our cloud. This allows them to complete that migration without interrupting their day-to-day business operations. Additionally, we also enable customers to migrate with us in our cloud and, once complete, to continue to run their production systems in our environment.
Most of our customers have extremely large databases which need to be migrated and the hardware requirements to undertake this are often overlooked. Supplying this in the cloud can dramatically reduce unexpected costs that organisations might otherwise incur.
Furthermore, the cost of maintaining on-premises infrastructure is often underestimated. Today, providers of on-premises hardware and software have caught up with subscription models. As a result, what used to be a capital purchase is now a subscription service. Therefore, the argument for taking the cost out of a CAPEX budget versus OPEX is eroding, with the long-term high operational costs often exceeding the cost of a cloud alternative.
It’s your private cloud – you have the keys to it
For those utility customers that are cloud curious, the first temptation is to look at offloading infrastructure to a private cloud, with the cloud provider running their entire infrastructure in a cloud environment. However, the utility still has to maintain its infrastructure. Whilst on-premises architecture is becoming increasingly costly, private cloud is often 2-3x more expensive, particularly if the utility organisation undertakes a complete ‘lift and shift’.
Therefore, you have to be smart about how you utilise this environment; it is operationally different and will need new skills. Utilities should consider a private managed service, with their partner managing the subscription with the cloud provider, subsequently offering this as a SaaS solution in a dedicated environment.
This differs from a multi-tenant SaaS approach in that it is dedicated to that customer, instead of shared by multiple customers and delivers several advantages. Organisations can employ custom integrations, and custom code inside that cloud environment – something they wouldn’t do in a shared environment because code can sometimes cross boundaries. Additionally, they can choose their upgrade strategy and frequency of upgrades.
The importance of software integration pathways
We are certainly seeing the trend growing towards cloud among our customers. It is important to note that when we’re running GIS solutions in the cloud, this doesn’t mean that it can’t connect with other systems. We supply software integration pathways between our hosted GIS infrastructure and other systems – cloud to cloud or cloud to on-premises. It will be interesting to see how cloud adoption in the utilities sector continues to unfold.