To gain the greatest value from operations outsourcing, utilities need to identify which processes are best handled by a trusted partner, and which are best maintained in-house. It is also valuable to understand which AMI processes utilities prefer to outsource and which they would rather manage internally.
Landis+Gyr undertook research into understanding the value of Managed Services for their utility customers and how receptive utilities are to these solutions. The results provide key insights into the expectations, benefits and, last but not least, how utilities can go about selecting the right partner.
The research found that utilities in EMEA are generally more likely to outsource a wider scope of AMI processes than those in North America. In EMEA, utilities often use Metering as a Service (MaaS), which includes the daily AMI solution operations besides covering the Software as a Service (SaaS) model.
100% of EMEA customers indicated that they already, or would in future, purchase meter reading as a service, compared with 67% in North America. In EMEA, 75% of respondents said they would outsource reporting and data analytics, ranking it among the top processes to outsource.
61% of customers said they could benefit from outsourcing communication network management, since it requires specific expertise that not all utilities possess in-house, making it more efficient to outsource.
Overall the survey revealed that utilities tend to be most open to outsourcing processes that are outside of their core business. As one example, distribution network planning tends to be a process which most utilities would manage internally.
References and experience play the greatest role for EMEA utilities
The number one factor on which EMEA utilities base their evaluation, is references and experience, with 78% of respondents rating it most important. By choosing a vendor who already performs successfully in the service business, utilities reduce the risk involved in a long-term commitment to a supplier. References and previous experience create credibility and trust in a company’s service capabilities.
Utilities in EMEA rank a provider having a stable financial background as the second most important factor after references and experience, at 70%. Secure financial background is directly linked to business continuity, and utilities in EMEA see this as important to avoiding potential risks associated with a vendor’s financial instability during the long-term contract.
65% of EMEA utilities ranked having multi-vendor service capability third among the most important factors in choosing a Managed Services partner. It is of specific importance to these respondents that the service provider be able to deliver Managed Services for their own AMI and smart grid offerings as well as third-party technologies, and that this can be included in the scope of service.
EMEA customers participating in the survey typically outsource all AMI operations with MaaS contracts. While many of these utilities prefer to work with multiple technology suppliers, they want a single provider to manage services for their entire AMI infrastructure, independent of the technology providers they use.
Local presence is ranked fourth by utilities in EMEA, at 57%. This lower ranking may be attributable to utilities in EMEA being accustomed to working with representatives and providers that may not be locally based.
Being focused on the energy business is chosen among the top factors by only 39% of EMEA respondents. This indicates that those utilities see it as important, but not among the top deciding factors when choosing an AMI Managed Services provider. The importance of this factor could increase in future, as more companies from a variety of other industries enter the AMI service business.
In the EMEA market, there have already been examples of service companies from other industries extending their business into the energy sector, only to make a quick departure when it doesn’t prove to be profitable for them.
For now, with references and experience being of key importance, utilities have already built into their selection process criteria for confirming a provider’s focus on the energy business, and a reliable indicator that the provider knows the sector well, is deeply interested in the industry’s overall success, and is fully committed to energy excellence.
Only 26% of EMEA utilities selected the service partner providing its own technology for AMI/Smart Grids as a top factor. If the Service Level Agreement (SLA) is high and the service is reliable, whether it’s based on a supplier’s own technology or that of a third party, then this factor would understandably not play a significant role in Managed Services provider selection.
However, it merits consideration that service partners who provide their own technology for AMI/Smart Grids have more control over the technology and can react more quickly to new developments in the market, and more rapidly implement and deploy technological advancements within their service offerings.
In EMEA only 9% of customers rank having an established partner network as a key selection factor. This may be due to utilities in EMEA tending to focus on a provider’s core capabilities, as evidenced by their references and experience, assuming the service provider’s ability to establish their own partner network and to produce services reliably and efficiently will be reflected in this core assessment.
As we have seen, in terms of supplier selection, ranking of the evaluation criteria varies greatly between the markets. For customers in the EMEA region, factors relating to business continuity and supplier capabilities are of greatest importance; they put the most weight on references and experience as well as on having a stable financial background. These results may reflect the fact that in EMEA, utility customers participating in the survey typically purchase MaaS, where the services partner takes responsibility for daily AMI operations. With this level of outsourcing, utilities become more dependent on their chosen service provider and the risk of possible complications increases, resulting in a greater emphasis on factors that ensure business continuity.
Three benefits of Managed Services
Allows utilities to exploit data: Utilities surveyed said outsourcing AMI operations frees them up to focus on using their data instead of gathering it. Rather than spending time and resources on collecting smart metering data, the respondents said that they felt they are able to focus on analysing data and using the results to make more informed business decisions.
Enhances competencies and resources oversight: The use of Managed Services makes it easier for utilities to manage the competencies and resources in their AMI operations. Having an external partner ensures availability of up-to-date competencies and resources for AMI operations. A modular offering allows for individual service models that take into consideration individual utilities’ resources, culture, and constraints.
Cost predictability: Predicting costs is crucial to an organisation’s financial success. Utilities value tools that support accurate cost predictions and save resources. Managed Services contracts are based on a fixed fee for the selected service package and level, providing increased AMI operating
cost predictability, compared with the cost of running these operations in-house. ESI
About the company
Landis+Gyr offers industry-leading products, service and solutions.
Whatever challenges your company is facing, we’ve seen – and solved – them all before. We offer a customisable range of solutions from smart meters and load management software to analytics programmes and battery storage; everything you need to bring your grid into the future.
www.landisgyr.com/za | +27 12 645 3111