January 18, 2018   |   Cloud-Based Solutions

Now is the Time for Cloud-Based Solutions in Utilities, and Here’s Why

The utility industry has been slow to embrace cloud-based solutions relative to other sectors. However, this does not necessarily mean the industry is a slow mover for not being an early adopter. With stringent regulations and complicated security and compliance standards, it makes sense for utility providers to test the proverbial waters before jumping head-first into cloud technology.

In fact, the utilities industry is in good company with other regulated sectors like healthcare and finance in taking time to fully vet cloud technology before embracing its benefits. Yet, cloud-based solutions provide the ready answers utilities need to vastly improve the customer experience and reduce costs while satisfying their stringent regulatory requirements.

Why is cloud technology the remedy to the issues utility companies face? Let’s take a look at the main obstacles for utility providers and discuss how cloud-based solutions can help.

Challenge #1: Growing Financial & Operational Pressures

The majority of utilities are struggling with how to replace aging infrastructures and assets. In fact, according to Deloitte, investor-owned utility capital spending reached $117 billion in 2016, which was mostly allocated to upgrading antiquated infrastructure and modernizing grids. With technology changing at a faster-than-ever pace, the product lifecycle of certain hardware is significantly limited, causing utility providers to invest more in software solutions. To increase efficiency, they are increasingly going digital, deploying technologies such as smart meters, digital productivity tools and back-office automation. One of the most impactful opportunities for cloud technology is the digitalization of the customer experience.

Cloud-based models empower utilities to dynamically manage new rates and programs, and achieve a predictable and flexible cost structure.

How Cloud Technology Can Help

Cloud-based solutions help accelerate digital transformation for utility companies by empowering them to offer web-based customer experience solutions that are both flexible and secure. In addition, cloud technology mitigates cost of hardware implementation and is less expensive than on premise solutions to help utility companies reduce total cost of ownership—shifting the investment profile from capital expenditures to operational.

Cloud-based solutions are inherently scalable and evolve with businesses as they grow for maximum cost effectiveness. With a cloud-based model, utilities are empowered to dynamically manage new rates and programs, and achieve a predictable and flexible cost structure. As updates are performed by the third party, this eliminates the burden on internal staff to ensure updates are made, freeing them up to focus on more mission-critical tasks.

Challenge #2: Rising Customer Demands

Today’s customers demand more than ever. As we live in an immediacy era, customers want real-time access to their information instantaneously. They also want to be spoken to in a manner that is transparent and highly personalized. This demand for personalization runs far deeper than customized subject lines. In fact, today’s utility customers want energy data insights that are tailored to their individual usage and will help them save money. In addition to real-time access and personalized communications, the utilities industry must serve a diverse range of customers spanning all generations. Each customer is unique and has his or her own preferences for engagement and payment. Many busy customers are looking for self service capabilities where they can access their accounts in an instant and perform tasks such as pay bills, review notifications, view due dates, explore payment history and choose their own communication preferences—all in one, centralized web-based experience. But with less than 30% of utilities executives confident about customer engagement capabilities, how can providers rise to the challenge?

How Cloud Technology Can Help

Cloud-based solutions enable utility companies to rapidly deploy new solutions, from eBilling to mobile, to accommodate their customers’ preferences and deliver a personalized Customer Experience (CX). Cloud technology empowers utilities to more quickly implement applications to create and send documents with the personalized messages and insights today’s customers demand, or offer self-service capabilities for customers to easily access the information they need when they need it—no matter what device they use.

Challenge #3: Stringent Regulatory Requirements

Utility companies are under strict regulations from organizations such as The North American Electric Reliability Corporation (NERC) and Federal Energy Regulatory Commission (FERC). Regulations are constantly changing and companies must ensure compliance. The consequences of non-compliance are steep. For some companies, metered services compliance failure can cost up to $1 million per day. In addition, as utilities process troves of personal customer information, they must ensure their billing and payments partner is SOC2 and PCI compliant to keep sensitive customer data safe.

How Cloud Technology Can Help

A cloud-based platform can actively use metrics to uphold and track compliance. The right solution provides the insights utility companies need to ensure they are abiding by regulations, thus eliminating the risk for steep non-compliance fines. In addition, partnering with a proven partner with a leading cloud-based solution ensures that they are responsible for overseeing that their solution is SOC2 and PCI complaint. This effectively places the onus on the cloud provider, not the utility company, to securely manage customer data at scale.

A recent survey indicated that 54% of regulatory staffers are considering shifting cloud investments from OPEX to CAPEX.

Shifting the Capital Bias

We’d be remiss without touching on the regulatory change afoot when it comes to shifting the utilities sector’s capital bias. Historically, utilities had to categorize cloud-based investments as Operating Expenses, thus removing the benefit of depreciation. In November 2016, however, the National Association of Regulatory Utility Commissioners (NARUS) created a non-binding resolution requesting state regulators restructure cloud regulations. Even more recently, a 2017 survey indicated that 54% of regulatory staffers are now considering shifting cloud investments from Operating to Capital expenses. This movement would further cement cloud technology’s role in the utilities space.
 

CXM at the Intersection of Customer Experience, Cost Control, Regulatory Compliance

As evidenced by the examples above, cloud-based Customer Experience Management (CXM) lies at the intersection of the need to transform the customer experience, as well as reduce costs and comply with strict regulatory demands. Cloud-based solutions give utility companies the power to elevate customer communications and engage with their valued customers in meaningful, insightful and personalized ways. A leading cloud-based billing and payments provider assumes the burden of PCI compliance so that your company can have peace of mind knowing standards are upheld across every channel you use. A proven provider also keeps up-to-date with regulatory demands to ensure processes are compliant.

Feel free to schedule a conversation with our team today to discuss how Level One can help you improve the customer experience, reduce costs and meet stringent regulatory requirements.