A New Era for UtilitiesCloud computing changes the game

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ContentsUtilities: An industry facing pervasive and profound change 3

Cloud computing: A quick primer 7

How cloud can change the game for utilities 8

Factor 1: Capital-intensive and cost-constrained– 9 Cloud reduces costs and lowers capital expenditure

Targeted SaaS offerings are launched for utilities 10

Early moves into the cloud: SaaS and virtualization 11

Factor 2: Uncertain and marked by change– 12 Cloud is flexible and agile, with reduced sunk investment

Enabling investment in new technologies 12

Managing regulatory impacts 13

Factor 3: Data-rich, social and analytics-enabled– 14 Cloud brings scalability and leading capabilities

Vindicating cloud in smart grid 14

Accenture Technology Labs: Testing the benefits of cloud analytics in 15 an advanced metering infrastructure (AMI) environment

Massive opportunities in social media 16

The social media-enabled utility becomes reality 16

Factor 4: Collaborative and suffused with M&A– 18 Cloud is readily transferable, with transparent costs

Starting your cloud journey 20Using cloud’s unique characteristics as a source of 21 competitive advantage

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Utilities: An industry facing pervasive and profound changeToday, utilities worldwide are navigating through significant change across their operations and external environment— bringing unprecedented challenges and opportunities.

The pervasive changes now under way are being driven by four defining factors of the current utility industry context. Each of these factors brings profound impacts across the utilities value chain—from Generation to Transmission and Distribution, and from Trading and Risk Management to Retail.

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• InGeneration, utilities are facing an urgent need to replace aging assets and decarbonize the fleet, using capital-intensive, low-carbon technologies. These projects involve a high degree of construction risk and a time lag on positive cash flows.

• InT&D, utilities need to connect new generation sources—including offshore networks—and reinforce their network infrastructure to handle increased power flows sufficient to meet rising demand. Yet cost regulation is continuing to tighten, with multiple regulatory settlements requiring progressively more transformational cost reduction. Within Transmission, interconnection is a key priority, while in Distribution there is a focus on investment in low-voltage (LV) visibility.

• InTrading and Risk Management, risk capital is reflecting increased market volatility and the rising complexity of business-to-business (B2B) contracts. At the same time, rising energy prices are driving greater scrutiny by the public, policymakers and regulators of utilities’ cost base and margins, including the relationship to the wholesale costs of energy.

•Andin Retail, costs are under intensifying pressure due to mandated competition in the smart metering arena, including new entrants with deep retail capabilities and structural cost advantages, and the regulatory environment. Again, rising energy prices are intensifying external scrutiny of costs and pricing.

Across the entire value chain, utilities have to manage regulatory intervention at multiple levels—local, national and supra-national. They are also facing the displacement of centralized generation by distributed generation and the growth of distributed energy resources (DER), including storage, demand response, dispatchable/controllable generation and voltage control as an ancillary service. Other trends include long-run growth in loads and the displacement of gas with electrification (related to energy efficiency), and changing load shapes, reflected in a move toward granular settlement.

• InGeneration, there are major uncertainties around natural gas, given unconventional sources and its role as a transition fuel. The future of nuclear also is unclear. Other areas where clarity is lacking include the levels of renewable subsidy and carbon price, and the issue of renewable generation grid parity for different technologies.

• InT&D, change and uncertainty surround the emergence of new, low-carbon power flows, the competition for new connections, and many aspects of smart grid—including regulatory support, and technology evolution and cost.

• InTrading and Risk Management, utilities are facing fundamental changes in energy markets—e.g., liberalization versus market retreat—together with rising market integration and physical interconnection. The carbon market is evolving, and markets for DER are emerging. Uncertainty is being further increased by market volatility and a lack of visibility over future spreads, while B2B risk management products and services are developing rapidly.

•AndinRetail, end customers are demanding new products and services, fueling service convergence and the entry of new market competitors. In addition, regulators are looking increasingly to drive greater energy efficiency.

Factor 1 Capital-intensive and cost-constrained

Factor 2 Uncertain and riven with change

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For utilities, the ability to manage and exploit data at every stage of the value chain is becoming ever more important. The drivers include increased regulatory reporting and compliance requirements, and the advent of the social media-enabled corporation. In particular, social media is driving internal and external online collaboration, innovation through techniques such as crowdsourcing, and more active and sophisticated stakeholder management.

• InGeneration and T&D, utilities are driving the simultaneous integration of information technology (IT) and operational technology (OT), and are focused on distributed intelligence, and temporal and spacial visualization and decision support. Further imperatives include implementing condition-based asset management and predictive maintenance, alongside field force optimization and effective management of increasingly complex contracts. The data-rich, social world brings specific impacts in each segment of the value chain.

- Generation—these include cross-market fleet management and maintenance.

- Transmission—there is the need to manage interconnection between systems and markets.

- Distribution: there are multiple impacts, such as the advent of smart meter-led visibility of the LV network, active network management (including new forms of control and protection), and new developments around the management of major outage events. The growing application of social media is a further consideration.

•AcrossbothTrading and Risk Management and Retail, utilities are gaining a more granular and end-to-end view of customer/segment lifetime value —both wholesale and retail—and are embedding this into their strategic and operational decision making.

- In Trading and Risk Management specifically, the data-rich environment is ushering in new capabilities, including integrated risk-adjusted gross margin management, customer-level risk premiums, and enhanced demand forecasting and market modeling.

- And in Retail, consumers’ rapid uptake of mobile and social networking is driving utilities to adopt multi-channel contact strategies encompassing social media—enhanced and supported by consumption presentment and analytics, enhanced segmentation and treatments, and increasing product and service differentiation.

Utilities are reshaping their portfolios for the new environment throughout the value chain by divesting noncore assets and businesses, and engaging in increasing collaboration with other players within and beyond the utilities industry.

• InGeneration and T&D, utilities’ strategies include the subcontracting of build and maintenance activities to third parties, and forging joint ventures and alliance partnerships for new and existing assets.

• InTrading and Risk Management, utilities are moving into the provision of trading and risk management services to third parties.

•AndinRetail, utilities are entering smart metering and energy analytics managed services, driving alliances and acquisitions for energy services, and moving into white labeling of offerings for branding by other types of providers.

Factor 3Data-rich, social and analytics-enabled

Factor 4 Collaborative and suffused with M&A

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Toward the future…

As these four factors play out over the coming years, utilities will become data-rich businesses that excel in collecting, interpreting and acting on information.

In other words, utilities will stand or fall by their ability to unleash the full value of data—be this through smarter use of social media with business customers and consumers; more effective collaboration with joint-venture partners; or faster and more responsive management of T&D networks. Those utilities that successfully exploit data can achieve a combination of agility, speed, and deep business and customer insight—potentially changing the game for themselves and their competitors.

…by harnessing the power of cloud

How can utilities act today to establish the basis for this future high performance? The answer is already here, and is becoming clear not only in utilities, but also in many other industries—the power of cloud computing.

Most executives in utilities know the core concepts of cloud computing, which are summarized on page 7. But while the majority of utilities grasp the principles of cloud, few have fully assessed its potential benefits for their business. Even fewer have started to adopt it in key areas.

Mapping the journey ahead—addressing the industry’s defining factors

In Accenture’s view, the current gradual, yet steady progress of cloud adoption will accelerate dramatically over the coming years as utilities become energized and invigorated by the benefits cloud can deliver.

As the momentum of cloud adoption grows, those players that move earliest to assess and seize the cloud opportunity also will likely seize the initiative from their competitors, by adjusting faster and more fully to the imperatives of the new environment.

Cloud computing is a proven model for providing and sourcing IT hardware and software services on a pay-per-use basis using Internet technologies. Cloud services are highly configurable, adaptable and scalable, and require less up-front investment and ongoing operating expenditure than traditional IT models.

Clouds generally take one of four forms (or a combination of these forms): private, public, hybrid and community. Private clouds are dedicated to a single company for private use. They can either be built within a company’s own data center, or located off premise and provided by an external third party to deliver virtualized application, infrastructure and communications services for internal business users. Public clouds are owned and provided by external third parties over a network. Hybrid clouds blend the benefits of public and private clouds by enabling a company to retain confidential information in a private cloud, while providing access to the wider choice of applications available in public clouds. Community clouds are collaborative resources shared between a number of organizations with common interests, perhaps in the same industry, with the costs spread across the users. Community clouds can be hosted internally or by external third parties.

All four forms of cloud can provide on demand computing at one or more of three levels.

•Attheinfrastructure level, companies use infrastructure-as-a-service, or IaaS, offerings to source raw computing resources, processing power, network bandwidth and storage on an on-demand basis. IaaS is generally an organization’s first step into the cloud.

•Attheplatform level, cloud-based platform-as-a-service, or PaaS, offerings provide companies an environment that supports rapid evolution for key business application development that needs continuous change, helping to foster ongoing business innovation while controlling costs.

•Atthe application level, cloud-based applications—generally known as software-as-a-service or SaaS—are available via standard browsers, supporting device independence and anywhere access. Some SaaS offerings, such as the customer relationship management cloud on salesforce.com, have achieved widespread take-up across many industries. Both SaaS and PaaS have established themselves as disruptive ways of delivering new functionality quickly.

•Atthebusiness process level, cloud-based solutions known as business process outsourcing platform-as-a-service (BPaas) or platform-based business process outsourcing (BPO) offer an Internet-enabled, externally-provisioned service for managing an entire business process. This differs from application clouds in that BPaaS provides end-to-end process support, covering not just software but also people processes, such as contact centers.

Cloud computing: A quick primer

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How cloud can change the game for utilitiesAs Figure 1 illustrates, the inherent characteristics of cloud computing that directly address the four factors are driving forces for industry change—thus providing utilities with an effective platform to support future high performance and growth. These factors are why we believe cloud will fundamentally change the game for utilities in the next few years.

Within each of the four defining factors shown in Figure 1, there are specific near-term opportunities to be seized in utilities’ migration to cloud. We will highlight these opportunities alongside our analysis of cloud’s longer- term impacts.

Defining factors Cloud characteristics

Capital-intensive and cost-constrained

Uncertain and riven with change

Data-rich, social and analytics-enabled

Collaborative and suffused with M&A

Reduced cost and avoid capital expenditures

Flexible and agile with reduced sunk investment

Gives access to scalability and leading capabilities

Readily transferable with transparent costs

• Benefit from economies of scale that reduce total cost of ownership (TCO)• Move capital expenditure (capex) to operational expenditure (opex)

• Can trial without material sunk investment • Changes can be implemented faster and cheaper

• Extremely scalable and able to handle volatile levels of demand• Able to access the latest technology and innovations including: - Big data management and analytics - Social media (internal for employees, and external for customers and other stakeholders)

• Makes it easier to separate or bring in-house• Costs are transparent−supporting contracting, joint venture and alliance arrangements

Figure 1. How cloud’s fundamental characteristics address the four defining factors of the current industry context.

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Utilities are facing a need for heavy investment in priorities, such as replacing aging assets, decarbonizing their generation, expanding their network capacities and implementing mandated smart metering programs. Cloud changes the game by offering utilities economies of scale that reduce total cost of ownership (TCO)—while also enabling them to shift their investment profile away from capital expenditure and toward operational expenditure.

These attributes of cloud bring particularly significant benefits for the management and delivery of utilities’ current capital programs. By their nature, many of these programs—smart meter deployments, new generation build, offshore transmission networks and so on—have sharp peaks and troughs. In many cases, this fluctuating pattern drives utilities either to build temporary capabilities or to subcontract to third parties.

Under either of these models, cloud computing can provide a cost-effective and flexible solution: first, by enabling utilities to scale faster and avoid significant investment in a temporary capability, such as scheduling and mobility solutions for the meter installation workforce; and second, by allowing them to transition to a subcontractor in an efficient and cost- effective manner, while keeping the option of bringing the activity back in-house with minimal disruption, if required. Also, within the capital expenditures domain, cloud services can enable utilities to focus their ongoing capital expenditure on the areas offering the best returns—primarily those in their core business capabilities and operations—as opposed to investing in IT, which is fundamentally an enabler for these capabilities.

Furthermore, by shifting the emphasis from fixed to variable costs through pay-per-use pricing, cloud helps utilities align their costs more closely with business need and revenues, as well as supporting continuous cost improvement over time through greater automation and flexibility. Cloud’s effectively infinite processing power and high scalability can also help utilities reduce distribution costs by facilitating capabilities, including automated meter reading and enhanced outage management.

Factor 1: Capital-intensive and cost-constrainedCloud reduces costs and lowers capital expenditure

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Targeted SaaS offerings are launched for utilitiesSaaS solutions specifically designed to meet the needs of utilities now cover areas including:

•Integratedutilitybilling—suchasUtilibill

•Smartgridmeterdatamanagement—such as OATI webMeter

•Consumerengagementandenergymanagement—such as Opower

•Energyusagemanagementforutilities and customers—such as Aclara Energy Analyses

•Graphicaldatavisualizationandmodeling—such as Autodesk® Buzzsaw®

•Geographicinformationsystems—such as Esri ArcGIS

•End-to-endconsumerengagementsupport—such as Tendril ConnectTM.

Legacy integration will be keyWhile adoption of cloud-based, as-a-service offerings starts to rise among utilities, it is clear that much of a utility’s systems landscape will remain private for a long time to come, and often operated in-house. Utilities will likely test cloud-based solutions in areas outside their core billing processes before considering moving these critical applications to the cloud. So, an important step in a utility’s journey to cloud enablement will be the integration of their heritage legacy applications with those provisioned from the cloud. SaaS applications are also available to support the integration between other SaaS offerings and legacy systems.

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Early moves into the cloud: SaaS and virtualizationWith growing numbers of utilities starting to consider and adopt cloud solutions, major cross-industry SaaS providers, such as salesforce.com, Workday, NetSuite and Microsoft, are gaining traction in the industry. At the same time, a number of utility-specific SaaS offerings have been launched—and more providers and solutions are coming to market all the time. Available via Web browsers on a pay-per-use basis, these industry-tailored services are helping to pioneer utilities’ cloud transformation. Page 10 highlights some examples.

Many utilities already have recognized the benefits of cloud through IT infrastructure virtualization, effectively creating private clouds offering IaaS (see below for information on KEPCO). According to IDC Energy Insights’ latest annual survey of utilities in Western Europe, more than 50 percent of utilities are currently investing in server/storage virtualization and IP telephony technologies, making them the most popular technologies for utilities.1

Virtualizing IT infrastructure can be a stepping stone to building out the technology infrastructure that enables the transition to cloud. As the sidebar on KEPCO highlights, moving infrastructure to the cloud and leveraging SaaS solutions are among the biggest near-term opportunities that cloud offers to utilities.

1 ©Copyright IDC. Source: CIOs Priorities: New Technologies — Western European Utilities Survey 2011. By Roberta Bigliani, et. al. Doc# EIOS58T, December 2011.2 “KEPCO First to Adopt Cloud Computing Among State-run Enterprises,” by Jang Ji-young, September 1, 2010. http://english.etnews.com/

In the drive to cut TCO and avoid capital expenditure, early cloud opportunities across the value chain include moving toward cloud-enabled infrastructure and migrating to SaaS solutions when replacing functional applications.

In retail, there is an early opportunity to move business-to-business customer relationship management (CRM) to a cloud-based platform.

After a successful pilot, the Korea Electric Power Corporation (KEPCO) has implemented virtual desktops accessed through a thin client with network access, enabling users to create customized virtual PCs on the network server. A KEPCO official announced: “It has been proven through the three-month tear down and redesign process—which we conducted before the actual testing of cloud computing—that it is highly efficient in terms of reducing cost…Once this test proves cloud computing as a viable solution, KEPCO plans to convert the thousands of its PCs to virtual settings.”2

Leveraging cloud to reduce TCO and capital expenditure

KEPCO virtualizes to operate private cloud

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Cloud-based PaaS environments enable utilities to rapidly and flexibly test, pilot and trial new offerings and capabilities across their business, without significant up-front investment. This combination of agility and lower investment expands the range of experimentation and innovation, enabling winning ideas to be scaled up quickly for launch, while those that fail can be more simply tested and rejected. Also, cloud platforms mean system changes and refinements can be implemented faster and at a reduced cost.

Pervasive industry change and uncertainty make it vital for utilities to use small-scale trialing—sometimes outside core systems and with collaborative partners— to test out new offerings and innovations at low cost and risk, with the capability to scale them up at speed, if appropriate. Cloud computing provides an effective platform to deliver this capability. Instances might include using cloud-based CRM for a step-out energy services business offering solar photovoltaic (PV) installation and home energy care.

The ability to trial innovations quickly and at a reduced cost is especially vital in the industry’s areas of greatest uncertainty. For example, utilities’ ability to justify smart grid investments in T&D currently is limited by uncertainty over key factors, such as the rate of adoption of electric vehicles, heat pumps and distribution-connected generation. With regulators unwilling to approve the funding of large-scale speculative or pre-emptive investments in future-ready IT, cloud provides a reduced-cost option, enabling scaling at pace if a certain scenario emerges and the business case shifts rapidly in favor of smart grid solutions (versus traditional reinforcement).

Enabling investment in new technologiesAn additional source of uncertainty is that many new solutions enabled by technologies, such as complex event processing, advanced analytics and decision support, and IT/OT integration, are not fully proven. The same issue applies with solutions, such as active network management, dynamic asset ratings and active voltage management, where the lack of certainty of return is hampering investment.

As in other areas of the business, cloud computing can provide utilities with the means to cost-effectively trial and develop these technologies. In some cases, regulators are providing specific funding for smart grid trials, such as the United Kingdom, which has made available £500 million (approximately $780 million) through a low carbon networks fund.3 Again, cloud computing could fit the bill for optimizing the returns from such investments.

Factor 2: Uncertain and marked by changeCloud is flexible and agile, with reduced sunk investment

3 Source: “Ofgem awards £62 Million across four projects in first low carbon networks fund competition,” Ofgem press release, 28 November 2010, www.ofgem.gov.uk/Media/PressRel/Documents1/LCN%20Fund%20Press%20Release%20FINAL.pdf

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In Trading and Risk Management, utilities can enable faster and more cost-efficient development of new offerings and capabilities by moving custom applications to a PaaS model.

In Retail, there is an immediate opportunity to build a nascent home care business in the cloud (including CRM, billing and field force management) to reduce sunk investment in an uncertain business environment.

State Grid Corporation of China: Integrated data center consolidation and virtualizationState Grid Corporation of China has decided to migrate from a traditional and multiprovincial data center infrastructure to consolidation and virtualization solutions, in order to meet its business transformation and IT needs, and its future cloud computing requirements. The potential benefits include increased hardware utilization and flexibility, lower operating and maintenance costs, and simpler back-up and disaster recovery processes. This solution will expand the infrastructure bandwidth of State Grid’s existing IT infrastructure, allowing its systems to become compatible with future cloud computing implementations.4

Leveraging cloud to gain agility and reduce sunk investment

4 “China Intelligence Signs Contracts with the State Grid Corporation of China.” PR Newswire. January 5, 2012. http://en.prnasia.com/

Managing regulatory impactsAs we previously highlighted, ongoing regulatory change is a further key cause of uncertainty for utilities globally, and is accelerating as policymakers push for the replacement of aging infrastructure and a lower carbon energy system, combined with greater financial control and transparency. New regulations often require amendments to system functionality and business processes, such as new standards for calculating customer tariffs and distribution charges. Rising environmental requirements, such as quotas for generation from renewable sources, are also driving change projects in many markets.

Across the regulatory arena, the ability of cloud platforms to implement system changes and refinements faster and in a more cost-effective manner than traditional infrastructures helps to accelerate compliance and reduce disruption. And the role of cloud in managing regulation could escalate in the future. With regulations ranging from Sarbanes-Oxley in the United States, to a call for increased carbon emissions controls and reporting, it is not uncommon for a regulatory mandate to apply across a large region. In these circumstances, multiple utilities could benefit from a single SaaS solution that deals with changing industry regulations, rather than each company having to implement them separately using costly custom builds.

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The scalability of cloud in terms of storage capacity and processing power, together with its ability to handle volatile levels of demand on a pay-per-use basis, can bring huge benefits to utilities. These attributes enable them to cost-effectively access the latest technology and innovations as and when needed, including “big data” management and analytics, and social media capabilities—both internally for employees, and externally for customers and other stakeholders.

Across their T&D, Trading and Risk Management and Retail businesses, utilities are dealing with increasingly large volumes of data generated by smart meters and other devices. This flood of data is expanded still further by big data from sources such as social networks. Cloud computing provides utilities with effectively infinite capacity and processing power “on tap” to manage and perform advanced analytics on this mass of data, using new solutions and technologies specifically designed to deal with enormous data volumes.

Sophisticated cloud-based analytics can produce actionable business insight that can drive significant value from the wealth of big and smart data, through benefits including enhanced customer segmentation and improved demand forecasting. To further increase these benefits, cloud enables utilities to access the latest capabilities on a pay-per-use basis, and to use cloud’s flexible scalability to deal cost-effectively with peak workloads caused by the periodic need for hard-core number crunching.

Vindicating cloud in smart grid A recent experiment by Accenture Technology Labs verified the applicability of cloud-based analytics for smart meter environments (see page 15). Our view is that utilities will increase their adoption of cloud-based analytics in the next few years, enabling better decision making throughout the business, based on information that is more timely, accurate, relevant, detailed and reliable.

The improved information capabilities brought by cloud can also help utilities change the game in managing talent and knowledge. As experienced employees retire from the industry, cloud-based technology-as-a-service and social collaboration software will help utilities address the loss of skills and talent by fostering knowledge-sharing, improving the employee experience, and reducing the need for on-premise maintenance and support skills.

Factor 3: Data-rich, social and analytics-enabledCloud brings scalability and leading capabilities

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Accenture Technology Labs: Testing the benefits of cloud analytics in an advanced metering infrastructure (AMI) environmentAccenture Technology Labs set out to solve a key IT challenge facing many utilities: how to develop a platform for getting value quickly and cost-effectively out of all of the historical meter data now available. As smart meter deployments grow, so does the opportunity to generate value and competitive advantage from analytics. Yet the ability of traditional databases and historical systems to capitalize on this opportunity is often limited by high costs, restricted scalability and poor suitability to analytics.

To address this issue, a specialized Accenture Technology Labs testing team conducted an experiment to show whether a cloud-style platform —open, distributed and highly-scalable—could serve smart grid analytics requirements more effectively than traditional systems. Using an innovative combination of calendar-based systems and commodity-type servers, the team evaluated 16 processes involving enterprise-wide analytics in various business functions across a utility. These processes were tested on a series of more than one million meters, involving about 10 terabytes of data.

The results showed that the solution based on cloud-style platforms, implemented on commercially available commodity-type servers, was able to perform queries and analytics on large data sets with an acceptable degree of latency, greatly increased scalability, and at much lower costs. Equally significant, the cloud platform consistently equaled or outperformed a traditional relational database platform based on specialized hardware.

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Massive opportunities in social media Internal collaboration software mirrors many of the solutions and technologies that drive take-up of social media among consumers and businesses. Utilities have huge opportunities to harness cloud computing to become social media-enabled organizations, using online networks to drive collaboration, innovation and relationship management across and beyond the business. Many utilities are now seizing these opportunities in their retail business, successfully engaging with individual and business customers to offer them “energy services” over social media.

As these social media initiatives gain momentum and traction with customers, utilities will increasingly use powerful cloud-driven analytics on a blend of big data and their own smart meter

data to forge deeper relationships with customers, help manage their energy footprints, and provide other value-added products and services. Data from social media interactions can also enable utilities to respond quickly and flexibly to customers’ needs with offerings that treat them as individuals —including personalized bundles, rates/tariffs and incentives that suit their specific tastes, values and lifestyles.

These social impacts mean cloud computing can radically change the game by enabling utilities to become more customer-centric than ever before. Some companies in the utility ecosystem are already moving in this direction, such as the energy management solutions provider Schneider Electric, which has worked with Accenture to implement cloud-based CRM based on salesforce.com (see page 17).

The social media-enabled utility becomes realitySocial media is permeating the business environment and changing the internal and external environment for all organizations—utilities included. Internally, the effectiveness of a business is increasingly determined by how well it manages social capital. Externally, call centers are being supplanted by tips from peers on Facebook pages. Utilities that harness such disruptive changes can turn them to their advantage. As Figure 2 illustrates, a 2011 study by Chartwell showed that about one-third of utilities were using social media to engage with customers—but almost 40 percent were not.

The utility leaders in social networking are positioning themselves as social media-enabled organizations engaging in constant and close two-way interaction with customers. There

are many examples. BC Hydro’s Facebook page includes discussions on issues such as smart metering, advice on what to do during an outage, and a “Save like Steve” challenge for conservation-conscious consumers. TXU Energy factors “TXU Energy in Your Community,”

links to donate to TXU Energy Aid, and videos of donors. And Dominion Virginia Power has more than 16,500 followers on Twitter for its latest news, notices and community events. These utilities are leading the way where others will follow.

Utilities’ use of social media

Microblogging(Twitter, etc.)

Social networking(Facebook,

LinkedIn, etc.)

Video/Picture posting(YouTube, Flickr)

Not using any social media

Among the 31 utility respondents that answered the question

39%

32%35%

39%

Figure 2. Proportion of utilities interacting with customers via social media.

Source. “Using Social Media for Effective Customer Communications.” Chartwell. May 2011.

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Case study: Helping Schneider Electric move to a customer-centric model in the cloudSchneider Electric is a $20-billion worldwide leader in energy management solutions with a presence in 120 countries and more than 100,000 employees. In recent years it has grown strongly through international M&A. To sustain its expansion plans, Schneider Electric decided to align its business units on the same front-office processes, and enhance collaboration across its business by deploying a single CRM solution worldwide. Salesforce.com’s suite of cloud-based CRM applications was selected as the platform, and Accenture was asked to manage the implementation.

Schneider Electric set Accenture an ambitious goal: to design, implement and deploy the salesforce.com-based solution to more than 17,500 users

in 80 countries within an 18-month time frame. A global Accenture team worked with salesforce.com to design, build and deliver a unique solution focused specifically on Schneider Electric’s business requirements, deploying a core light CRM solution to support the main functions, with the capability to plug in additional processes as required.

The salesforce.com cloud-based solution has given Schneider Electric a 360-degree view of its customers and a high level of collaboration between its business teams. Philippe Trichet, senior VP, Customer Experience & CRM at Schneider Electric, commented: “This project, led together with our partners Accenture and salesforce.com, has already demonstrated a valuable return on investment: more than 20 percent of cross-selling, more than 20 percent of account coverage and an impressive 70 percent adoption rate.”

In Distribution, utilities can implement a cloud-based website to support volumes and manage the crisis in a major outage event.

Meanwhile, in Retail, there is an opportunity to implement cloud-based big data and meter data analytics for enhanced customer segmentation and more responsive development and differentiation of offerings.

Also in Retail, utilities can implement cloud-enabled social media analytics and cloud platforms for multi-channel engagement and brand management.

Leveraging cloud to gain scalability and leading capabilities

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Cloud services provide utilities with a new level of flexibility in how they manage and organize their IT capabilities, making it easier to separate or consolidate capabilities, or to bring them in-house if that is the chosen option. At the same time, cloud’s pay-per-use cost transparency results in greater clarity and accountability in multipartner collaborations, providing a strong basis for contracting, joint venture and alliance arrangements, and smoothing post-merger integration or carve-out in M&A deals.

In tandem with utilities’ expansion into social media, a further accelerating trend is collaboration with complementary partners beyond the industry to engage customers, and create differentiated and bundled offerings. For example, utilities in the future will share cloud-based applications and processes collaboratively with retailers to boost sales and deepen customer relationships. This sharing will enable faster, more cost-effective and flexible creation and marketing of next-generation offerings, such as co-branded energy plans sold in combination with energy-efficient devices.

For many utilities, the capabilities to create value from M&A and to collaborate with partners within and beyond the utilities industry will be key to future success. Cloud services can help to boost the value realized from M&A, and increase the pace and certainty of post-merger integration by enabling new entities to be plugged in to cloud platforms. Similarly, divestments can be easier and quicker to execute by being unplugged. And, going forward, common usage of cloud platforms will help to maintain standardization and IT governance across a merged utility business’ various operations.

CEMIG in Brazil: Migrating to cloud-based capabilitiesCEMIG, one of Brazil’s largest power generators and distributors, has upgraded its IT infrastructure and data center solutions by adopting virtualization and cloud-based capabilities. The solution is designed to meet the company’s need for an integrated environment across its operations and 10,000-point network in Brazil.5

Factor 4: Collaborative and suffused with M&ACloud is readily transferable, with transparent costs

5 Information Week press releases at: http://www.informationweek.com/pressreleases/midas-medicis-cimcorp-wins-3-million-con/X866339

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In Generation, utilities can implement cloud-based asset management systems for offshore wind joint ventures to simplify the allocation of IT costs between the partners.

And in Transmission, there is a clear early opportunity to implement cloud-based scheduling and mobility for the internal and subcontracted field force.

Leveraging cloud to boost collaboration through enhanced transferability and cost transparency

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Starting your cloud journey

In our view, the message is clear: The utilities industry will continue to change, and cloud computing will help shape the new rules. Utilities that have not yet taken their first steps toward their cloud-enabled future should make it a priority to examine the potential of cloud computing—and also take a close look at what their competitors are doing in this space.

The good news is that this is a journey rather than a one-off change. Utilities can begin with small steps or bite-sized chunks, testing out cloud models in specific areas of their business. Over time, their cloud maturity and comfort levels will increase, as will the resulting generation of higher value and lower costs.

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As utilities’ usage of cloud grows, they are on a journey toward using cloud’s unique attributes as an ever greater source of competitive advantage. Accenture has devised a cloud maturity model (see Figure 3) to help utilities map their path to cloud maturity. It will help utilities executives pinpoint their company’s stage in the journey, assess the upcoming opportunities and plan their best next steps.

The model divides the journey to cloud maturity into three main phases starting with commodity IT, such as email and storage, then stepping up to functional applications, such as business intelligence (BI) and procurement, and, finally progressing to core business applications in the cloud, such as CRM and billing.

At the same time, the utility’s objectives in using cloud also mature, progressing from a focus on costs to ad-hoc strategic enablement, before finally making cloud an integral part of the strategy. Each of these objectives addresses a different defining factor of the utility context that we described earlier.

Clearly, different utilities will move into the cloud at their own pace, reflecting the unique characteristics of their business and the competitive environment they face. However, our industry experience and insights indicate that the industry’s higher performers will be:

•Realizingalltheavailablevaluefromlevel 1.

•Proactivelyandsystematicallyexploringopportunities at level 2.

•Preparingforlevel3asthecloudmatures—and as the depth and scope of the cloud ecosystem increases.

Figure 3. Accenture’s cloud maturity model for utilities.

Examples

• CRM and billing• Position management• Asset management• External use of social media

• BI and reporting• Procurement, HR and finance• Internal use of social media

• Storage and compute• Email• Collaboration tools

Scop

e

Value lever

Core business applications

Functional applications

Commodity IT

Reduce IT TCO and capital expenditures

Ad-hoc strategic enabler

Integral part of strategy development and execution

Capital-intensive and cost-constrained

Uncertain and riven with change

Data-rich, social and analytics-enabled

Collaborative and suffused with M&A

1

2

3

Leading utilities will be:

• Realizing all the available value from level 1• Proactively and systematically exploring

opportunities at level 2• Preparing for level 3 as the cloud matures−

depth and scope of cloud market increases

Extent to which cloud is a source of competitive advantage

Source. Accenture analysis.

Using cloud’s unique characteristics as a source of competitive advantage

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Find out moreThe cloud-enabled future has begun— and is already starting to change the game for utilities. It is time to embark on the journey. To learn more about how Accenture can help utilities to seize the cloud computing opportunity to achieve high performance, please contact:

Nigel Barnes Master Technology Architect, nigel.barnes@accenture.com

Matthew Coates Global Cloud Strategy Lead, matthew.coates@accenture.com

Martin de Weerdt Utilities Technology Lead, martin.c.de.weerdt@accenture.com

Robert Hopkin Utilities Strategy, robert.hopkin@accenture.com

Joshua E. Meyer Global Cloud Business Services Manager, joshua.e.meyer@accenture.com

John M. Schullian Solution Architect, Resources, john.m.schullian@accenture.com

Oscar van den Berg Utilities Cloud Lead, oscar.a.van.den.berg@accenture.com

Jason A. Allen Accenture Research - Global Lead for Utilities

Laurie A. Henneborn Accenture Research - Global Lead for Technology Growth Platform Team; Cloud Research Lead

Additional contributors

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Accenture is a global management consulting, technology services and outsourcing company, with 257,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is www.accenture.com.

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