According to the 2015 Momentum® Market Trends & Insights® Report, the annual contract value (ACV) for outsourcing engagements within the utility industry jumped 24 percent since 2014, outpacing the next closest industry by more than double. For many IT leaders, a primary focus has been, and will continue to be, in regards to effectively supporting core business needs while addressing the unique challenges faced by today’s utility industry. Although the need to realize a more agile and digitally-capable infrastructure environment is widely felt across all industries, the increasing need for utility companies to find the proper balance of operation, cost, and resource allocation has caused many organizations to turn to IT outsourcing as the solution.
It used to be that utility companies operated primarily under a CAPEX model due to the high demand for energy, gas, electric, and water services. However, as modern businesses continue to become more socially and environmentally conscious, and both consumers and businesses begin to adopt cleaner and more efficient forms of utility production such as solar, wind, and geothermal energy, utility companies have been forced to adjust their business strategies. This, combined with the fact that the utility market is becoming more and more saturated with ‘micro-players’, has caused organizations to pursue more cost-effective approaches to IT delivery.
With the ability to facilitate high service levels while also realizing a leaner and more efficient organizational structure, infrastructure outsourcing enables utility organizations to scale-up or scale-down their resources based on demand. Meaning, rather than having to incur the costs of an overstaffed team during ‘slow months’, organizations are able to sustain comparable cost-levels.
In addition to completely overhauling traditional operating models, utility companies are now faced with the challenge of an aging workforce and a growing skills shortage. In fact, 72 percent of utility employers have reported having difficulty finding qualified candidates to fill open positions. With a rising education standard and a declining pool of applicants that possess the necessary skillset to work in the smart grid sector, utility organizations have been forced to seek out alternative employment strategies.
Infrastructure outsourcing, due to its ability to minimize organizational and operational disruption while increasing productivity, allows utility organizations to shift the daily management and responsibilities of non-strategic business initiatives to external service providers. Not only does this substantially lower IT costs, but it also helps to combat the rising challenge of employing talent with the necessary skillset in-house.
The complexities and intricacies, especially from an IT perspective, that enterprises face when working in the utility sector often create unique business and IT challenges. However, through infrastructure outsourcing, organizations are able to generate operational and cost optimizations, create a more agile and adaptable infrastructure architecture, and do all of this while increasing levels of productivity and effectiveness.
IT management solutions companies, like Windsor Group, are well-versed on the state of the market, and can facilitate the strategic knowledge, resources, and partnerships needed to compete in fluctuating market conditions.
If you’re interested in learning more about the various types of sourcing options that can accommodate your utility enterprise’s unique business challenges, download our whitepaper, “The CIO’s Guide to Evaluating Sourcing Options”.