The utilities industry historically lagged behind other sectors in cloud adoption. This lag stemmed partly from the fact that utilities have less competition and therefore faced less pressure to continuously transform and become more cost-effective. Regulatory restrictions due to security concerns have created other barriers to cloud adoption, as has the capital-intensive nature of the utilities industry, which encourages a focus on CAPEX vs. OPEX expenditures like cloud. Yet as cloud evolves to support industry-specific use cases, a well-defined cloud strategy is crucial to improving utilities’ scalability, agility and innovation capabilities. One place to begin developing such a strategy comes from an unexpected area: operational technologies (OT).

Much of the industry continues to use legacy OT with a siloed IT and OT operating model. This impacts a utility’s cloud journey. Utilities that have awoken to the huge competitive advantages of cloud are now pushing a “cloud-first” strategy for IT and enterprise apps. Even so, they are very hesitant to explore cloud solutions for OT workloads, with a number of factors contributing to slow OT cloud adoption:

• A legacy OT technology/vendor landscape that is not cloud-based
• Siloing between the OT domain and the more cloud-friendly IT domain
• Prudence related to security (both cyber and physical) and data corruption risks
• Uncertainty regarding OPEX vs. CAPEX trade-offs given prevailing revenue cap regulatory models

While regulatory and operational considerations impose real constraints to the adoption of cloud in the OT domain, there is significant scope for utilities to do more and realize phenomenal value from cloud adoption. Cloud capabilities have now matured to the point where they can robustly support select OT workloads. Furthermore, deploying high-value, non-operationally critical OT capabilities to the cloud can deliver significant cost reductions and other operational benefits. 

Cloud Adoption Strategies for Operational Technologies

Utilities are just now starting to overcome a host of barriers to cloud in OT. Until recently, for example, there were few OT OEM PaaS or SaaS solutions available in the market. This is now changing, with several prominent vendors developing such solutions, and the field of OT-relevant cloud solutions growing quickly. At the same time, in the context of revenue caps, regulators are moving away from their singular focus on OPEX reductions and becoming more receptive to the sorts of TOTEX (CAPEX + OPEX) reduction opportunities that cloud enables. 

Among other strategies, cloud deployment for OT workloads will involve: 

• Segregating operationally critical workloads (i.e., SCADA) from non-critical workloads (i.e., OMS). Technology segregation will be essential to avoid regulatory and security compliance challenges, given that cloud solutions for certain OT applications may not comply with cyber, physical and IT security parameters for critical national infrastructure (CNI).
• Emphasizing use case-specific deployment strategies. Cloud use cases will differ significantly between electricity, water and gas OT. Remote condition monitoring (gas) and digital water metering (water) are particularly attractive use cases. In electricity, cloud solutions will be most transformational in the context of distributed energy resource management systems (DERMS), microgrid management systems (MGMS), demand-side management (DSM) and other use cases in which high data volumes and IoT integrations allow cloud to bring economies of scale. 
• Exploring phased cloud implementation. Risk tolerance will vary from enterprise to enterprise. A phased cloud implementation strategy, starting with the simplest use cases that promise clear-cut ROI, may result in stronger institutional buy-in.
• Adopting an architecture perspective. Architecture best practices and design principles are fundamental to safely and securely operating critical services. While the high-security core OT zone itself may be less amenable to cloud solutions, the OT border zone will present opportunities for cloud adoption, with the exact architecture dependent on the enterprise’s IT-OT integration patterns.

Utilities companies will find that the cloud deployment in OT is very different from cloud deployment in IT. However, with the right strategies and safety measures in place, it will drive many of the same fundamental benefits.  

The Benefits of Cloud Adoption in Utilities OT

A well-defined cloud strategy will play a crucial role in ensuring that OT systems in the utilities industry enable utilities to capitalize on benefits such as scalability, agility, innovation, data analytics, cost optimization, and operational efficiencies. The cost optimization benefits alone are significant; they will drive TOTEX reductions in the OT domain as a result of both cost-effective cloud infrastructure and a pay-per-use consumption model.

The emerging OT cloud solutions are already scalable and resilient, and they can meet many current OT system requirements. Furthermore, cloud OT solutions are likely to better align with the organization-wide infrastructure strategy and OEM platform strategy, resulting into overall reduction in cost-to-serve.

The impetus to adopt OT cloud deployment will only grow as capabilities like remote condition monitoring, predictive asset maintenance, asset/network performance optimization, predictive failure analysis, and digital assistants for network monitoring generate huge volumes of data from diverse field devices that will be best utilized in a cloud environment. As they evaluate cloud-friendly OT strategies, leaders in the utilities industry should consider not just near-term cost savings, but also the long-term opportunity cost of not developing strong cloud capabilities in the OT domain. 

Shirish Patil, Head of Consulting – Utilities, ECO, Airports and GIS

Shirish has worked in the utility industry for more than 28 years. He is the Global Head of Domain & Consulting business for Wipro’s Utilities, ECO, Airports and GIS sectors. He has championed and architected many large transformations working with clients across power, gas and water sectors globally and worked across continents including Australia, UK, Germany, US, Middle East. Shirish’s priorities are to help customer develop and operationalize digital and operational technologies for business transformation, data monetization and new business models.