Utilities to increase IT spend in 2012

Spending on information technology by utilities including water, electricity and gas providers in Australia has been flat for the past three years, but is forecast to grow 2.6 per cent in 2012 to reach $2.4 billion, according to the latest forecast from information technology research and advisory company Gartner. The forecast includes spending by energy and utilities organisations on hardware, software, IT services and telecommunications.

External IT services is forecast to represent the biggest spending category for utilities companies, reaching $923 million in 2012. Gartner analysts said that as utilities move to towards smart meter deployments and smart grid upgrades, there is both a lot of new technology and a peak in demand for technical resources. Using service companies to supplement their own staff and knowledge is going to be a common practice.

However, spending by utilities on software is expected to grow the fastest in 2012, up by 10.3 per cent.

According to Gartner vice president and fellow, Kristian Steenstrup, much of the new technology will be aided by software updates and replacements. For example billing systems that can cater for smart meter information and asset and work management systems that take advantage of data feeds from the smart grid.

“Some utilities companies select technology and software investments as if the process was a popularity contest, using the technologies that have been used the most by other companies as the sole criterion,” Mr Steenstrup said.

“In doing so, they inadvertently select older established technologies or the most fashionable of the newest technologies, overlooking those that might be most appropriate to their enterprise and appetite for risk, and overlooking the maturity of the individual technology and the availability of support in the Australian market,” he said.

“Successful energy companies and utilities are streamlining business processes and investing in IT, often concurrently with enhancements on the operational technology or ‘OT’ side, which is where much of the smart grid investment is taking place,” Mr Steenstrup said.

“Continuing pressure to improve performance in markets driven by volatile energy prices, increased regulatory scrutiny and environmental needs, is forcing utilities to re-examine their application portfolios.”

Mr Steenstrup said there is also a growing need to cater for diverse renewable energy sources, from residential as well as commercial scale operations. This in turn leads to a much more complicated scenario of feed in tariff credits and dealing with the intermittency of most renewable sources.

Mr Steenstrup commented that companies operating in deregulated markets like Australia tend to have a focus and organisation priority driven by competition and government-mandated levels of unbundling and business separation, which is playing out at a different pace, state by state.

“This issue was mainly restricted to the electricity industry, but we are now seeing this as an issue for water and gas providers as well,” he said.

Mr Steenstrup discussed the top business and technology trends shaping the energy and utilities sector at Gartner Symposium/ITxpo on the Gold Coast, in mid- November. US-based Gartner research director Randy Rhodes gave a presention on smart metering and the development of future energy delivery infrastructure, the so-called ‘intelligent grid’.