The managed services market is estimated to reach $257.84 billion by 2022, representing a compound annual growth rate of 11.1 percent from 2017 to 2022, according to Markets and Markets. As managed services have become more mainstream, so have the number of associated value delivery options. Today, Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS) are used to deliver end user value through managed services. But there’s something missing from this growing list of options. As vendors’ service and product offerings grow, customers benefit from the greater number of offerings to choose from, but also face uncertainty about which offerings will best meet their needs—not to mention what risks they face if they make the wrong choice.
Therefore, it’s not surprising that service providers are turning to what their customers truly need: desirable outcomes to meet their business challenges. When customers can focus only on ideal outcomes, not the infrastructure or the solutions needed to deliver them, that’s compelling. In fact, it may even become the prime measure of organizational performance in the utility and a barometer of how utilities deliver value to consumers: Did they, or did they not, achieve them? In that light, thinking about implementation, processes, and key components can become a distraction. And that’s why understanding desired “outcomes,” and optimizing operational business processes to achieve them, has fast become the only end game that matters.
"Utilities are recognizing the promise of the OaaS model and its ability to help them meet their goals in ways both tangible and measurable"
Shifting Delivery Models
The migration of on-premise software to the cloud is one shift in delivery models. The emerging Outcomes-as-a-Service (OaaS) model is essentially a hand-and-glove fit with the cloud, and it has been a boon for companies across multiple industry segments. As one example, in the utilities industry, cloud-based managed services focusing on desired outcomes have helped in providing:
• Real-time power and natural gas forecasts
• Revenue assurance
• Network management
• Theft, leak and outage detection
• Meter data collection and analytics
• Automated billing management
• Regulatory standards and cybersecurity compliance
The value of OaaS in the utilities sector comes to light if you visualize the many processes it encompasses, but more importantly, manages – for example, processes that involve meter-to-cash, grid operations, analytics and data from field devices. OaaS also overcomes the Rubik’s Cube of complexity created by the mandate that a new solution or platform must positively impact cost, security, availability, scalability, performance, and application development. OaaS platform providers assume the onus of managing this complexity and the associated risk for utilities.
Two ways in which outcomes can be delivered include Software-as-a-Service (SaaS) and a fully managed service, called Outcome Services. The SaaS offering provides an interim solution between on-premise and a fully managed Outcome Services solution, wherein the utility subscribes and has access to software applications that are installed in the cloud. A cloud operation steam provides monitoring services to ensure the system is available, while autility continues to use and operate the system and takes responsibility for attaining its desired outcomes. In the Outcome Services model, the service provider operates the systems for the utility, manages select operational business processes, and ensures that the utility can achieve the outcomes expected and associated with its performance.
Through a services approach, Itron helps utilities manage and optimize overall AMI operations, as well as revenue cycle services; conservation, sustainability, energy efficiency, system integrity, asset management and renewables integration.
Managed Services at TNMP
Texas-New Mexico Power (TNMP), which supports 250,000 customers in more than 130 communities, has expanded its advanced metering infrastructure (AMI) program to run on a standards-compliant, multi-application network that offers fully supported managed services. This approach allows TNMP personnel to focus on operations while the provider keeps the technology current, therefore enabling TNMP to derive the greatest value from key applications. Through a cloud-services model, TNMP is migrating its systems, including meter data management and data collection to the cloud, and is also implementing analytics.
TNMP has seen great results, servicing customer requests within two hours, where it has traditionally required 24 to 48 hours. And the OaaS platform has generated over 8million bills from data collected remotely over the air. Using AMI also allows retail electric providers in Texas to offer creative solutions to TNMP customers. Those include time-of-use rates and prepay options—which were once impossible to offer when the utility lacked access to interval data.
Utilities are recognizing the promise of the OaaS model and its ability to help them meet their goals in ways both tangible and measurable. But becoming “outcome-centric” is also becoming a corporate imperative.
In an article in Harvard Business Review, Michael Connerty, a managing director at L.E.K. Consulting, said that “Becoming outcome-centric involves a foundational shift in organization and culture, and maintaining the discipline to follow through will likely mean the difference between future success and stagnant survival.”