European utilities continue to be under significant pressure to reduce capex and opex related to ICT. CIOs are facing significant challenges in determining where to make the most effective budget allocations.
On one hand, CIOs are expected to undertake new initiatives to deliver business value. On the other, they are challenged to reduce the expenditure related to routine IT activities, especially reducing maintenance and employee expenses.
IDC Energy Insights’ latest annual survey of European utilities revealed that European utilities have made their IT operations more efficient, effectively bringing down costs, favouring the allocation of IT budget for growth.
Two IDC Energy Insights survey-driven studies highlight the following key ICT budget trends for European utilities for 2014:
*After years of utilities internalising IT spending, the direction is changing. Not only did European utility firm executives indicate that the greater part of IT spending would be external, but this externalisation of IT spending is expected to continue, as 6.6% of utility survey respondents expect to increase their share of external IT spending in the near future.
* European utilities identify “integrated and secure access to data and applications”, “integration of IT applications with operational technologies”, and “speed and cost of regulatory compliance adaptation” as their most pressing IT objectives.
Survey results also confirmed that European utilities’ IT objectives for the next 12 months are seamlessly aligned with their leading business initiative (regulatory compliance) and key challenge (integrating disparate applications).
* Security remains the top investment priority for European utilities, with the majority of spending going on maintenance and running of existing systems, but with spending also being funnelled into enhancements and upgrades and the deployment of replacement systems.
Taking a closer look at security solutions, endpoint security and network securities will be the main investment areas for European utilities.
* European utilities are demonstrating a propensity toward line-of-business IT solution investments, specifically for network automation and control, customer care, and plant maintenance, which have a significant margin over the pack.
Additionally, European utilities identified meter data management as the line-of-business IT solution they would most be investing in for first time, as indicated by over 21% of survey respondents.
“IT departments are being asked to do more with less, as lines of business become increasingly demanding. CIO agendas are continuing to shift from focusing on IT productivity to focusing on business productivity as CIOs move from managing portfolios of systems and technologies to portfolios of services,” says Gaia Gallotti, research manager, IDC Energy Insights.
“Utilities therefore have to balance their investments in IT solutions that are needed to run the business and comply with demanding regulation, also taking into consideration a number of obstacles, including aging infrastructures, increasing security threats, exponential increases in data, and a steady rise in demand.”