What is the utility industry software outlook as it pertains to hosted vs in house software platforms?
Here’s what the current outlook looks like for utility industry software when comparing hosted (cloud/SaaS) platforms vs. in-house (on-premise) deployments:
Industry Trends & Strategic Shifts
- Rise of cloud-native platforms: Solutions like Octopus Energy’s Kraken—originally built in-house—have been commercialized and adopted globally for managing complex needs like billing, EV chargers, solar, and heat pumps. Kraken now serves over 60 million accounts with plans to reach 100 million by 2027 Financial Times. This highlights the growing momentum behind scalable, hosted utility platforms.
- Grid modernization via advanced tech: Utilities are increasingly leveraging AI for grid resilience—using tools for predictive maintenance, real-time monitoring, and operational assistance. Examples include Duke Energy and Rhizome using AI to anticipate equipment failure, and GE Vernova’s acquisition of Alteia to boost its cloud-based infrastructure monitoring capabilities Business InsiderReuters.
Cloud / Hosted (SaaS) Solutions: Benefits & Growth
- High adoption: Around 74% of utilities now use some form of cloud/hosted services, ranging from internal operations to customer portals and CRM systems.
- Speed & agility: Over half (54.7%) of utilities believe that deploying Customer Information Systems (CIS) via cloud takes less than 18 months—a quicker turnaround than traditional in-house installs.
- Scalability & flexibility: Cloud platforms allow utilities to scale resources dynamically, adapting to demand spikes—especially valuable during peak usage events or crises. This flexibility helps avoid over-investing in infrastructure Engineered IntelligenceOtelli FoundationProperty Industry Eye.
- Economic advantage: SaaS models offer predictable, usage-based pricing with minimal upfront investment, unlike capital-intensive on-premise systems. Total cost of ownership over time typically favors SaaS. For example, SaaS solutions may deliver up to 50–60% lower TCO over 10 years Spacewell | A Nemetschek CompanyDeltekProperty Industry Eye.
- Reduced IT burden: Cloud providers handle maintenance, updates, and security, freeing utility IT teams to focus on core operations Engineered IntelligenceAMC S Group.
- Innovation pace: SaaS supports faster rollout of new features—including AI and analytics—without needing new hardware or re-architecting systems Engineered Intelligence.
- Security gains: Modern cloud providers implement advanced, multi-layered security and compliance (ISO, SOC, GDPR, NIST), often exceeding what many utilities could feasibly manage in-house Engineered IntelligenceAMC S GroupSpacewell | A Nemetschek CompanyUsersnap.
In-House (On-Premise) Systems: Strengths & Constraints
- Greater control: On-premise gives utilities full control over data, infrastructure, and network—even without Internet access—an advantage for certain sensitive operations or regulated environments DeltekWikipedia.
- Customization & autonomy: Organizations with unique workflows or regulatory demands often opt for on-prem to tailor solutions precisely, especially in large or complex setups Deltek.
- Concerns around cloud security: Surveys show nearly half of IT decision-makers remain “very or extremely anxious” about cloud security, even though many fears are based on perception more than fact Usersnap.
- Hidden costs: On-prem systems incur ongoing costs—staffing, hardware, power, maintenance, and downtime—that may exceed initial impressions RedditSpacewell | A Nemetschek Company.
- Longer deployments & obsolescence: Custom-built systems can be slow to deploy, expensive to update, and risk becoming outdated if key staff depart EnergySysSpacewell | A Nemetschek Company.
- Increasingly marginalized: Industry sentiment is shifting, with cloud being seen as future-forward and on-prem as legacy—though this depends on existing infrastructure and internal capability Reddit.
Hybrid & Open-Source Approaches
- Hybrid models: Many utilities are adopting hybrid architectures—leveraging cloud for some services while keeping critical or legacy systems on-premise—for enhanced resilience and flexibility Reddit+1.
- Open-source collaboration: Initiatives like Europe’s Open Smart Grid Platform and LF Energy’s OpenEEmeter show growing interest in shared, transparent utility software development through open source WIRED.
| Dimension | Cloud / Hosted (SaaS) | In-House (On-Premise) |
| Adoption Trend | Growing rapidly across billing, CRM, analytics | Stable but declining innovation rate |
| Deployment Speed | Fast (months) | Slow (often >1 year) |
| Scalability | Elastic, pay-as-you-use | Requires upfront investment |
| Cost Model | Subscription; lower total cost | Capex-heavy; higher ongoing cost |
| IT Burden | Low (provider-managed) | High (requires internal expertise) |
| Innovation Pace | Rapid feature releases (AI, analytics) | Slow, hardware-bound |
| Control & Security | Strong, but third-party managed | Maximum control, but resource-intensive |
| Best Fit | Agile, resource-limited or forward-looking utilities | Heavily regulated, custom-heavy utilities |
| Hybrid Potential | Excellent for strategic, phased transitions | Vital for mission-critical legacy systems |
Final Thoughts:
- Most utilities are actively shifting toward cloud-based solutions, especially for customer-facing systems and analytics, drawn by scalability, faster deployment, and ongoing innovation.
- Hosted platforms are winning favor as they lower IT overhead, enhance resilience, and accelerate access to AI-powered insights.
- In-house systems retain relevance where deep customization, regulatory control, or legacy integration are priorities.
Hybrid strategies and open-source tools are promising pathways for blending cloud benefits with local control and interoperability.