costs saas utilities

What Are the Cost Drivers for System Integration in SaaS for the utilities?

Global organizations prefer the Software as a Service model due to its immediate delivery and efficient working as an enterprise software solution. SaaS uses the cloud-computing framework to make their business application available over the internet that their customers can use from their web browsers. On the other hand, system integration is essential for B2B communication and internal cooperation. Numerous SaaS applications greatly benefit utilities in managing their assets spread across the country without buying expensive traditional software licensing. Enterprises need to oversee Software-as-a-service (SaaS) applications and cloud-based subscription software to reduce and optimize costs. SaaS vendors design their applications as platform-independent, meaning customers can use their service from any device or web browser. Utilities need to opt for SaaS for significant cost savings compared to premise software.

Common Myths regarding the SaaS model 

Software as a Service SaaS is no stranger to myths when a utility provider considers one to make things easier for their organization. Here are the most common ones: 

  1. Shifting all the data from on-premise to the cloud is challenging
    Utilities feel like cloud-based SaaS models are incompatible with in-house infrastructure, and shifting their data to the cloud is a complex process. In reality, all happens instantaneously as modern SaaS providers build their service to integrate with conventional corporate hardware used by utilities. 
  2. Lack of control over data security
    SaaS does not work on the all-or-nothing principle. You can choose the type of data you want to shift to your cloud instance. Various standardized security policies ensure data access security via an encryption key.  
  3. SaaS are incomplete solutions
    Utilities also feel that numerous SaaS vendors do not provide full integration for the cloud instance. However, almost all SaaS applications are equipped with APIs to exchange information while ensuring full connectivity and data integration as required.

Importance of SaaS Cost Management

Given how tangible this tech is, most organizations move towards cloud-based deployment without servers or subscription licenses. According to Business Insider, the global SaaS market has grown to a value of US$ 140 billion in 2022. This unprecedented growth has not given business leaders enough time to prepare for increasing costs. Though the rapid advancements in Software as a Service (SaaS) may seem daunting, this tech has more to offer organizations.
We can see an enormous shift toward the cloud-based approach. Every one in five employees is willing to purchase the SaaS applications using a credit card or expense compensation. Therefore, being prepared for these purchases has become an essential aspect of SaaS cost management.

The need for system integration 

System integration refers to connecting different subsystems with a more extensive system for seamless collective functioning. Usually, utilities have hundreds of sub-stations spread across their grid network. Individual management is time-consuming, inefficient, and expensive. Therefore, utilities have to opt for a cloud based SaaS solution that can link their internal systems and sub-station equipment to communicate. 

Integration increases the information flow rate to reduce operational costs for utilities through cloud computing. Moreover, system integration interconnects the internal systems of utility service providers and significantly reduces operating costs while the number of users increases. You can connect your vendors to the system if your organization deals with third-party suppliers. 

Here are some integration methods that can help utilities: 

  1. Vertical integration
    When utilities opt for vertical integration, they integrate their subsystems by creating numerous functional “silos.” They start from the most generic system and work up the hierarchy. Vertical integration is relatively simple as it involves only a limited number of systems (at least 2). However, the integration is rigid, and managing it becomes difficult in the long run. Any new inclusion of subsystems requires a star integration topology using point-to-point connections. The management systems become challenging as the number of integration increases. For instance, if there are ten systems, change in any one system will require a re-do in the other nine, even if you are using Amazon Web Services.
  2. Horizontal integration
    A standard interface layer between all subsystems, also called Enterprise Service Bus (ESB), is horizontal integration. The interface allows easy integration as just a single layer is needed to communicate with all other subsystems. Additionally, if one system needs replacement, you do not have to re-do all other interfaces.
  3. Joint data format integration
    When you integrate multiple systems, the data that travels from one system to another needs to be transformed into a different data format. With Star integration, this becomes a hassle because you need to make numerous transformations – a high maintenance task. Therefore, to overcome this, we use a common data format approach where all systems will only do one data conversion, i.e., from the native format to the common one and vice versa. This makes handling the management systems easier as the required data transformations are just as high as the number of subsystems.

A Deeper Insight into Cost Drivers for the System Integration Platform 

In recent years, you can see the immense growth in the technology sector due to specialized equipment for various industries. The utility sector has also embraced this transformation by introducing smart meters and high-tech sensors. Experts should thoroughly vet the costs associated with these disruptions to avoid unforeseen obstacles.

Below we have summarized some insights into accurately determining the total costs of owning and administrating integrated tech systems.

  • Calculating the initial costs of procuring the platform
    The initial costs business experts need to consider are collecting, storing, and analyzing the collected information through an integration platform. This cost comprises acquiring the software and hardware requirements for integrating the solution. Considering the complexity of data exchange is also vital. Utilities relying on basic data sets can use management systems that offer point-to-point integration, while those dealing with complex information must deploy a  more sophisticated solution.
  • Considering further additions to the platform
    Business leaders must consider the additional associated costs for integrating the already in-use tech with the purchased platforms. For example, the meters and software already connected to the system should easily connect with the newly purchased ones.    
  • Identifying the management and support needs
    Like every other technology, utilities also need proper management checkups conducted regularly. These may include government-mandated inspections or daily run-downs to help drive costs.
  • Error handling and cost buffers
    Developing a business model that incorporates all the above factors and an additional cache for unexpected errors is the right approach for system integration. In utilities, miscalculations can become costly once permits are granted. Hence, a systematic approach to problem-solving saves from extensive expenditures.

The Challenges of System Integration

There are many reasons why system integrations are challenging. 70% of business models that perform system integration fail. When projects are complex, this tech failure is most likely to occur. The chosen integration is not the only reason behind these problems – inefficient projection management tools fuel these issues.

In today’s modern enterprise era, with the proliferation of cloud based SaaS solutions, cloud-based services, and the need for traditional on-premise applications, integration has become more critical than it ever was.

Some of the most common reasons are below: 

  • Concurrent alterations in the integration landscape
    The longer a project is, the more challenging it becomes to handle constant changes. Planning short projects and adopting the agile-based methodology improves the success rate significantly. This method can also help cater to the changing project requirements.
  • Insufficient skilled resources
    Even if you have the most advanced integration technology, it is useless if not backed by people who have expertise in their respective domains. Many companies are struggling to retain employees that match their required skill-set. The best solution is to source these via third-party SaaS vendors that can bring forward the people you need based on your integration expertise requirements.
  • Absence of accountability
    When many people like stakeholders and SaaS vendors work on the same project, none of them takes responsibility for the entire system. Any utility company that still uses traditional software is dedicated to handling and accomplishing only their side of things resulting in a lack of accountability. There’s always more than one party involved in an integration project, depending on the project’s requirement. This, therefore, gives birth to the blame game scenario where if anything goes wrong, none of the parties is ready to take the blame for it. For this reason, if one group is supervising everything, then there is no room left for ambiguity over accountability.

Conclusion 

Numerous solutions provide organizations with the necessary tools and technical skills to deliver a seamless system integration. Considering all cost drivers for system integration in SaaS for the utilities is crucial for making the right choice. With the ongoing tech-driven developments happening in every corner these days, organizations must develop solutions that enable them to keep up with the ever-changing integration needs of every era. 

As far as the industry cost factor is concerned, businesses can help strengthen their internal processes with SaaS providers by moving towards cloud computing. Adding up all cost drivers will help utilities increase their efficiencies by opting for  Software as a Service SaaS system integration. Aptimize is among the most cost-efficient SaaS options for utilities to manage their assets and coordinate their grids’ implementation, scalability, and adaptability.

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