Investments in intelligent grid technologies to fuel growth in utilities IT budgets in 2010

FRAMINGHAM, USA: A new study published by IDC Energy Insights indicates that investments in information and communications technology (ICT) spending by utilities in North America will increase by an average of 4 percent in 2010, as the industry recovers from the recession and benefits from the infusion of federal funds through the American Recovery and Reinvestment Act (ARRA).

These factors, along with cost recovery, indicate the industry will be investing significantly in new technology to enable the intelligent grid in 2010 and beyond.

The report, Best Practices: CIOs Move from 2009 Spending Limits to 2010 Projects (Document #EI222869, April 2010) presents the results of three surveys recently conducted by IDC Energy Insights and the IDC Vertical Group and sheds light on how utility budgets have been shaped for 2010 and in the near future.

The data and analysis in the study enables utility CIOs and IT leadership executives to benchmark themselves against their peers as well as stay ahead of trends in the industry.

Among the key findings presented in the report include the following:
* Utility budgets for 2010 are recovering some ground. According to the Utility CIO survey, budgets are expected to increase, on average, by 4 percent. The IDC Vertical Research Annual Survey reported that 24 percent of utilities will increase their budgets, 16 percent will see budget cuts; and 60 percent of budgets will remain the same. Of software applications, ERP, meter data management, and security applications will see the most investment.

* Utilities will be investing in the intelligent grid whether or not they are awarded federal stimulus funds and these investments will lead to an increase in ICT spending. Over half the utilities are either piloting or deploying technologies such as smart metering, meter data management, SCADA and substation automation, and grid automation control. The motivations may be different – shareholder and credit ratings concerns, regulation, customer attraction and retention – but projects are starting in the pilot stage, with many utilities pursuing full deployments over the next five years.

* Utilities are in the group of industries that are lagging in their adoption of cloud computing. Over half (58%), either have no plans to implement cloud as part of their roadmap or are unaware of the technology. The software applications that are most often delivered as Software as a Service (SaaS) – to about 15 percent of utilities – are supply chain management and environmental health and safety, though IDC Energy Insights sees potential for other cloud applications in the emerging intelligent grid.

"The recession hit utilities hard, with companies in 2009 taking action to reduce expenses," said Jill Feblowitz, IDC Energy Insights practice director. "However, more optimism, the infusion of federal funds, and cost recovery are all contributing to an increase in ICT budgets and spending in 2010. IT efficiency and reliability, along with productivity are also driving IT investments for 2010."