Utilities Increase Business Application Software Investments

The need to migrate from legacy solutions to new digital technology is driving utility investments in enterprise software applications. These companies need flexible, resilient solutions because utility business drivers change so quickly nowadays.

Dramatic market shifts are one reasons why energy companies are purchasing business software solutions. In 2020, worldwide revenues reached $241 billion up 6.7%, according to International Data Corporation (IDC).

Flexibility Becomes Key Market Driver

Utilities must be able to rapidly adapt to business disruptions. For instance during the pandemic, energy these enterprises had to rapidly move employees from corporate locations to remote offices as well as interact with customers in new, social distancing ways.

Consequently, they required business systems capable of making the adjustment. In many cases, energy company legacy Enterprise Resource Management (ERM), Customer Relationship Management (CRM), engineering applications, and grid management systems were based on rigid technology from yesteryear. Consequently, these organizations spent a lot of time and effort tinkering with them to add the new, necessary functionality.

The Cloud’s Impact Grows

Because of the shifts in requirements, cloud applications are taking up a larger and larger portion of utility software purchases. Demand for public cloud enterprise applications is expected to produce a five-year Compound Annual Growth Rate (CAGR) of 13.6%. The enterprise applications overall market is expected to increase at 4.1% CAGR during that time, according to IDC.  

Cloud interest is growing, but that market segment still faces challenges, starting with a very fragmented customer base. In 2020, the top five cloud enterprise software application vendors were SAP, Salesforce, Oracle, Intuit, and Microsoft, according to IDC. The fivesome accounted for only 22.8% of worldwide revenues.

The Connection Conundrum

As a result, energy corporations have many options when looking for such products. Because these applications are vital to daily operations, they connect to many other systems. Building and maintaining such connections can be a time consuming and expensive proposition for utilities. The more fragmented the market, the more work that energy companies need to take on to connect their systems. Once the link is made, they must maintain such connections. They would prefer to minimize such work, so their technology personnel spend the bulk of their time enhancing business applications rather than connecting and maintaining their different enterprise systems. Cloud offers them that capability.

Business disruptions are forcing energy companies to invest in enterprise software applications. In many cases, these companies take on the deployment, integration, and maintenance work themselves. Because they prefer to offload that work to a third party, cloud enterprise business applications are now driving market adoption.