The Emergence of a $3.4 Billion CISaaS Market

In the utility world, customer information systems (CIS) can be thought of as the utility billing engine. And while these systems have largely remained in the hands of the utility to date, the CIS market is undergoing a shift in terms of both supply and demand. This shift will allow the utilities of the future cost-effectively offload their CIS to focus on more critical responsibilities, like grid management and optimization.

Age versus Cost and Complexity

No other utility IT system costs as much to acquire, integrate, and maintain as CIS. The modern CIS is extremely high cost, wide-reaching, and complex. With many home-grown systems now reaching the end of their lifecycles, more and more utilities are faced with the decision of whether or not to upgrade aging systems. Some utilities are hesitant to make the commitment to costly, complex, and time-consuming upgrade/replacement projects.

Customer Expectations versus Deployment Time

Customers have come to expect higher levels of service from their utilities. In response to this pressure, utilities are updating web portals with energy savings tools and customer-based data, offering mobile apps to enable bill paying and embracing social media channels (Twitter, Facebook) to gain valuable and timely feedback. Many of these tools can only be implemented and used upon integration with CIS, forcing utilities to consider investing in modern, sophisticated systems. Maximizing customer expectations is difficult when faced with the multiyear windows that characterize the majority of CIS deployments, as at least part of the system is likely to be obsolete upon commissioning.

SaaS Addresses Barriers

Software as a Service (SaaS) models are here to answer these challenges, or at least to begin the process. Two of the primary benefits of SaaS models are the reduction in costs and complexity and the ability to remotely update software without the hassle of uprooting the CIS.

For example, Oracle, with its customer to meter (CIS plus meter data management system) product, is posed to offer the first truly SaaS CIS in the industry. This offering is a multi-tenant solution, which uses the same code from machine-to-machine, utility-to-utility. The company cites a 30% cost reduction when compared to an on-premise system. In terms of deployment time, Oracle has seen this window fall from an average of over 2 years to 17 months.

Market Landscape

In emerging markets, it is possible that CIS as a service (CISaaS) solutions will become even more popular later in the decade as the business model is proven. Combined with constrained budgets and a lack of sunken investments in owned systems, some emerging markets may come to rely heavily upon CISaaS. This will provide utilities with more bandwidth to deal with regionalized issues (e.g., electrification, energy theft).

According to Guidehouse Insights, the global market for CISaaS is expected to grow from $153.1 million in 2018 to $570.3 million in 2027, at a CAGR of 15.7%. On a cumulative basis, the global market is expected to be worth nearly $3.4 billion over the next decade. Single- and multi-tenant solutions are included in this analysis.

CIS as a Service Revenue by Region, World Markets: 2018-2027

(Source: Guidehouse Insights)

Vendors are responding with increased development of SaaS-based customer management solutions. Beyond the Oracle’s of the world, there are existing solutions that offer quasi-SaaS offerings, like those offered by the National Information Solutions Cooperative and SEDC. With these single-tenant solutions, there is some level of customization across enterprises, keeping it from reaching the “true” SaaS classification.

Given the notable uptick in utility demand (from cooperatives and municipals to utilities of all sizes) and supply (emergence of multi-tenant CISaaS), the market should expect strong adoption of these nascent solutions over the foreseeable future.