RESEARCH REPORT. Executive Summary: Meter Data Management

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1 RESEARCH REPORT Executive Summary: Meter Data Management MDM as a Managed Service, Utility In-house MDM, Smart Grid Data Analytics, Big Data, Smart Metering System of Record, Grid Operations, Financial Management, Customer Engagement, Business Process Re-engineering, Market Dynamics, and Professional Services NOTE: This document is a free excerpt of a larger report. If you are interested in purchasing the full report, please contact Pike Research at sales@pikeresearch.com. Published 3Q 2012 Bob Lockhart Senior Research Analyst Carol L. Stimmel Research Director

2 Section 1 EXECUTIVE SUMMARY 1.1 Introduction Meter data management (MDM) can no longer go it alone and the vendors know it. During the year since Pike Research published its first Meter Data Management report, every MDM vendor has moved aggressively into offering analytical capabilities alongside traditional MDM capabilities. Familiar functions, such as validation, editing, and estimation (VEE), are still critical and now reside in expanded product sets that include analytic capabilities. The ability to survive strictly on traditional MDM capabilities no longer exists. MDM vendors have evolved to avoid becoming dinosaurs. Regardless of how the tug-of-war between MDM and data analytics is resolved, Pike Research expects MDM systems to continue to sell throughout the rest of this decade. Utilities will continue to need a reliable and accurate system of record for their metering data and MDM is the only application likely to provide it. The three primary drivers of MDM purchases will be:» Advanced metering infrastructure (AMI) deployments, which are likely to include MDM at the same time. This is a departure from past scenarios where many stimulus-funded AMI deployments did not include MDM.» Replacement of legacy customer information systems (CIS), necessary to process the more complex billing determinants that come with dynamic pricing methods.» Desire to enhance business efficiency and decision making through more advanced analytic capabilities that require metering data as an input. The MDM marketplace has diverged into two distinct approaches: in-house utility deployments and managed services deployments. While in-house deployments are currently more popular, Pike Research forecasts that MDM as a managed service will gain market share throughout the decade. Pike Research also expects MDM as a managed service to generate quite a bit more revenue than in-house MDM, albeit with quite a bit more cost as well. MDM purchases are more strongly influenced by desired business outcomes than by technology issues, although some procurement of in-house MDM still emphasizes the technical aspects. The business outcome focus reflects the trend that utility operations teams are increasingly involved in the requirements and definition of success for technology acquisitions. Concurrently with the new business issues, MDM faces technology issues similar to the past, but more severe. MDM acquisitions today must be able to scale for much larger data volumes, as AMI deployments are completed and other sensor data are collected from the AMI beside interval consumption readings. Multiple specifications exist for meter data formats, each of 1

3 which has appeal in different markets. And finally, cyber security threats and data privacy legislation have each increased in intensity. 1.2 MDM and Data Analytics MDM s survival against data analytics engines emerged repeatedly in our research as the key topic for this market. In the best case scenario, utilities realize that they can perform nearly all the analyses they need within expanded MDM systems. In the worst case scenario, MDM is relegated to a piece of middleware that does little more than capture and smooth data from AMI head-ends. The most likely future is somewhere between those two extremes. Utilities still target MDM at three high-level business outcomes:» More efficient grid operations» More efficient business operations» More effective customer engagement However, during the past year data analytics have emerged more forcefully as a factor in achieving those desired outcomes. MDM s ultimate survival against data analytics rests in a complex stew of utilities perceptions of what they need, analytics vendors ability to align utilities visions with their own, and MDM vendors ability to convince utilities that they can provide the answers. It is far too early to forecast success or failure. MDM vendors have expanded their analytical capabilities and most MDM products can store non-ami data, such as sensor readings from supervisory control and data acquisition (SCADA) systems, enabling more complex analytics. MDM s shortfall is likely to be its limited ability to process non-structured data that is also needed for decision support, such as weather, economic, and political data. 1.3 MDM Revenue Forecast Chart 1.1 shows that Pike Research forecasts global MDM revenue to increase from $122 million in 2012 to $424 million by the end of 2020, with a compound annual growth rate (CAGR) of 16.8%. Comparing similar years between last year s forecast and this report, Pike Research has increased the MDM revenue forecast for from $1.135 billion to $1.414 billion, an increase of nearly 25%. The increase is attributable to increased drivers from smart grid data analytics and better visibility into AMI deployment plans especially for managed services. 2

4 Chart 1.1 MDM Software Revenue by Region, World Markets: ($ Millions) $450 $400 $350 $300 $250 $200 North America Europe Asia Pacific Latin America Middle East and Africa $150 $100 $50 $ (Source: Pike Research) This report also segments MDM revenue forecasts between in-house MDM and managed services MDM. Pike Research expects managed services to be, by far, the larger revenue generator for MDM vendors because of the number of capabilities that must be bundled into a managed service before it can be offered. By comparison, in-house deployments of MDM may generate only software license and maintenance revenue for the MDM vendors. Hardware, telecommunications, and professional services necessary for an in-house MDM deployment can be procured from a number of vendors beside the MDM provider. Pike Research expects North America and Europe to remain the major MDM markets throughout the forecast period. Significant activity is likely to occur in Asia Pacific during the second half of the decade. However, Pike Research expects that large MDM deployments in China and India will exert severe downward pricing pressure on MDM software licenses. MDM programs in those two countries are not likely to use MDM managed service offerings, which Pike Research expects to produce the lion s share of MDM revenue throughout the forecast period. Once again, Pike Research forecasts a separate market for MDM professional services, segmented by in-house and managed services MDM. This reflects the substantial amount of business process change that an MDM deployment can produce. MDM vendors are at a fork in the road. Will MDM become middleware or an all-conquering analytical enabler? Most likely, the answer is somewhere in the middle, with plenty of opportunity for MDM to remain a viable marketplace. MDM vendors must tread carefully, yet aggressively, over the next 2 to 3 years to preserve their business. 3

5 Section 8 TABLE OF CONTENTS Section Executive Summary Introduction MDM and Data Analytics MDM Revenue Forecast... 2 Section Market Issues Overview What is MDM? Client Requirements Business Case for MDM Systems Basic MDM Capabilities Extended MDM Capabilities Asset Optimization Workforce Management Outage Management Power Quality Load Research and Forecasting Line Loss Analysis Energy Theft Rate Design Load Curtailment/Demand Response Prepaid Metering

6 Commercial and Industrial Customer Web Portal Customer Engagement Credit and Collections Financial Management Settlements Customer Billing Information System MDM versus Data Analytics Scope of Data Analytics Demarcation between MDM and Analytics Data Analytics Providers Data Analytics Market Compared to the MDM Market How Much MDM Is Really Deployed? Meter Data Management or Meter Data Analytics? MDM Market Dynamics Size as a Differentiator Movement of MDM Suppliers into Data Analytics Cost Savings Industry Consolidation Better Management of the AMI Business Process Re-engineering Governance, Regulatory, and Compliance Pricing Approaches MDM as a Managed Service MDM Managed Services Market Survey Value Proposition of MDM as a Managed Service

7 2.11 Regional Issues for MDM and Data Analytics North America Europe Asia Pacific Latin America Middle East and Africa MDM Professional Services Section Technology Issues Functional Overview of an MDM System Implementation Models In-house MDM Managed Services Data Issues Data Models International Electrotechnical Commission Common Information Model SAP MDUS National Rural Electric Cooperative Association MultiSpeak Massive Data Volumes Cyber Security Issues Data Privacy Issues Data Analytics End-user Issues User Access to Consumer Data Facilitating Consumer Relationships

8 Section Key Industry Players Introduction MDM Vendors Aclara Software Ecologic Analytics emeter EnergyICT Ferranti Computer Systems Itron National Information Systems Cooperative North Star Utilities Oracle OSIsoft Powel SAP Telvent Systems Integrators Atos CSC IBM Infosys Logica Science Applications International Corp Wipro

9 Section Market Forecasts Introduction Market Assumptions Forecasting Methodology MDM Global Forecast MDM Global Installed Base Forecast MDM Global Revenue by Region MDM Global Revenue by Delivery Model MDM Regional Forecasts North America MDM Revenue Forecast Europe MDM Revenue Forecast Asia Pacific MDM Revenue Forecast Latin America MDM Revenue Forecast Middle East and Africa MDM Revenue Forecast MDM Forecast by Delivery Model MDM Managed Services Revenue by Region MDM Non-managed Services Revenue by Region MDM Professional Services Forecast Section Company Directory Section Acronym and Abbreviation List Section Table of Contents

10 Section Table of Charts and Figures Section Scope of Study Sources and Methodology Notes

11 Section 9 TABLE OF CHARTS AND FIGURES Chart 1.1 MDM Software Revenue by Region, World Markets: Chart 5.1 Smart Meter Installed Base by Region, World Markets: Chart 5.2 MDM Installed Base by Region, World Markets: Chart 5.3 MDM Software Revenue by Region, World Markets: Chart 5.4 MDM Revenue by Delivery Model, World Markets: Chart 5.5 MDM Revenue by Delivery Model, North America: Chart 5.6 MDM Installed Base by Delivery Model, North America: Chart 5.7 MDM Revenue by Delivery Model, Europe: Chart 5.8 MDM Installed Base by Delivery Model, Europe: Chart 5.9 MDM Revenue by Delivery Model, Asia Pacific: Chart 5.10 MDM Installed Base by Delivery Model, Asia Pacific: Chart 5.11 MDM Revenue by Delivery Model, Latin America: Chart 5.12 MDM Installed Base by Delivery Model, Latin America: Chart 5.13 MDM Revenue by Delivery Model, Middle East and Africa: Chart 5.14 MDM Installed base by Delivery Model, Middle East and Africa: Chart 5.15 MDM Managed Services Revenue by Region, World Markets: Chart 5.16 MDM Non-managed Services Revenue by Region, World Markets: Chart 5.17 MDM Professional Services Revenue by Delivery Model, World Markets: Figure 3.1 Meter Data Management Context

12 Section 10 SCOPE OF STUDY This report examines the marketplace for meter data management (MDM) software and services during the period from 2012 through The Market Issues section of the report defines the base MDM functions that must be present in MDM, followed by a list of sample extended MDM functions. The purpose of this report is to enable current and prospective MDM vendors to understand the likely investment by utilities in MDM software and MDM as a managed service. To achieve that purpose, Pike Research has excluded from the forecast any revenue not believed likely to be received by MDM vendors. Specifically, for in-house MDM deployments, Pike Research does not expect those utilities to source hardware, such as servers or telecommunications circuits, from the MDM software supplier, so those components are excluded from the forecasts. Very large systems integration projects are treated as in-house deployments, even if the systems integrator (SI) will ultimately manage the MDM system. This is because Pike Research also expects SIs to procure components like servers and telecommunications from sources other than the MDM software supplier. The definition of MDM as a managed service is an offering that is repeatable and hosted by the vendor, with small amounts of customization. This precludes from consideration offerings that must be built from scratch or are highly customized for each client. This forecast also excludes activities like staff augmentation, although a separate forecast for MDM professional services is included in the report. 84

13 SOURCES AND METHODOLOGY Pike Research s industry analysts utilize a variety of research sources in preparing Research Reports. The key component of Pike Research s analysis is primary research gained from phone and in-person interviews with industry leaders including executives, engineers, and marketing professionals. Analysts are diligent in ensuring that they speak with representatives from every part of the value chain, including but not limited to technology companies, utilities and other service providers, industry associations, government agencies, and the investment community. Additional analysis includes secondary research conducted by Pike Research s analysts and its staff of research assistants. Where applicable, all secondary research sources are appropriately cited within this report. These primary and secondary research sources, combined with the analyst s industry expertise, are synthesized into the qualitative and quantitative analysis presented in Pike Research s reports. Great care is taken in making sure that all analysis is well-supported by facts, but where the facts are unknown and assumptions must be made, analysts document their assumptions and are prepared to explain their methodology, both within the body of a report and in direct conversations with clients. Pike Research, a part of the Navigant Consulting, Inc. Energy Practice, is a market research group whose goal is to present an objective, unbiased view of market opportunities within its coverage areas. Pike Research is not beholden to any special interests and is thus able to offer clear, actionable advice to help clients succeed in the industry, unfettered by technology hype, political agendas, or emotional factors that are inherent in cleantech markets. NOTES CAGR refers to compound average annual growth rate, using the formula: CAGR = (End Year Value Start Year Value) (1/steps) 1. CAGRs presented in the tables are for the entire timeframe in the title. Where data for fewer years is given, the CAGR is for the range presented. Where relevant, CAGRs for shorter timeframes may be given as well. Figures are based on the best estimates available at the time of calculation. Annual revenues, shipments, and sales are based on end-of-year figures unless otherwise noted. All values are expressed in year 2012 U.S. dollars unless otherwise noted. Percentages may not add up to 100 due to rounding. 85

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