1. HOSTING FOR TODAY’S UTILITIES
HAVE YOU EVER THOUGHT ABOUT SAVING YOUR UTILITY MONEY, increasing
operational efficiencies, and at the same time reducing some day to day operational headaches?
Trick question I know, but one thing is very certain, today more than ever before, the
management of computer software at the utility has become very complex especially when you
add in the computer environments they operate within.
Almost overnight, many of the software vendors and computer firms serving the utility industry
have transformed themselves into what is called “Application Service Providers” or ASP’s
(sometimes also called a hosting center). For some of you, you might remember back in the 70-
80’s when Service Bureaus were common, which in a nutshell was where many utilities operated
from the same large mainframe. Then in the 90’s, many companies installed in-house systems
and migrated the operation from remote to internal to the utility. Have you ever heard the term
“what goes around - comes around?”
Let me offer the conclusion to this article even before I get started. The ASP environment may
or may not be the right solution for your utility. But for many utilities, whether a small single
service utility with just a few users or a larger utility with hundreds of users, there is increasingly
justification. In this article I will attempt to provide a high-level management overview of why
an ASP environment may benefit your utility. As I am sure you may have heard about other
things “your mileage may vary” and your environment may be different.
Let me start by defining a little better what an ASP is.
Do you remember back in the 70’s when many utilities relied on a centralized mainframe located
many states away to deliver business applications? Then in the 80’s we saw a move from
mainframe to desktop personal computing and the trend continued in the 90’s as computing
power increased in capacity while cost and size continued to get smaller. ASP’s are a return to
centralized computing.
The ASP provides an application or applications from a remote server then distributes these
applications to the utility over a high speed connection such as the Internet or dedicated
communication line. These applications then operate from a browser or other thin client
connection. The important note is that technology has improved in recent years that the person
using the application seldom notices the difference if the application is run local or remote.
Applications have grown in recent years to include financial applications including payroll
processing, customer information systems, credit scoring, credit card processing, customer
relations management (CRM), and even desktop applications such as word processors and
spreadsheets. Before I go any further, the ASP concept is not owned by any one vendor or
organization. Most major vendors today have products and services that can be considered an
ASP solution. This allows tremendous flexibility for the utility.
Professional Computer Systems, Co. Ph: 712-263-3106
PO Box 116, Denison, IA 51442 www.pcsco.com

2. Market Background
Before I go into any detail, let me provide a few quick bullets on why ASP’s or hosting centers
have become popular:
• The high cost of managing and maintaining software applications such as financial,
customer information, and associated applications.
• Hard to find IT resources.
• Fluctuating cost of information systems.
• Complex and changing computer server, network, security and virus protection
environments.
• Wave of new technologies becoming available to utilities.
• Information Technical (IT) departments are being asked to do more with fewer resources.
Benefits for considering an ASP or Hosting:
Like the advantages recognized by utilities in the 70’s, utilities considering an ASP solution
today can reap many benefits. Depending on the current situation of the utility, some reasons to
migrate to an ASP will benefit some utilities more than others. Here is a quick list of reasons to
consider an ASP or hosted computer software solution:
Lower Total Cost of Ownership (TCO): In today’s demanding application and computer
system environment, small to midsized utilities are spending more time and effort each year
keeping up with technology. By using a hosting company, the utility will be in an
environment where the cost of operations, administration, maintenance and support is shared
by all of the participants in the hosting center. But the most important benefit is the utility
moves the requirement of managing the application to the ASP, thereby freeing up staff for
other utility efforts.
Higher Reliability: Most ASP/hosting centers are designed for 7 x 24 hour operation.
Continuous operation is accomplished by designing and installing servers with redundant
power supplies, disk drives and other hardware components. This provides the greatest
potential access to your applications. Access in many cases can be accomplished from the
utility office, from a secured remote site and if allowed the customer may have access to their
own account information. Many ASP’s can provide 99% or better uptime for critical
applications. A side benefit includes the fact the ASP/hosting center provides data backup
services saving operational time.
Scalability: Most ASP’s provide for the ability to scale from just a few users to hundreds of
users. This allows utilities to contract for only the services and capacity required today, but
for the most part can grow capacity without little effect on the utility or the ASP. Gone are
the days when you have to go back to the board and get permission to purchase memory,
disk, and add software licenses and etc...
Predictability of Cost: One of the benefits of the ASP is that costs are fixed and can be
calculated easily throughout the year, which in turn makes is easier to budget for the service.
Usually, once budgeted for, monthly fees stay consistent unless the service required by the
utility changes.
Professional Computer Systems, Co. Ph: 712-263-3106
PO Box 116, Denison, IA 51442 www.pcsco.com

3. Keep Current on the Latest Technology: This is one of the most important underlying
benefits; let the ASP focus on keeping such issues as versions of the database, operating
systems, application, virus protection, security up to date versus having to interrupt utility
staff and daily operations to keep these issues current. Most ASP’s have extensive plans to
manage and monitor these issues and are typically very good at these technology
environments.
Emphasis on Continuous Improvement: For some utilities, regulations now required by
Sarbanes-Oxley are difficult to implement with internal based systems. By outsourcing,
utilities will have access to newer processes that might not be available to the utility for
extended periods of time. Hosted solutions have the tendency to have a quicker time to
market and are easier to keep the solutions up-to-date.
Last, and more important, the utility focuses on serving utility customers versus managing
technology. As stated before, the utility staff can serve customers as opposed to managing
software applications, servers and databases. Even if the utility has an IT staff, the ASP
enables the in-house IT staff to solve core in-house IT issues and manage the overall utility
enterprise.
It is not all benefits: While the benefits are many, there are downsides to moving to an
ASP/hosting solution. First and foremost, many managers and directors do not like the fact the
utility data is not within the walls of the utility. Second, most of the connectivity to an ASP
depends on fast Internet service. If the Internet is slow, the solution is slow. The following table
contains a short list of other pros and cons.
Pro or Reward Con or Risk
Allows utility to focus on core business Loss of direct control over computer
Cost reduction Subject to negotiation
Increased reliability Must rely on Internet access
Flexibility Live with rules of ASP
Increased available expertise Dependency on ASP
Conclusions: There are several key factors that may be an incentive for a utility to investigate
outsourcing some of the utility internal applications. Each utility will be different, but the value
statement can be significant if the proper controls are put in place. The ASP/hosting business
has inherited many of the characteristics of what we called in the past “Service Bureau”. It
seems to be the same, yet the services are different.
The trends outlined in this article have been the basis of why many utilities today (both small and
large) are considering hosting or outsourcing some of the utility internal applications. I believe
every utility should discuss and debate how an ASP/outsourcing might benefit the utility as part
of an annual technology assessment. A well thought through plan implemented in a well
designed manner can provide significant savings and increased efficiencies for the utility.
If you take away the emotions of “all applications must be in our office” or “we have always
done it this way” there can be real benefits for all involved. Today’s computing environments
Professional Computer Systems, Co. Ph: 712-263-3106
PO Box 116, Denison, IA 51442 www.pcsco.com

4. are very complex, because of technology advancements in recent years there are identifiable
business benefits with real cost savings. There is no canned answer, each utility will have to
analyze and determine how an ASP solution is applicable for the utility. Whether you agree or
disagree, I would love to hear your comments.
About the Author: Kim Ingerslev is President and CEO of Professional Computer Systems in Denison,
Iowa. Mr. Ingerslev has worked in the utility industry for 23 years working with utilities from Alaska to
Bermuda and for both small and midsized utilities. He can be reached at kimi@pcsco.com.
About Professional Computer Systems: PCS specializes in providing software and services for the
utility industry. The products include a suite of financial applications, customer information systems, and
e-commerce services. Services include training, implementation and software development. These
solutions are provided in the form of in-office or hosted solutions. PCS Web site is www.pcsco.com.
8/1/2004
Professional Computer Systems, Co. Ph: 712-263-3106
PO Box 116, Denison, IA 51442 www.pcsco.com