The 2015 Black & Veatch Strategic Directions: Smart Utility report explores how advances in telecommunications, automation and data analytics are changing the relationship between utilities and their customers. The report provides an analysis of important planning, investment, and security challenges and opportunities along with insights on how utilities and cities can achieve their service, resiliency and, ultimately, smart city goals. Learn more: http://bv.com/reports/smart-utility

1. February2015
2015 STRATEGIC DIRECTIONS:
SMART UTILITY

2. SMART CITIES
2

3. 25.0%
57.6%
17.4%
Smart City Initiative
Announced
Yes No Don't know
SMART CITY INITIATIVES MAKE HEADLINES
41.3%
33.7%
33.1%
32.0%
30.2%
18.6%
12.2%
Assessing readiness
Currently in the planning stages
with relevant stakeholders
Creating a roadmap
Currently in the piloting stage
Preliminary discussions
Implementing a large-scale
Smart City deployment
Other
Foundational Activities
Being Examined
3

4. EFFICIENCY, RESILIENCY DRIVE SMART
INITIATIVES
What do you see as the primary driver of Smart City initiatives in your region?
42.5%
15.6%
8.7%
7.9%
6.6%
5.7%
2.6%
2.3%
8.2%
Improving efficiency of operations/ reducing
operating costs
Environmental/resource sustainability
Better overall management of community
systems
Increasing critical infrastructure resilience
Attracting business investment
Increasing customer satisfaction
Improving safety and security
Increasing resident/student satisfaction/
attracting new residents/students
Don’t know
4

5. SMARTER UTILITIES ENABLE SMART CITIES
What do you see as the top three most important systems into a smart city program to invest in first?
48.0%
41.0%
39.9%
31.1%
29.3%
22.4%
19.9%
11.9%
7.9%
7.3%
4.6%
2.7%
10.0%
Smart electric grid
Energy management systems (buildings, campuses, regions)
High-speed data network
Smart water systems
Smart buildings (energy/water efficient, smart appliances)
Renewable/distributed generation
Smart transportation
Smart waste systems
Smart street lighting
Microgrids or nanogrids
Interactive kiosks/ community information systems
Other
Don’t know
5

6. INFRASTRUCTURE , AUTOMATION
AND DATA SET THE STAGE
Which of the following do you feel are the top three most critical building blocks of a smart utility, city/community or
campus system?
58.3%
39.4%
37.7%
26.7%
23.7%
17.0%
16.4%
16.1%
15.0%
14.0%
7.4%
1.9%
3.4%
6.1%
Foundational/physical infrastructure
Automation and control systems
Smart Utility/City plan/roadmap
Common data repository/data mgmt system
Smart devices
Device accessible applications
Smart sensors
Data visualization and analytics
Ubiquitous wide-area connectivity
Customer/resident/student info. systems
Free public access to Wifi
Embedded/edge processing
Other
Don’t know
6

7. ROI CHALLENGES, CUSTOMER BUY-IN
LIMIT PROGRESS
What are the top three hurdles that must be overcome to enable utility, city/community or campus systems to be
managed in a smarter, more integrated way?
64.0%
36.9%
31.0%
25.6%
18.3%
18.1%
17.9%
17.7%
14.9%
13.4%
13.1%
7.3%
3.3%
5.3%
Budget constraints
Lack of resources or expertise
Policy hurdles
Gaining stakeholder support
Ownership across departments
Short-term mindset
Security concerns
Time constraints/other priorities
Lack of incentives
Process hurdles
Technology availability
Cultural barriers
Other
Don’t know
7

8. OPTIMISM PREVAILS DESPITE HESITATION
When do you believe there will be widespread adoption and implementation of the Smart City model across the United
States?
0.7%
10.0%
31.6%
25.0%
4.1%
10.9%
17.6%
Never
In the next 1-5 years
In the next 6-10 years
In the next 11-15 years
In the next 16-19 years
In the next 20+years
Don’t know
8

9. TELECOMMUNICATIONS
9

10. TELECOM NETWORKS REQUIRE UPGRADES
56.6%
48.4%
41.4%
40.7%
34.5%
27.3%
6.0%
Needed to support capacity demands
for Smart Grid/Smart Utility initiatives
Infrastructure is needed to support
mobile workforce
Infrastructure is obsolete or near
obsolete
Infrastructure is needed because of
cyber security initiatives
Needed to support future renewable
integration projects
To support IP network convergence
Other reason
Top Reasons For Improving
Communications Infrastructure
What are the top three reasons you are planning on upgrading or building communications infrastructure in the
next 5 years?
10

11. LEGACY CONNECTIONS SUNSET, IP RISING
26.5%
9.3%
17.9%
46.3%
Yes, considering IP network
Convergence
Yes, planning on implementing
over the next 2 years
Yes, actively in the process of
converging network
infrastructure through an IP
No, we are not actively
pursuing IP network
convergence
Are you considering, planning or currently deploying IP network convergence?
11

12. IMPACT OF NEXT GENERATION TECHNOLOGIES
AND STATUS OF MIGRATION
6.2%
15.7%
18.0%
7.2%
11.1%
12.7%
29.1%
0%
20%
40%
Major impact,
already
complete with
our migration
Major impact,
implementing
our migration
now
Major impact,
still finalizing
our migration
plans
Minor impact,
already
complete with
our migration
Minor impact,
implementing
our migration
now
Minor impact,
still finalizing
our migration
plans
Little or no
impact to our
network
Telecommunications carriers are migrating service offerings away from Frame Relay Services to next generation
technologies such as IP/MPLS. What impact do you anticipate this will have on your network, and what is the status
of your migration? 12

13. BIGGEST SECURITY CONCERNS REGARDING
MANAGEMENT AND THE USE OF DATA
38.2%
18.6%
13.2%
9.6%
8.4%
0.3%
2.0%
Unauthorized system access
Data integrity
Regulatory compliance
Maintaining customer privacy
Data loss
Other
Data security is not a big concern
13

14. NEW REGULATIONS EMPHASIZE SECURITY
Why have you not implemented a public carrier cellular network solution?
42.9%
10.5%
31.1%
15.5%
Reasons for Not Implementing
a Public Carrier Cellular
Network Solution
It does not meet our security requirements
It does not meet our requirements for QoS that
guarantee prioritization of critical utility traffic
It is not as cost effective as our private network
solution
Don’t know
14

15. TOP REASONS FOR DEPLOYING
IP NETWORK CONVERGENCE
73.4%
62.2%
33.9%
14.0%
3.4% 2.2%
0%
20%
40%
60%
80%
Increased amount
of data &
bandwidth
capabilities to
support operations
Demand for
operational
efficiency and
lower operational
expense
Security concerns Op Ex savings Environmental
initiatives
Other
15

16. AUTOMATION
PROGRAMS
16

17. AUTOMATION PROGRAMS BEING
DEPLOYED
. Which of automation initiatives are you currently implementing?
51.2%
48.7%
36.2%
29.9%
25.0%
17.7%
17.7%
16.4%
14.4%
1.6%
11.8%
Enterprise-wide
Asset management
Cyber or physical security
Electric substation
Water or natural gas production,
transmission, treatment facilities
Water or natural gas unmanned facilities
Water or natural gas distribution main
monitoring and/or control
Water or natural gas customers
Electric distribution
Other
No, we are not currently implementing
automation initiatives
17

18. AREAS WHERE AUTOMATION PROGRAMS
ARE CURRENTLY BEING IMPLEMENTED
2.1%
49.9%
33.4%
14.5% Only where mandated
Only where there is positive business
case support for new capabilities or
services
Where needed to replace outdated
equipment
Enterprise-wide regardless of
whether it is mandated or where
there is positive business case
support
Which of the following best describes the areas where you are implementing automation programs?
18

19. DATA
MANAGEMENT &
ANALYTICS
19

20. DATA ANALYTICS CURRENTLY IMPROVES
OPERATIONAL PERFORMANCE
35.4%
28.0% 27.3%
18.6%
8.1%
34.3%
0%
20%
40%
Descriptive
analytics
Closed-loop
optimization
Predictive
analytics
Prescriptive
analytics
None of the
above
Don’t know
What types of data analytics does your organization currently use to improve its operational performance?
20

21. BUSINESS AREAS THAT WILL BENEFIT MOST FROM
INCREASED DATA MANAGEMENT AND ANALYTICS
CAPABILITIES
38
67.1%
44.5%
27.1%
27.0%
26.8%
24.6%
19.7%
14.6%
1.3%
Asset management
Capital investment prioritization
Customer service/engagement
Customer billing, collections and/or revenue protection
Evaluating strategic options/scenarios
Risk management
Business case development
Rate making or dynamic pricing
Other
21

22. OPERATIONAL AREAS THAT WILL BENEFIT MOST
FROM INCREASED DATA MANAGEMENT AND
ANALYTICS CAPABILITIES
48.8%
47.8%
42.9%
28.4%
24.1%
18.0%
17.7%
17.1%
7.5%
0.4%
Evaluating operational or maintenance options/scenarios
Improving/maintaining service reliability
Monitoring performance
Identifying issues and losses
Infrastructure resiliency and recovery
Resource conservation /operating efficiency
Outage management
Regulatory compliance/reporting
Streamlining projects
Other
22

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