Mitigating AMI Implementation Risks and Challenges through AMI Managed Services

Debadutta Sahu | Dec 18, 2012

Introduction: AMI (Advanced Metering Infrastructure) programs are typically quite complex and burdensome for the utilities, fraught with risks and challenges during their journeys towards successful implementations. Managing and mitigating the multitude of challenges and risks during an AMI implementation life cycle can drain the utilities of their energy and shift their focus away from their core day to day business activities. In this situation, AMI Managed Services provide the utilities a safe passage to escape from all the complexities, challenges and risks associated with AMI implementation and share them with experienced and expert Managed Services providers who have the wherewithal to manage and deliver these kinds of programs and related services successfully. An AMI Managed services provider assumes the responsibility of managing the AMI program on a day to day basis and the utilities in the bargain compensate them for their services on a "pay as you go" model. These service providers bring into use their rich AMI program implementation experience and expertise to handle the challenges and risks some which are discussed below:

Financial Risk: Utilities generally commit huge capital and operational expenditure upfront costs for their AMI implementation programs and there is always a looming danger of not realizing the targeted financial objectives of the program. Overrunning the projected costs is very much a possibility. The utilities however can avoid the risk of incurring huge upfront costs owing to traditional way of AMI implementation by opting for Managed Services which is charged to them on a "pay-per-use" pricing model. Managed Services provide the utilities a predictability of costs incurred during the program and saves them from the program costs spiraling out of control. Utilities are better able to align project results to program costs in Managed Services model. Managed Services particularly help small and mid-sized utilities that face severe funding constraints for their AMI programs.

Technology Risk: AMI technology is currently in the growth phase of the Industry cycle and is therefore seeing a lot of technological innovations and advent of new standards and protocols. A utility exposes itself to the technology risks when it invests heavily in a particular technology or standard for its AMI program. Complex AMI programs can take couple of years to get into production and by the time their programs enter into production phase, a new generation of AMI technology would have arrived in the industry which the utility can ill-afford to adopt. On the other hand, Managed Services vendors invest significantly in mastering new technologies, adopting new protocols and standards and building an ecosystem around their products and services through partnerships and alliances. And they also employ many expert professionals who have spent considerable amount of time working in various technologies. The Managed Services vendors are part of many AMI technology research forums and industry groups and share common product development and strategy with many product vendors. From this perspective, Managed Services vendors are always better equipped to counter the technology risks and challenges arising from AMI programs than the Utilities. Managed Services option gives the utilities a complete freedom from worrying about future technological changes and in a way makes their AMI technology future proof.

Supply Risk: An AMI implementation program involves sourcing of scores of smart Meters, communications equipment, hardware and software from various sources based on their quality and requirement of the project. It requires a big logistical effort to ensure a steady supply of hardware and devices from different vendors so that the meter installations and network and software deployments go uninterrupted. Utilities can entirely pass this activity to Managed Services providers who have the alliances and contractual agreements with the equipment manufacturers and vendors to work around this kind of risk. These Service providers also have a shared AMI market vision and strategy with the suppliers.

Resources Ramp-up/Ramp-down Risk: Managed Services can go a long way in mitigating Resources ramp-up/ramp risks for the utilities. Managed Services model is based on use of shared services and resources, standardized processes and re-usable products and artifacts which makes it is easier for the service providers to ramp up or ramp down the resources as per the AMI project requirements and charge accordingly on per transaction or per service basis to the utilities.

Risk due to mid-program Scope Changes: Scope changes can occur mid-way through the AMI program which can cause program implementation disruptions and budget and time overrun. Managed Services providers can manage this risk by foreseeing and managing the scope changes through efficient and effective change management approach.

Risk due to unavailability of skilled resources: Short supply of skilled resources required for AMI program implementations poses a real risk for the utilities. Lack of communication and training for existing personnel also impacts the outcome of the program. A Managed Services vendor shoulders the entire responsibility of sourcing key professionals for the AMI program from its pool of experts who have a very rich industry and AMI implementation experience.

Risk due to involvement of multiple vendors: A typical AMI program involves multiple vendors spanning across multiple streams of services and products like Meter supply, Deployment services, System Integration, Program Management, Networking and Telecommunication etc. Communicating common program objectives and vision across all the vendors and their varied perception of the same poses a big challenge for the utilities in achieving synergy in the program. However, engaging with a single Managed Services vendor and sharing with them common program vision and objectives makes the job much simpler for the Utilities. The Managed Services providers, who have past experience and relationship of working with various vendors and suppliers, successfully manage them and achieve optimal performance in the program. Managed Services route helps the utilities in reducing the risks and complexities arising out of managing multiple vendors.

Risk of committing errors: The AMI regime incorporates a fair amount of complexities into various utilities' business processes, operations and technologies. For example, the existing Billing process of a utility assumes higher complexity due to complex calculation of different types of dynamic tariffs, ToU (Time of Use) billing, demand side management etc. which increases the risk of committing errors in billing. Utilities can let the Managed Services vendors operate their complex business processes by using their standard and proven solutions and experienced professionals to mitigate the risk of committing errors.

Regulatory Risk: Regulatory authorities look towards safeguarding the customer interests and market competition in AMI scenario. Utilities are required to comply with various Industry regulations. In order to meet all regulatory obligations, the Utilities can build appropriate regulatory compliance mechanisms into their contractual agreements with Managed Services vendors and link the payments with discharge of Regulatory responsibilities during performance of services.

Risk due to Aging Workforce: The roll out of Smart Meters and allied infrastructure brings in lot of changes in business processes and increases functional and technical complexities. It requires a very agile and skilled work force who can internalize trainings and new AMI related technologies and complex business processes to become fully productive in less turnaround time. With many Utilities today facing the issue of Aging work force, preparing a highly skilled and agile workforce to run successfully the AMI set-up could be a challenge. However, the Managed Services vendors have the required pool of expert professionals to successfully operate and maintain various AMI assets and processes during and after the AMI implementation. And off-course, it is prudent for the Utilities to entrust the task of operating and maintaining the AMI set-up to the Services providers who also would have implemented the AMI system.

Environmental Risk: Utilities are required to appropriately dispose and re-cycle the decommissioned Metering equipment that could otherwise pose an environmental hazard. Managed Services vendors have alliances and partnerships with various equipment manufacturers and stakeholders to follow appropriate standard and methodology for safe disposal and re-cycling of decommissioned metering equipment.

Conclusion: AMI implementation involving IT applications integration, large scale program management, security, networking, telecommunications, change management, procurement etc. are definitely not the strength areas of the Utilities. Therefore customizing and managing an AMI system do not come without its share of risks and challenges for the utilities. Managed Services providers today can provide answers for many of the questions related to risks and challenges that the utilities are facing today for their AMI implementation programs. Although Managed Services brings with it risks such as disruption in services and more cost on a long term basis, these risks however can be managed by going for a long term contract and incorporating penalty clauses for service disruptions and linking business benefits to terms of payment in the contractual agreement. The benefits and cost advantage that the Managed Services providers accrue from standardization, mutualization/sharing and reusability of their bundled products & services can be passed to the utilities through cheaper cost of services and products through a "pay per use" model. Finally, it makes a lot of sense for the Utilities to focus more in the areas where they have core competency in activities such as providing reliable and quality electricity and related services and let the Managed Services providers handle the risks and challenges arising from managing all non-core activities including AMI implementation and operations.

Related Topics


It's almost impossible for any business decision to involve only positive arguments for any particular option. Ignoring the negatives in this article makes it a sales pitch.

For example, what would the per-customer costs of a TOU-capable implementation, with included billing services, amount to?

No response so far.

But other response received. :)

Sunday near Roscoe TX

Roscoe Wind Farm (781 MW) The Roscoe Wind Farm in Roscoe, Texas was the world's largest wind farm at completion with 627 wind turbines and a total capacity of 781 MW, which is enough to power more than 250,000 average Texan homes

George Strait-Ocean Front Property.

You should implement it, it is for sure an excellent project, I am impressed! Great job!
Zahnreinigung München

what about the costs? I think that it is not cheap to implement and upgrade it!

Greetings I discovered your site by oversight when i was hunting hurray down this acne issue, I must say your site is truly useful I additionally love the outline, its astonishing!.
pos software

Company formations - Providing a bespoke range of Virtual Office and Telecoms & Company formation services.

money rates - Foreign Exchange for overseas property purchases and international payments. Get unbeatable money rates from our exclusive referral partner Baydonhill.

account executive jobs - Account executive, Medical writer jobs. Media Contacts are specialist recruiters for the Media Industry, recruiting Media Publishers and PR Agencies.

admin services - Meridian Virtual Office provides a back office support service to companies requiring support and advice without incurring full time office overheads.

meeting rooms london - Quality Meeting Rooms in London; UK, available for hire from £5 per hour - BOOK ONLINE!! Hire rooms in prime city locations for meetings.

You have raised a paramount issue..thanks for sharing..i might want to peruse more present issues from this blog..keep posting..
san antonio foreclosure lawyer

I don't have sufficient energy right now to completely read your site but I have bookmarked it and likewise include your RSS channels. I will be back in a day or two. much obliged concerning an incredible site.
craniosacral winder

I've recently chosen to make a site, which I have been needing to accomplish for some time. A debt of gratitude is in order regarding this post, its truly valuable!
car service bradbury

You have made an extraordinary showing. I will most likely burrow it and generally suggest to my companions. I am sure they will be profited from this site.
fisher price games

Hmm… I read writes on a comparative subject, however i never went by your online journal. I added it to top choices and i'll be your steady followers.

Step Up Height increaser helps to increase height naturally. Step up Height Increaser is a Herbal & Ayurvedic Product. Step Up Height Increaser

Hello, this is really an amazing page, many thanks for telling.I have to admit that I truly feel identified with this particular topic, and this is the reason I acknowledge together with the author; these days people try to look for a great future and begin contemplating brand-new methods for continuously growing, is Good!
more reviews on rebelmouse

I really like the dear information you offer in your articles. I'm able to bookmark your site and show the kids check out up here generally. Im fairly positive theyre likely to be informed a great deal of new stuff here than anyone else!
300c lambo doors

I've recently chosen to make a site, which I have been needing to accomplish for some time. A debt of gratitude is in order regarding this post, its truly valuable!
doors repair st. paul

Thank you a lot for providing individuals with a very spectacular possibility to read critical reviews from this site.
eroll elektronik sigara

I like your post. It is good to see you verbalize from the heart and clarity on this important subject can be easily observed. hormone replacement
best garcinia cambogia extract

I agree with you. This post is truly inspiring. I like your post and everything you share with us is current and very informative, I want to bookmark the page so I can return here from you that you have done a fantastic job. Personal Trainer Ibiza

Effectively, the article is really the best theme on this registry related issue. I fit in with your decisions and will excitedly anticipate your next overhauls.
alzheimer care in cambria california

Good Post, I am a big believer in posting comments on sites to let the blog writers know that they’ve added something advantageous to the world wide web!

Took me time to read all the comments, but I really enjoyed the article. It proved to be Very helpful to me and I am sure to all the commenters here! It’s always nice when you can not only be informed, but also entertained!

Took personal time to peruse all the remarks, yet I truly reveled in the article. It turned out to be Very useful to me and I am certain to all the commentators here! It's generally decent when you can be educated, as well as entertained!

It is imperative that we read blog post very carefully. I am already done it and find that this post is really amazing. - See more at:
disposal bins calgary

You have raised an important issue..Thanks for sharing..I would like to read more current affairs from this blog..keep posting..
Mesa Electrical Contractors

I am happy to find this post very useful for me, as it contains lot of information. I always prefer to read the quality content and this thing I found in you post. Thanks for sharing.
cleaning services calgary

digital lock from epos system in Singapore.

Nice share of information here. I really find this information really helpful for me. Thanks a lot, dude, for putting up this vital information on the internet for everybody to use.
bodybuilding nutrition