Outsourcing Utility
Network Operations
for OpEx and Innovation
T
By Shaun McFall, Senior Vice President and Chief Marketing Officer, Aviat Networks
he arrival of smart grid
is rapidly changing the
rules in the utility sector.
Utilities—investor owned,
publicly owned, or coop-
eratively owned—are being
challenged with deploying large-
scale telecom infrastructure projects in addition to
managing thousands of IP endpoint devices such
as automated meter infrastructure (AMI), phasor
measurement units (PMUs), demand response, and
SCADA systems. The top issues facing all utilities
include:
1. Managing new integrated communications
networks and associated operating expenditure
(OpEx) of network operations centers (NOCs),
2. Increased focus on delivering new energy offer-
ings and tools, and
3. Assuring network service leading to increased
customer satisfaction.
For utilities to meet these needs, external expert
help is available. Outsourcing network operations to
professional managed services partners is a busi-
ness model that is becoming increasingly popular
for its proven effectiveness.
Control Network Operating Expenses
Network operations expenses are becoming one
of the largest cost drivers of smart grid OpEx. As
these new communications networks and their
respective costs grow steadily, they will entail more
focus from management and finance primes. By
outsourcing various elements of operations such as
integrated communications network NOC activities
to a managed services provider, cost control can
be immediate and bottom-line net positive. These
together can help abate a utility’s fundamental con-
cerns about giving up control over a core part of its
communications infrastructure.
Network OpEx Can Be Controlled
The growth of network OpEx costs for smart grid,
UTC Journal | 2 nd
Quarter 2010
as a percentage of overall OpEx, has been largely
unchecked. This is particularly alarming as opera-
tion and maintenance costs could become a major
barrier for smart grid deployments if not addressed
early on. In short, utilities need to rein in their
OpEx and do more for less.
For the mobile operator, on average, network
OpEx accounts for more than 26 percent of total
OpEx 1, and this figure is growing.
Outsourcing integrated communications network
NOC functions can illustrate vividly how to achieve
immediate OpEx cost control:
• Each network shift needs a minimum of two NOC
engineers.
• Three shifts are scheduled 24 hours a day, Mon-
day through Friday (six NOC engineers), in addi-
tion to weekend shifts. That’s another four to six
NOC engineers, depending on hours per shift.
• Including an NOC manager, that is a total NOC
headcount of 10 to 13.
Outsourcing NOC activities will have the most
immediate and largest effect on the top line for
rural utilities and co-ops, especially for those that
operate on tight budgets and often serve sparsely
populated areas.
For utilities likely to keep NOC operations in-
house, the back-up NOC functions could be consid-
ered for outsource. In the event of a natural disas-
ter, such as a hurricane or flood where network
service and utility grid information is affected, lo-
cating a backup in an unaffected area is imperative.
Back-up NOC functions can be arranged through a
managed services provider, which also reduces the
immense cost a utility would encounter with build-
ing a secondary NOC.
Managed Services: Customized to Fit
Small or large parts of the utility NOC activities
can be outsourced. Service can be customizable to
balance the need to reduce costs and the utility’s
desire to preserve control over core functions. In
a step-by-step approach, a utility could initially
Continued on page 48
47
 Outsourcing Utility Network Operations
Continued from page 47

outsource weekend support only and then expand
outsourcing to weeknights, thus keeping the kernel
of 8-to-5 weekday NOC monitoring in-house when
weekend shifts and then weeknight shifts, reduc-
ing recurring headcount cost by up to 75 percent.
tools in place and can often execute network opera-
to perform. This is especially true when consider-
ing the ever-changing and demanding technology
transformation to more complex platforms. Utilities

overall NOC costs and leave NOC functions com- tions, and tools for customers. Utilities can improve

and leave the “mess” to the experts.

cient given the third-party provider’s ability to scale
its personnel, tools, and processes to meet your
business goals. Bottom-line, third-party managed
that simply cannot be accomplished in-house.
Focus on Product Innovation
Smart grid and new technologies to empower lower
energy consumption for consumers is the future
that utilities need to focus on, and outsourcing non-
core network services can free resources to do so.
Utilities can focus on rolling out new applications
for customers, such as personal energy dashboards
and time-usage information, to take full advantage
of the new smart grid technologies.
of telecom and NOC professionals, typically a
headcount of 10 to 13 to support three shifts, seven
days a week. These skilled, direct labor costs can be
high.
Experts in managed network services already
have network management and NOC processes and
Utilities need assurance of their network service
to increase customer satisfaction. Outsourcing net-
work operations to a third-party managed services
provider can help provide this customer satisfaction
by implementing their services within a framework
of an integrated service assurance program. This
approach focuses on uninterrupted network perfor-
mance by providing superior situational awareness
through a state-of-the-art integrated network man-
agement solution. Managed services providers can
transparently remove operational burdens while
ensuring optimal service experience with maxi-
mum network uptime, something that a utility may
and an outdated or fragmented element manage-
ment system.
An integrated service assurance program custom-
ized to a utility’s unique smart grid networking
needs will include a rich set of applications that
can deliver everything from service management to
Continued on page 50

Utility Disaster Recovery Planning

As a utility, is your business safe from a disaster? Is your business continuity plan implement-
ed? Are your customers protected?
Many utilities do not have a reliable back-up solution or disaster recovery (DR) plan. If you
do not implement a DR plan supported by a reliable, backed-up solution, it can become a very

mitments.
Third-party NOC operators and managed services providers can deliver a solid DR plan for
your network. Backing up your network infrastructure is the smartest single action you can
take to guarantee network uptime and network redundancy. NOC operators can customize
a DR plan to ensure that your network is protected and comes online faster in the event of a

tive solutions that prevent you from having to implement a fully manned secondary NOC.

48 UTC Journal | 2 nd
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 Outsourcing Utility Network Operations
Continued from page 48

shoot problems from isolation to solution. In addi-
tion, this program enables integration of third-party
hardware and software to deliver improved quality
of service. An effective service assurance solution
will deliver uninterrupted network performance,
serving as the cornerstone to preempt, respond to,
and resolve network issues while lowering opera-
tional costs and improving QoS.
Integrated service assurance solutions can often
deliver functional expertise more cost-effectively
than in-house efforts. With specialized programs
that concentrate on small and medium-sized utili-
ties with multi-vendor, multi-platform networks, an
integrated service assurance provider can manage
everything from legacy equipment to next-genera-
tion, IP-based network infrastructure and services.
At that point, utilities can provide a higher level of
customer satisfaction to end users.
fast-rising network OpEx, refocus more intensely
on their core competency to deliver new energy
offerings, and assure network service uptime for
increased customer satisfaction.
By contracting a managed network services
provider, utilities can take a large and confident
step in overcoming those tough challenges. Man-
aged network services providers can deliver the
expertise, processes, and tools that utilities need
for operational effectiveness: lower cost, improved
system performance, and simplified operations.
Freed of network operations concerns, a utility can
concentrate on its core competency of delivering
new energy offerings to customers.

Benefits for Utilities End Note

While the imminent modernization of the electric 1. “Operator OPEX Strategies—How and Where
grid represents a great opportunity for advance- to Cut Costs,” by J. Buvay and S. Basu. Mobile
ment and change, utilities know they must control Europe, November 13, 2009.

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50 UTC Journal | 2 nd
Quarter 2010