August 20, 2019

During the Cloud for Utilities 2018 Summit last November, Managing Director Rick Cutter sat down with Andrew Jornod, CEO of VertexOne to discuss the utility industry and its evolution to a more cloud-based business infrastructure. VertexOne, headquartered in Texas, is a market leader in North America for customer experience solutions for utilities Vertex has been providing cloud-based services for the last 20 years to more than thirty utility companies.

Cutter and Jornod have known each other for nearly 20 years, going back to when they both worked at SCT Utility Systems. Below are some of the highlights from this compelling interview.

Rick Cutter: Tell us about your career, and how you got to be CEO of VertexOne.

Andrew: I started out as an electrician, worked my way through university and then right into consulting. I got right into the utility space and I haveńt looked back. I have seen this industry change and adapt to things that at one point we thought were moving very rapidly. But as you compare that to today, things are just moving at an epic pace. Wére seeing the change that́s happening in this industry, I wanted to be part of that. When I started to see the shift to cloud across other industries, and saw utilities play more of a role in the cloud space, I quickly realized that this is an opportunity I couldńt pass up, and Íve been at VertexOne for about five years now.

Rick: As a cloud provider you guys have been doing some managed hosting for a long time. I know that SAP is your big partner now, can you tell us a little bit about that relationship?

Andrew: We took an evaluation 5 years ago, shortly after I joined, and then we started working with the organization to say “how do we want to go to market as a company?” One thing that we are really known for is our ability to service and deliver outstanding service over a period of time to our customers. And the software with both Oracle and SAP, have gotten to a point where the functionality of the base solutions are pretty standard. It’s really the solutions theýre putting around the core that has really evolved them to the point where theýre at today.  We looked at that and thought if we really understand our market segment – we service customers anywhere from 50,000 utilities to about 2 million and above – and we saw and opportunity for us to leverage the SAP platform, and the excellence theýve had as the largest provider of customer-information systems and really core systems for utilities, and provide a solution set around the cloud that was focused on integrating into their business. We focused on leveraging SAP at the core but really it’s just the tip of the iceberg. The services we provide around our cloud-based solution are about integrating their business, which has provided the most value for our customers.

Rick: And to that point, yoúre not just offering a CIS system, yoúre providing multiple different apps as a service now as well, correct?

Andrew: That́s correct, yes. When we started this journey obviously customer information systems, for the last 20 years, has been the cash register for the utility. Today, it’s really about how do we create a subset of Vertex tools and partner tools that sit around the core, and how do we focus in on the core CIS by going in at low risk, lower cost and in a way that we can capitalize expense for our utility customers today knowing where the regulations are, but at the same time, providing all that value that surrounds it with our own IP and other utility providers.

Rick: Right, because Vertex extends SAP and adds extensions and, like you said, you have other products to make that overall solution so Vertex is very deep.

Andrew: Yes. Our job is to simplify the use of SAP. SAP is developed for a global utility base, and dealing with utilities and the size segment we talked about earlier, you have different requirements, different usability of the solution in those different market segments. So we really focused on how to right-size that for our customer base, regionalize it for each one of the utilities, but do it in a way that provides them some prescription around how the implementation should go at a low cost, low risk and low timeline

VertexOne started off having an application business and a call center business and was operating more than 20 million end-use consumers. They evaluated all of the services the company provided across electric, gas, water, waste water utilities of all different sizes and developed a solution that would help drive the behavior of not only those agents but of those customers.

“We find that to be  extremely valuable for when we go into a utility of lets say a 50,000 to 500,000 customer size that have the same issues that utilities in the larger, Tier 1 segment have but also dońt have the budget or the manpower to be able to implement those types of solutions with the complexity that́s necessary to compete with the larger utility providers.”

Rick: Now that we have companies like Google, Microsoft and Amazon offering infrastructure applications – not necessarily SaaS applications for the utility market –How do you see the overall market evolving?

Andrew: We look at it from a maturity curve, definitely. You see things like infrastructure as a service, and Google and Amazon are providing the kit to run these systems. And then you see where the big software companies have gone – the Oraclés, the SAṔs – around a platform as a service, saying “Hey we can provide ERP, or CIS, or EAM functions in a cloud-based environment, through the provider of choice.” But, there is a lot of customization and a lot of configuration around the system, it’s just being hosted by a third party, therés value there. And then you get to that next step which is really the software as a service, where you start do see homogenizing of customers across a common code base, across a common platform. You see  this in Salesforce.com and others that really are trying to drive to a central system that allows them to drive down the cost to serve, but at the same time drives up the functionality – you pick and choose what functionality you have – all the upgrades, functional and technical, are included. That́s where we see the market going.

Rick: I think one of the biggest advantages of a SaaS model (Software as a Service) would be continuous innovation as yoúre alluding today, and upgrades that are more automatic. How is VertexOne working with that type of model?

Andrew: The application upgrades is a good discussion, because a lot of people talk about upgrades that are included, whether it’s a platform as a service play or even a software as a service play. The reality is that upgrades come in a technical fashion as well as a functional fashion. At Vertex we push the limits with the functional fashion. We ensure the upgrades are included to move the application forward but also to take advantage of new functionality that we continue to add to our platform. As a service to our customers, all upgrades are included, functional or technical.

Rick: In regards to the market, you and I sat down and had a conversation about two years ago, and we were starting to see people asking about Cloud and kicking some tires. My opinion is it looks like wére seeing more people talk seriously about taking Cloud in the utility space as an option. What are you seeing today?

Andrew: You know four or five years ago yoúd say “wére not going to move our data into the cloud, wére not going to take the risk of having a third party be responsible for things that could be a security breach” or something of that nature. It’s the exact opposite today, and the question now is – how do I have someone else take the responsibility, have the capabilities around managing the risk associated with having customer, financial, or employee data within their organization? Íve seen that shift happen. The biggest challenge we see in the industry around cloud has been around the capitalization. We have talked about that extensively throughout the industry. And one of the things I spend a lot of time struggling with is, if I create a 100% cloud-based company which – you look at many of the different delivery models of licenses and services that are being proposed – it is primarily OpEx we had to compete with a lot of different cloud variations out there in the market. The bold business integration – is very interesting and provides a lot of value, and it comes down to figuring out how we capitalize as much of this cloud platform as possible.

According to Jornod, there are two things you need to do in order to capitalize on new technology like the cloud: (1) the ability to take over the solution for de minimis cost and (2) the ownership of the data and the solution itself.

Rick: It sure feels like therés a tangible shift in the market right now. Ím hearing a lot more about Cloud and utilities are certainly open to putting their data in the cloud now with the right protections and so forth, so it’s changing.

Andrew: You look at the evolution and, in some instances the confusion, of “cloud” in the industry. The value for customers really comes down to what it is that theýre getting out of the service? “Cloud” is a word that is used often and not necessarily defined clearly, and so wére trying to give some definition around what it is that we do differently from a Cloud perspective. With that said, I’m very excited with this conference and utilities in general moving to cloud, adopting cloud, and really seeing the benefits that it offers the industry and, more specifically, the traction we’ve been seeing in the last 5 years as the market continues to evolve.

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