Earlier this week, Microsoft (News - Alert) shared some findings of a survey they recently conducted with 200 utilities about their views on smart grid initiatives. We have featured Microsoft previously here about both their Hohm offering as well as their Smart Energy Reference Architecture, or “SERA.” In my view, Microsoft brings a lot to the utility world, especially in providing a platform that integrates software applications intelligently with both the IT infrastructure and the Web. Most of this is not first nature to utilities, and before running to deploy the solution, they first need to recognize and understand the problem set.

Microsoft’s Worldwide Utility Industry Survey 2010 is their latest attempt at doing this, and while this is not really a major study, there are a handful of meaningful conclusions that I think will – and should – resonate with utilities. The press release cites a few key findings, but for greater context, I spoke with Jon Arnold (News - Alert) (no relation), managing director and Larry Cochrane, technology strategist.  Both are key drivers in Microsoft’s Worldwide Power and Utilities Industry vertical.

Right off the bat, the first finding sets the stage. In terms of overall progress with smart grid deployments, only 8 percent have “completely adopted”. That’s not surprising, and more noteworthy is how little progress the rest of the market has made – 31 percent said “plans are in place, but not started”, and 24 percent have “not yet started”. If we take this data at face value, we are still in the early adopter phase, which is good news for Microsoft and the rest of us.

Complementing this is the fact that utilities know they’ll have to invest in smart grid once these plans get moving. When asked how they see their smart grid budgets changing in the next 2-3 years, 77 percent expect an increase. It may be too early to tell how much of an increase is expected, but clearly, the foundation is in place for this to be a strong growth market.

In terms of the problem set, the survey honed in on a few areas that play well to Microsoft, especially SERA. Three caught my eye in particular.  First is the state of their overall IT architecture, particularly the ability to support things like AMI, sensor monitoring over the Web and cloud computing. The majority – 59 percent - said they’re “having some success, but it could be better.” Another 33 percent said they “struggle to support new business processes and lack the ability to integrate with new technologies,” and only 8 percent said their IT is “completely adequate.”

Mirroring this is how they evaluated their IT platforms. Again, the majority – 52 percent - was middling, having a “standardized” platform with “limited automation.” Another 18 percent have a “basic” platform that’s “functional,” but “uncoordinated and manual.” Only 11 percent said their platform was “dynamic and fully automated”. While these attributes seem somewhat arbitrary (I don’t have access to the raw data inputs), there is enough consistency to support what we all suspect – utility networks and IT infrastructures will need work for successful smart grid deployments.

Just how much work they’ll need is open to debate, but the third finding in this sequence provides a clue. One question asked if they thought their organization would need to be “completely restructured” for a “fully integrated smart grid” to occur. That wording is a bit extreme, but “Yes” was the strongest response – 36 percent. Another 33 percent were not sure, but I suspect most of these would have leaned towards yes if the question was worded more moderately.

There certainly were some positive signs from the survey in terms of smart grid adoption. In terms of incorporating renewable energy into the grid – wind and solar – 42 percent said they are doing that now, and another 25 percent plan to within one – three years. TOU pricing – time-of-use – is another good indicator, and 19 percent are doing this now for all their customers. Most everyone else will follow in time – 36 percent in one – three years, and another 30 percent in four – six years – and both these findings imply that utilities will be ramping up their efforts considerably in the near term.

While I would concur with this willingness to move ahead, the ability of utilities to do so may be a different story. In speaking with Microsoft about the overall outlook, it’s clear that utilities are challenged when it comes to adopting and integrating new technologies, and this is what SERA seeks to address. Aside from these technologies being new and unfamiliar, utilities are not known to be innovative and tend to be fast followers rather than early adopters. This is a byproduct of being in a regulated sector, but with all the stimulus funding earmarked for smart grid, along with the ongoing pressures around climate change, carbon footprints and green energy, utilities have to move forward.

How they move forward will depend on many variables, and from Microsoft’s perspective, the hope is they will adopt standards-based technologies that integrate and scale across hardware in the field, software in the network, and the Internet that connects to an ever-increasing world of intelligent endpoints. Most of this is new for utilities, and they are not accustomed to sharing common technologies. The danger lies in having each utility follow its own path and reverting to closed, proprietary solutions. Another danger comes from limiting their vision of smart grid to AMI simply because a broader vision is too daunting a task. Neither is desirable, but the future is in their hands.

In short, utilities need to be shown the way, and Microsoft is positioning itself to be one of those leaders. This survey does not establish that for Microsoft – the marketplace will decide – but it’s a timely guidepost to assess how far utilities have come, and more importantly how far they have to go.