E.ON outsources applications to Capgemini

Utility giant E.ON has outsourced application services to Capgemini as part of a five-year restructure of its IT services in a deal worth about €50m.

The deal will see Capgemini provide application lifecycle services for E.ON’s business information management and SAP ERP applications, as well as providing industrialised software development.

The work has already begun after the successful transition of the services from E.ON to Capgemini.

Capgemini said the contract deepens its cooperation with E.ON.

E.ON, like many utility companies, are addressing calls for more smart metering services, which require heavy investments in applications and software development.

This is the case in the UK – the government plans to put 53 million smart meters in homes and businesses in the UK by 2019 as part of its GB Smart MeteringImplementation Programme to reduce energy consumption. But it could face a major challenge over concerns about the safety of smart meters in the home and the potential invasion of privacy.

Utility companies in western Europe will spend $10.5bn on IT this year, of which over 62% will be invested in IT services.

IDC Energy Insights expects IT spending by utility companies in the region to exceed $13bn in 2016, after average annual increases of over 5%.

IT services dominate spending, with $6.5bn invested in 2012, and will continue to rise by 4.9% each year. Software investments will increase the most in the next five years, growing by 7.2% each year, while hardware spending will see annual growth of 3.1%.

Speaking when the research was published in August, Gaia Gallotti, senior research analyst at IDC Energy Insights, said: "The need to reduce costs and achieve operational excellence, together with the need to comply with energy policies and regulation, will continue to drive utilities' ICT investments.”