The Economics of Software in eMobility: Financial Strategies & Optimal ROI

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E-Mobility

Software migration - choosing the new provider for eMobility software

19 MAY 2023 • 7 MIN READ

Paweł Małkowiak

Paweł

Małkowiak

Software migration - new provider

For those interested in the topic of software migration (both Charge Point Operators and eMobility Service Providers), we have published a comprehensive ebook with a bonus list of OCPP Acceptance Testing procedures. Platform Migration for EV Charging Businesses is available for free.

Following up on the previous entry from our Software Migration short series, we’re now moving a step further into the topic. While the introductory article took on the preliminary aspect of the whole issue which is the decision making process, this time we assume the decision has been made and it’s time to choose the new software provider.

Similarly to the decision making process, there’s a handful of things to consider before choosing the right provider to which one’s bound to migrate. When it comes to software migration, selecting the right software provider is a crucial decision with far-reaching implications. Not only does the choice impact the overall success of the migration process, but it also has significant financial implications for the organization. The selection process requires careful evaluation of various factors, including the provider's expertise, cost-effectiveness, and ability to mitigate potential risks. Assessing these financial aspects and potential risks becomes paramount to ensure a smooth transition and maximize the return on investment (ROI) for the organization. By meticulously considering these factors, businesses can make an informed decision that aligns with their objectives and minimizes the potential for financial setbacks and operational disruptions.

With the decision-making process, we have grouped the arguments into two categories: product-based and business-strategic. In like manner we can now look at the intricate task of choosing a new provider. Two major points to consider are the financial aspects and potential risks for the business.

New software for the EV charging business.

When considering the implementation of a new software provider for electric vehicle charging, financial aspects and potential risks hold particular significance. The rapidly growing demand for EV charging infrastructure necessitates a reliable and efficient software solution that can accommodate the increasing number of users and vehicles. Choosing the right software provider entails evaluating their pricing structure, considering factors such as installation costs, ongoing maintenance fees, and scalability options. Additionally, potential risks such as system downtime, data security breaches, and compatibility issues with existing infrastructure must be thoroughly assessed. As EV charging software plays a critical role in customer satisfaction and revenue generation, businesses must weigh the financial implications and potential risks associated with the new software provider to ensure a seamless and cost-effective transition to support the future of electric mobility.

Choosing the new software provider - financial aspects

In the realm of software solutions, it is evident that the Software-as-a-Service (SaaS) model has gained immense popularity. The majority of existing software providers predominantly offer their solutions through SaaS, leaving organizations with limited alternatives in terms of business models. While SaaS offers benefits such as easy access and regular updates, it may not always align with the specific needs and preferences of every business. Unfortunately, the lack of alternative business models from software providers often restricts organizations from exploring options that may better suit their unique requirements. The widely-adopted SaaS (Software-as-a-Service) model has its advantages, but it may not be suitable or satisfying for everyone. One of the key advantages of SaaS is that it relieves businesses from the burden of maintaining and managing the software, allowing them to focus on their core operations. Additionally, SaaS offers low capital expenditure (CAPEX) as businesses primarily incur operational expenditure (OPEX) costs. This makes it particularly appealing for startups with smaller charging networks, as it provides a cost-effective solution.

However, there are notable disadvantages to consider. As a business grows and expands its charging network, the costs associated with SaaS increase proportionally. The more chargers a business has, the higher the costs can rise, potentially reaching overburdening figures. This scalability issue raises concerns about the long-term financial sustainability of using SaaS. Moreover, SaaS sometimes does not provide the flexibility to customize the software to match specific needs, limiting the ability to gain a competitive advantage in the market.

As businesses contemplate growth and the expansion of their charging networks, it becomes crucial to consider alternatives to SaaS. Migrating to a software provider that offers a licensed model alongside SaaS could be a viable option. By transitioning to a licensed model, businesses can gain more control over the software and potentially mitigate the soaring costs associated with scaling up the charging network. Evaluating different business models and carefully weighing the financial implications will allow organizations to make informed decisions and ensure sustainable growth in the electric vehicle charging industry.

Another possibility for acquiring software is to have it custom made to meet the specific needs and preferences of a business. Custom software development involves creating a solution from scratch or modifying existing software to fit the unique requirements of an organization and may also be a pivotal argument in choosing the new provider.

Choosing the new software provider - customization & uniqueness

Custom-made software for EV charging offers distinct advantages that address the specific challenges and opportunities in the industry. By collaborating closely with software developers or development teams experienced in EV charging solutions, businesses can ensure that the software is built to perfectly match their workflows, charging infrastructure, and customer needs. This level of customization enables seamless integration with existing systems, resulting in enhanced efficiency and operational effectiveness.

Moreover, custom-made software allows EV charging businesses to differentiate themselves from competitors and gain a competitive edge. By incorporating specialized features and functionalities, such as advanced charging management algorithms, dynamic pricing capabilities, or seamless integration with renewable energy sources, businesses can offer unique value propositions to their customers. This tailored approach empowers businesses to optimize their operations, deliver a superior charging experience, and align their software with their brand identity.

Custom software can also be easily scalable, allowing businesses to adapt and grow without facing the same scalability issues often associated with SaaS models.

However, opting for custom-made software in an EV charging business does come with potential disadvantages that should be taken into consideration. One significant drawback is the high upfront costs associated with custom development. Building software from scratch or customizing existing solutions can require a substantial investment in terms of time, resources, and skilled professionals. Additionally, the development process itself can be time-consuming, resulting in longer development times compared to off-the-shelf solutions. This extended timeline may delay the implementation of the software and hinder the business's ability to adapt quickly to market demands.

Choosing the new provider - mitigating risks & safeguarding the solution

When evaluating a new software provider for an EV charging business, it is essential to carefully consider the factor of risk. Transitioning to a new software solution inherently carries certain risks that need to be mitigated to ensure a smooth implementation and ongoing operations. One significant risk is the potential disruption to charging services during the transition phase. Any downtime or service interruptions can lead to dissatisfied customers, revenue loss, and damage to the business's reputation. Compatibility issues between the new software and existing charging infrastructure are also a risk, as they can result in operational inefficiencies and delays in providing charging services. It is crucial to assess the reliability and stability of the software provider, considering factors such as their track record, customer reviews, and the availability of comprehensive support services. Here’s where it might be a good idea to go with a provider that has proven history in creating solutions designed specifically for the industry. Additionally, data security and privacy risks should be thoroughly evaluated to safeguard sensitive customer information and comply with industry regulations. Similarly, to what we’ve touched upon in the previous entry of the series, the matter of data ownership comes to play here. The software that governs charging stations stands as a vital element in a CPO's infrastructure. Unfortunately, this software is commonly owned and managed by a third party, leaving CPOs vulnerable to risks that are beyond their control. The substantial investment made in establishing a network of chargers further magnifies these risks, underscoring the importance for CPOs to evaluate potential hazards and implement measures to mitigate them. One potential remedy is to transition to proprietary software or acquire a license, reducing reliance on third-party providers and granting CPOs greater autonomy over their systems. By thoroughly assessing and managing these risks, EV charging businesses can choose a software provider that minimizes potential disruptions, ensures operational continuity, and supports their growth and success in the rapidly evolving EV charging market.