• Written by Azhar Aliyar, Director

A decision to be made this week by energy and utilities executives is where to allocate their IT budget, with many currently basing it on the latest report or system that promises to answer a new question, rather than on the overall efficiency of their existing systems, which is why 13.7% of US utilities reported using AI in the previous two weeks, according to the US Census Bureau's Business Trends and Outlook Survey, AI supplement, late 2025 to early 2026.

Where IT money actually goes

Most IT spending in energy and utilities goes towards getting answers out of systems rather than running them, with a significant portion dedicated to creating new reports and dashboards to answer specific questions, rather than using the data already available in systems like SCADA, the outage management system, asset management and billing, which is why 11.4% of US businesses used AI in their information technology function in the previous six months, as reported by the US Census Bureau's Business Trends and Outlook Survey.

This approach leads to a never-ending cycle of spending, as each new question requires a new report or system, resulting in a complex and costly IT infrastructure, and it is wrong to think that this is an inevitable consequence of doing business, as many of these questions can be answered by the existing systems, and it is the job of IT leaders to identify where this is possible.

The report and dashboard backlog

The report and dashboard backlog is a major cost driver in energy and utilities IT, with each new report requiring significant resources to create and maintain, and this is where AI can help, by providing a way to ask questions of the existing systems, rather than building a new report for every new question, and this approach can replace the traditional report and dashboard backlog, freeing up resources for more strategic initiatives, as seen in the 14.3% of US businesses that used AI in sales and marketing in the previous six months, according to the US Census Bureau's Business Trends and Outlook Survey.

By using AI to answer questions, energy and utilities companies can reduce the number of reports and dashboards they need to create and maintain, and this can have a significant impact on IT spending, as the cost of creating and maintaining each report can be substantial, and this is why 61.6% of US businesses with no plans to adopt AI said it was not applicable to them, according to the US Census Bureau's Business Trends and Outlook Survey.

Extending existing systems

Rather than replacing existing systems like SCADA, the outage management system, asset management and billing, energy and utilities companies can use AI to extend their capabilities, and ask better questions of the systems they already own, which can help to defer a replacement programme, and this approach can be more cost-effective than replacing the entire system, and it is also more efficient, as it allows companies to get more value out of their existing investments, and this is why 64.3% of US businesses already using AI made no change of any kind to adopt it, according to the US Census Bureau's Business Trends and Outlook Survey.

A shift supervisor, for example, can use AI to ask questions of the maintenance log, and get answers in real-time, without having to create a new report or dashboard, and this can help to improve the efficiency of maintenance operations, and reduce the risk of equipment failure, and for more information on how AI is transforming the energy industry, you can visit our blog.

Integration spend

Integration spend is another major cost driver in energy and utilities IT, with companies often having to build and maintain point-to-point links between different systems, in order to get the data they need, and this can be a costly and time-consuming process, but AI can help to reduce this cost, by allowing companies to join data at the point of the question, rather than building a separate link for each one, and this approach can be more efficient and cost-effective, and it is also more flexible, as it allows companies to ask questions of their data in real-time, without having to build a new integration.

For example, a category manager can use AI to compare two suppliers, and get answers in real-time, without having to build a separate integration between the supplier database and the procurement system, and this can help to improve the efficiency of procurement operations, and reduce the risk of supply chain disruption, and for more information on how to get started with AI, you can contact us at contact us.

Where AI adds cost

While AI can help to reduce IT spending in energy and utilities, it is not a panacea, and there are some areas where it can add cost, rather than removing it, such as the data work and governance that is required to implement AI, and this is why it is essential to budget for these costs honestly, and not to assume that AI will automatically reduce spending, without any additional investment, and this is why 6.8% of US businesses already using AI changed how they collect or manage data, according to the US Census Bureau's Business Trends and Outlook Survey.

For example, energy and utilities companies may need to invest in data cleansing and preparation, in order to get the most out of their AI systems, and this can be a costly and time-consuming process, but it is essential to get it right, in order to ensure that the AI system is accurate and reliable, and for more information on how to lead your organisation through this process, you can visit our executive and strategic leadership page.

Measuring success

In order to measure the success of an AI implementation, energy and utilities companies need to track the actual reduction in IT spending, rather than just relying on projections, and this can be done by measuring the number of reports and dashboards that are no longer needed, and the number of integrations that are no longer required, and this will give a clear picture of the cost savings that have been achieved, and for more information on the state of AI adoption in US businesses, you can read our analysis of the US Census Bureau's Business Trends and Outlook Survey.

By tracking these metrics, energy and utilities companies can get a clear understanding of the impact of AI on their IT spending, and make informed decisions about where to invest in the future, and this is why 22.4% of US businesses reported using AI in the two weeks to July 2026, according to the US Census Bureau's Business Trends and Outlook Survey.

When AI is not the answer

While AI can be a powerful tool for reducing IT spending in energy and utilities, it is not always the right choice, and there are some situations where it may not be the best solution, such as when the existing systems are already highly optimized, and there is little room for improvement, or when the data is not suitable for AI analysis, and in these cases, it may be better to focus on other areas, such as process improvement or staff training, and this is why it is essential to carefully evaluate the potential benefits and costs of AI, before making a decision, and to consider alternative approaches, such as those outlined in our blog.