Traditionally, large monopolistic utilities with assured revenue streams and captive markets had little incentive to change. However, deregulation, consolidation and globalization have altered the environment, pushing the utilities sector into a more dynamic, market-driven landscape. How can the sector transform itself in the face of rapid innovations in the industry?
There are two distinct ways:
- Invest in a wholesale program to restructure operating models and operational processes, or
- Evolve incrementally by identifying and optimizing units of structure and process, a few steps at a time.
Given the rate of technology churn and transient market structures, the adoption of an incremental approach and position will help utilities to sustain transformation over a period of time. Further, I recommend that the industry invest in the following four foundational enablers - data driven innovation, customer-centricity, enhanced cyber security and strategic crisis management - to achieve game changing value and high resiliency.
1. Data innovation: Insights and foresights to enhance enterprise value - Since there is no holistic set of processes, methods and tools available in the market place to implement data innovation, the following guidelines should be adopted:
a. Pursue value-based segmentation and prioritization of analytic opportunities, such as revenue analytics, customer analytics, grid analytics and security analytics
b. Integrate existing legacy reporting and data mining environments
c. Develop a holistic architecture to enable enterprise analytics
d. Establish data governance
2. Customer-centricity: Integrated customer information to improve brand value and market share - in an increasingly digital society, consumers will expect more customized and content enriched information from utilities, and will therefore compel enterprises to shift from infrastructure-centric to customer-centric communications that can effectively deliver personalized and actionable content. Hence, the utilities should develop systems that will
a. Provide customers with personalized energy information and conservation tips
b. Provide utility personnel with a consistent 360° view of the customer
3. Enhanced cyber security: Transition from vulnerable to valuable enterprises - Digital grid devices increase the probability of cyber exploitation, an ever-growing threat to destabilize utility operations. The current utility security architecture should be augmented to meet the following requirements:
a. End-to-end integrated security architecture
b. End point security solutions
c. Smart meter security architecture
d. In-home networks and security extensions
e. Extensions to information technology (IT) security
4. Strategic crisis management: Transition from reactive to resilient enterprises - The growing impact of severe natural disasters is forcing utilities to look for a strong crisis management execution model, with the following features:
a. Management of stakeholders
b. Management if communications
c. Smart work planning and scheduling It is important for utilities to recognize the fundamental shift in society and the business environment, and capitalize on emerging technology solutions to improve their market position and minimize operational risks. The above four pillars, when implemented, will help utilities leverage more out of the utility grid, minimize business disruption and future-proof the organization - thereby transforming into a next-generation utility.