In the Energy 2020 blog series, we have highlighted how macro trends around decarbonization, decentralization, consumer engagement and competition are creating significant opportunities. The industry has seen several new players entering the market to take advantage of these trends. These new entrants bring with them new business models, an increased focus on the end consumer, and new technology paradigms that are resulting in fundamental shifts in the trajectory of how energy is produced, delivered, and consumed.
In our earlier blogs, we discussed how Utilities can turn the Energy 2020 transition to their advantage and deliver powerful business outcomes. The underlying IT architecture and its agility is a key determinant of this transformation, and hence our topic for this blog.
Current state of IT architecture in Utilities
At most utility companies, the IT architecture has grown organically over many decades. While deregulation, energy transition and smart grids have necessitated changes to business and operating models, key parts of the current technology landscape at many large Utilities continue to reflect approaches derived from an architectural heritage that was appropriate before the industry started to change dramatically. For example, many companies still run their core business processes on large monolithic systems from leading enterprise product vendors, while a few continue to run on legacy mainframe platforms.
Over the past few years, Utilities CIOs have focused on cost take-out initiatives such as data center consolidation or exit. They have also increased adoption of SaaS applications for core business capabilities such as CRM, billing and customer experience by aligning to their COTS vendors’ product roadmaps, or by adopting born-on-cloud stacks. Through a combination of partnerships, acquisition of niche platform companies, or through internal innovation initiatives, many Utilities have also incubated a number of strategic capabilities to address new market opportunities and customers’ adoption of solar PV, batteries, inverters, electric vehicles and other energy solutions.
As new technologies and platforms were onboarded to the existing IT estate, CIOs of Utilities encountered many challenges, including:
- Proliferation of multiple and disparate devices at the customer premises owing to diverse behind-the-meter initiatives, causing issues in maintenance, security and data acquisition. This is further accentuated by different offerings of smart-home solutions from other service providers such as telecoms.
- Each behind-the-meter and mobility solution offering has its own data pipeline to capture and process the data to deliver corresponding services, resulting in increased cost of managing and maintaining such systems, and an expanded cyber-threat surface.
- Customer and consumption-related information are locked in data silos, such as customer activity captured in the web experience platform, consumption of commodity services in CRM and billing systems, and consumption of new-age services in individual products/service platforms.
- Many Utilities continue to execute their core business processes on large monolithic applications. Consequently, the cost to serve is adversely impacted as these applications are expensive to maintain, enhance and refresh.
Business themes influencing the future IT architecture for Utilities
We have discussed in earlier posts how changes to customer lifestyles and habits, driven by the Energy 2020 transition, offer opportunities for energy companies to innovate across value streams. The speed and business outcomes of these transformations will be greatly influenced by the agility of the underlying architecture. The IT architecture needs to be capable of supporting business strategies that will increasingly require: -
- Digitization of customer engagement across information interfaces, services and channels
- Embedding intelligence across all value streams through sensors
- Enabling employees through better experiences and simpler processes, and helping them better serve customers
- Making business and supporting systems agile and frugal to adapt to new business models of distributed generation and energy commerce
How should energy businesses shape their future IT architecture?
For starters, enterprises need to re-evaluate and assess their existing IT portfolio to simplify, rationalize and consolidate into fewer strategic platforms. Utilities should explore the adoption of emerging architectural approaches to reduce costs and deliver architectural agility. The following are examples of architecture approaches (See Figure 1) that, with appropriate contextualization, can be leveraged by energy companies as part of a broader digital strategy to deliver future-ready customer engagement capabilities.
1. Consider a platformized approach to unify all “sensing and measurement” capabilities across customer value streams
- Consolidate real-time measurement, acquisition and ingestion of customer consumption and usage data from all devices and sensors including smart meters and behind-the-meter solutions.
- Explore options such as cloud-native IoT platforms to provide an enterprise-wide platformized approach to evolve this capability
2. Consider alternative approaches for customer-facing systems and customer master data
- Develop a customer 360-degree view that can drive digital channels, call center processes as well as other utility processes such as billing. Explore the use of data virtualization techniques to jumpstart this initiative, designating existing systems of record (e.g., CRM platform) as the customer master, or through the adoption of Customer Master Data Management solutions. API-enable it for seamless access to customer data from other systems
- Assess and re-evaluate the need for a CRM platform owing to the shift towards self-service. Perhaps the required functionality could be addressed through low-code, no-code case management/BPM solutions. Such solutions provide the ability to automate a number of business processes and manual tasks across the enterprise
- Consider SaaS-based Call Center solutions with in-built AI/ML capabilities based on business case and age of existing applications; where appropriate consider a platform refresh of existing call center stack.
- Content management, internet presence and experience platforms are going through a technology paradigm shift. Architecture approaches such as headless CMS and cloud-native JAM stack could be considered especially at the time of CMS platform refresh/replacement. Adopting an open platform also enables the use of gig economy platform to address intermittent requirements such as launch of a microsite to support a campaign.
3. Consider a ‘Calculator – Consolidator’ billing architecture
- While SaaS billing platforms are being adopted more widely, their ability to scale is still not proven. Hence, it may be desirable to have a strategy to adopt multiple SaaS based billing platforms for specific customer segments and/or service such as lifestyle customers, commodity customers, SME customers and Industrial and Commercial.
- While each billing platform generates the bill for a specific customer segment and or a product/service, the billing line items can be aggregated by a back-office ERP system to produce a single bill. This delivers scalability as Utilities add new services and customer segments to their portfolio, while de-risking the customer billing cycle.
4. Deploy engineering competencies in areas of differentiation
- Utilities and energy companies will continue to evolve their products and services to help de-carbonize the economy. To achieve this, product and service offerings will increasingly need to be personalized to an individual customer needs, and driven by data and insights. In areas like this that offer opportunities to differentiate through innovation, Utilities can consider in-house, custom developed solutions.
5. Buy platforms, build insights
- Utilities need to consider consolidating their data and analytics initiatives on an open architecture data platform that is scalable and flexible. Such a platform can be leveraged to run advanced analytics and AI/ML models, and simplify the integration with the core business processes, making them intelligent and hyper personalized.
6. Connecting technologies as a foundation core
- Utilities need to consider integration technology platforms and evolving paradigms of integration as the need to integrate innovative SaaS solutions with their core processes will continue to grow.