Digital Transformation and the Utility Sector

Digital transformation is a strategic initiative that focuses on developing new ways of doing business and improving existing processes by adopting new technology. Technological advancement has created disruption in all sectors of business and it’s no different in the utility sector. It has changed the landscape in which energy companies operate and can better serve their customers.

Well, the benefits of a successful transformation are many, as new ways of doing business enhance service levels towards the end customer, improve efficiency, optimize processes and open up new sources of revenue. 

However, this is not without its challenges. Digital transformation disrupts existing business models, challenging organizations to establish new models fast in order to remain relevant and competitive. 

This is often a difficult and costly venture which also requires a culture change in the organization. Success is not guaranteed. 

In the past, energy companies have relied on more traditional methods of doing business. But this is changing fast. Quick adaptation is needed, as they run the risk of  being left behind with new market players moving in from other industries. 

Customer experience is one of the driving factors of digital transformation for utility companies. Today’s consumer demands better, faster and more mobile service, so companies need to keep up if they want to stay relevant. 

Changing customer expectations have led to increased demand for things like smart home platforms, i.e. fully integrated platforms that enable users to monitor, manage and control energy use in their homes. These IoT technologies allow data to be shared among interconnected devices in the home. 

Devices such as smart meters, thermostats, security systems and smart appliances enable the remote management of equipment and a more innovative customer experience. In fact, the power and utility industry is one of the top verticals using IoT with the highest number of users of IoT endpoints (299 million installed units in 2015), its market size is expected to reach almost $54 Billion by 2024. 

New technologies  are redefining the sector as disruptive models like distributed energy management (DEM) enable consumers to produce their own electricity giving them more control over how they use and store energy.

Using augmented reality (AR) and virtual reality (VR) can help revolutionize inventory management, data collection and staff training, all of which help minimize operational costs and increase efficiency. Combining AR and VR with robotic assistance devices (RAD) or using just one of the toolsets, workers can perform dangerous jobs and automate tasks and thereby increase productivity & reduce risk management while enabling employees to be re-trained to perform other jobs.

It’s important to note that each utility company is at a different maturity level with regards to digital transformation. A recent Deloitte survey defined three groups:  

Most companies in the sector fall in to the first two categories, i.e. they have incorporated some aspects of digital transformation or are about to do so. 

Generally speaking, the progress has been slow compared to other industries like healthcare or manufacturing, but it is gathering momentum as the benefits to transformation are becoming increasingly apparent. 

Traditional cultures combined with the challenge and cost  of upgrading legacy systems have complicated things, as often the older systems are not up to modern day requirements. 

However consumer demand and heightened competition are at the heart of transformation and drive it forward.

At Paddington we believe that successful transformations in the utilities industry share four key factors:

• Clear leadership, vision and a solid roadmap: Digital transformation must be clearly aligned with the company strategy. Communication from top down is a must as team-members need to understand and adopt the transformation vision. The roadmap should be driven by market requirements, not internal politics.
• Right people, right positions: Scout out the right talent for specific roles and work on raising your team’s technical and organizational IQ. The right people with the right skills and backgrounds in the right positions that drive transformation is key. Just creating new titles and functions is not enough, it’s about having the right people in those positions.
• Results & feedback reporting: Transformation is  a continuous process that requires testing, shared results, agility and risk-taking. It’s key for employees to understand how their participation directly impacts the overall success of the transformation. Take the teams feedback into account to adapt methodologies and organizational principles. Inability to do this points at a wrong team setup, perhaps also on a managerial level. 
• Culture change: Technology is only one aspect of digital transformation, company culture  plays an important role. The entire organization must be willing to adapt to a new way of working and employees must embrace new technologies that they may be uncomfortable with. This is especially difficult for established and often very conservative players in the energy sector, as they are not used to being challenged by new players and a rapidly changing consumer market.

Paddington Utilities Consulting offers a full-blown portfolio of services for the utility sector:

• Strategic consulting 
• Functional assistance in utility processes
• IT development of enterprise software for utilities 
• Project management 

Feel free to contact us for a free consultation to see how our experts can assist you!