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How Utilities can Achieve Digital Transformation at Scale

Digital transformation is becoming a top strategic priority in many utilities. Advanced technology and consumers wanting more personalized and meaningful experiences are just some factors driving transformation.

Utilities are seeing digitization as a way to improve performance, reduce costs and enhance customer satisfaction. Digital transformation can be risky in companies with legacy IT systems, large aging infrastructures and challenging regulatory requirements. Here are some of the ways they can minimize the risks and benefit from digital transformation.

Develop an organization-wide mindset

Digital transformations affect multiple functions within a company. In many enterprises, IT is expected to steer the process, given the dependence on information technology. However, technology lies at the core of how a utility operates and delivers with networks, smart connected assets and workflows.

It’s the functional managers, field personnel and frontline plant operators who are involved in changing the way systems operate. They must adapt to using next-generation control systems etc. They have to update practices that have been valid for centuries with remotely obtained data and corrective-action decisions dictated by analytics.

For digital transformation to be successful, it has to be organization-wide, with clearly defined roles and decision-making rights.

Evolve an integrated business architecture

Digital transformation has to rest on a solid foundational business architecture. It must be rooted in an understanding of costs and benefits.

Whether the goal is to evolve gradually or go for full-scale transformation, it’s the business architecture that allows companies to be more flexible and upgrade as technologies evolve and to prevent expensive one-off mistakes.

Determine digital positioning

It’s essential for utilities to have a clear understanding of how new technologies will give them a competitive advantage. Lack of coordination and adopting short term solutions due to a sense of urgency can lead to failure. On the other hand, analysis paralysis with endless evaluation and consuming resources in pilots is not the answer either.

Aligning key stakeholders and identifying partners to help with the process offers more likelihood of succeed. Some Industry-leading utilities are already digitally transforming their businesses with the power of smart energy industry software solutions built to face challenges head-on and enable them to thrive against competition.

Understand all the options

In the same way as investing in a digital thermostat does not turn a house into a smart home, implementing AI or any advanced technology on a piecemeal basis won’t mean that a utility becomes digitally competitive.

Technologies like blockchain can reduce transactional costs, help administrate human resources and much more. Automation, energy storage, advanced network control and microgrids can improve specific power generation and delivery costs.

Use agile deployment methods

Problems can arise when traditional deployment methods are used without realizing the unique properties of digital transformation. For instance, the waterfall method, where companies gather requirements, design, build and test has limitations when it comes to digital transformation.

Agile methods that follow a “think big, start small, fail cheap and scale fast” approach is more appropriate. The utility industry only starting to adopt agile principles for transformation and a cultural shift is necessary to account for the intrinsic uncertainty of such methods. Frontline delivery teams need to be educated about the advantages and risks of agile deployment.

Digital transformation is challenging but it presents many opportunities and capabilities that utilities need. To tap into its potential, they can’t be deterred by the inherent pitfalls.

Following the above steps, such as understanding digital positioning, taking an integrated approach, considering business architecture, understanding the options and using agile deployment methods can help utilities to successfully transform at scale and be ready for a new era.

Byron Lee's picture

Thank Byron for the Post!

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Discussions

Paul Willis's picture
Paul Willis on Aug 8, 2019 6:53 pm GMT

Utilities because of their historical emphasis on reliability combined with their monopoly situation normally have large amounts of surplus infrastructure.  Regulators generally do not seriously challenge the cost of this extra infrastructure because they realize that customers put a high priority on reliablity and utilities convince regulators that they need additional resources to provide the reliability.  However, enhanced use of the latest digital technologies such as blockchain can enable this surplus infrastructure to be more effectively utiltized without sacrificing reliabiity.

Matt Chester's picture
Matt Chester on Aug 8, 2019 9:29 pm GMT

Regulators generally do not seriously challenge the cost of this extra infrastructure 

In fact, regulators incentivize this type of extra infrastructure buliding because it's able to be used as a means for additional rate increases-- whereas software solutions (such as with digital technologies) isn't always allowed to count towards those type of capital investments and thus isn't prioritized as much by those utilities. The incentives need to be switched so these type of investments can be encouraged

Paul Willis's picture
Paul Willis on Aug 9, 2019 5:06 am GMT

I appreciate your proposal.  I am preparing a proposal in response to an group of utilities who would like advice on a strategy for utilitizing blockcahin technology.  I am wondering if you consider participating in this proposal,  If so you can reach me by email prwillis@surplusenergymatch.com

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