Ushering in the decade of digital

Ushering in the decade of digital

2019 was quite a year for “digitalization” in the Utility sector. Almost every major gathering of Utility peers sported the digital theme in some way shape or form. Internal presentations and meeting agendas looked naked without some reference to “Digital Engagement”, “Digital Transformation”, or “The Digital Utility”.

There is no doubting that digitalization has now become a dominant, if not permanent part of the Utility lexicon. So much so that, as the year drew to a close, even practitioners like us (TMG Consulting) were starting to feel some of that “buzzword fatigue” setting in.

Putting semantics aside, it is an accepted fact that digitalization has become a real and integral part of most Utilities’ future-proofing agendas. As an industry, we’ve moved from a time where digitalization was merely a topic reserved for conference keynote addresses and Utility-of-the-future ‘parlor games’ to being recognized by most Utilities worldwide as a required core competency, deeply woven into the fabric of their operating models.

Global investments in Utility digitalization are growing at a breakneck pace. It is estimated, that in 2019 alone, the Utility Industry will have spent over $60 Billion on digitalization initiatives and projections are that another $500 Billion will be added to that total by 2025. Digital initiatives, that for many companies showed up just a few years ago as rogue collections of small proof-of-concept (POC) “projects”, have transformed themselves into fully-fledged, company-wide digitalization “programs” now delivering steady streams of value to their customers and bottom line.

So, where have we seen the most traction from Utilities in their digitalization programs? And where is all this headed?

With our on-going work with our network of utilities and vendors, almost all of which are in some stage of their digital journey, 10 themes prevailed as likely to drive Utility digitalization priorities and investments in the next decade:

10 Trends Shaping the Future of Utility Digitalization

1. Hyper Targeting & Personalization — Proliferation of new data and digital technologies are now enabling utilities to ‘precision-match’ most aspects of their customer engagement strategies (content, style, and delivery channels) with the unique needs and channel preferences of their customers. This “segment-of-one” operating philosophy is quickly becoming the standard around which many Utilities’ customer experience strategies are being built.
2. AI-Enabled Smart Automation — “Bots” and other artificial intelligence (AI) enabled technologies have now taken root in customer billing (e.g. exception processing) as well as other back office processes and trials are beginning to surface in other customer workflows like inquiry resolution, new connections, move ins/outs, program enrollments, rate/plan switching, and others. Look for these trends to continue in any aspect of a Utility where high volume transactions, dependent on predictability of data driven decisions, are ripe for automation.
3. Rethinking Customer & User Journeys — After claiming initial gains from early customer experience (CX) initiatives, utilities are now looking to drive new tranches of value. In light of new data and digital innovations, many utilities are now revisiting their earlier customer journey and user mapping activities to discover new possibilities for digital enablement and embed them into their operating workflows.
4. Integration with Smart Cities — 2019 showed us many innovative examples of utilities integrating more effectively with the cities that they serve, helping communities modernize and drive new sources of value for their residents. This included more seamless coordination across basic Utility services (electric, gas, water, sewer, etc.), better orchestration of grid-connected assets, and new innovations in cross platform automation (city services, public transit, airports, etc.)
5. Decoupling/Cross-Leveraging of Data — There has also been an acceleration of a previously emerging trend to move the ownership of data and analytics out of the application/business unit “silos” into shared environments where data can be more effectively governed, maintained, and repurposed across business units. This should continue to emerge in 2020, as customer-oriented data is applied more directly to operating and infrastructure challenges, and vice versa.
6. Digital Factories — Structured environments for managing digital innovation became more prevalent across a growing number of utilities in 2019, centralizing competencies around data, analytics, and automation; providing agile infrastructures for quickly developing and testing use cases; and installing governance models for managing, monetizing, and scaling their digital innovation pipeline.
7. Unbundling of Core Systems — The past year saw more Utility executives rethinking what their “core” IT systems should look like at a fundamental level. The main consideration of which was the potential benefits of unbundling their systems’ investments (e.g. CIS, ADMS, etc.) to facilitate the inclusion of new best-of-breed point solutions. We also saw the emergence of new “system of systems” platforms to enable faster and more adaptive integration between legacy environments and these rapidly emerging technologies.
8. Best Practice/ Process Integration — There has been a large proliferation of IT implementation partners coupling software solutions with predefined and configurable “best practice”/ “best process” templates and workflows. This helps utilities avoid the cost and implementation risk associated with recreating complex software logic that already exists and is actively supporting mature business processes elsewhere in the industry.
9. Next Best Steps for the Cloud — The debate between “cloud” vs. “on-premises” solutions continues to evolve away from questions such as “does it make sense?” and “is it cheaper?” – which clearly vary from environment to environment – to debates around deployment methods, practices, and managed services models. Cloud deployments will undoubtedly characterize larger parts of our Utility ecosystems going forward. Look for solution providers to bring more creative and hybrid alternatives to the table which eliminate risk and barriers to cloud adoption.
10. Re-skilling for Digital — There are a variety of models emerging for the acquisition and retention of the skills required for digitalization initiatives both internally and outsourced. There is no right or wrong answer here but, as the supply of data science, software engineering, and other critical skills required for digital success has tightened, we have seen an increase in companies using outsourced models and shared platforms to satisfy their digital re-skilling requirements.

Author: Bob Champagne, Vice President- Digital Innovation & Research at TMG Consulting

Image credit: Tom Parkes / Unsplash

This article was previoulsy published on Energy Central.