This report is brought to you by Utility Week Intelligence in association with Wipro
How to drive value from digitalisation:
Heal scars, root out inefficiency and build ‘industry-scale’ business cases
How to drive value from digitalisation:
Heal scars, root out inefficiency and build ‘industry-scale’ business cases
Digitalisation must sit at the heart of the seismic transformations gripping energy and water utilities today. Without it, agile decision making, dynamic network management and price triggers, anticipatory customer service, cannot be achieved at scale and with consistency. Nor may the many other hallmarks of a modern utility company navigating the challenges posed by climate change, population growth and efficiency drives.
Yet the sector maintains a disappointing reputation when it comes to digital innovation, openness to change and ability to drive significant value from the rollout of new technologies.
Just last November, Ofwat’s Chair, Iain Coucher, told the audience at Utility Week Forum that water companies are behind where they should be on digitalisation. He acknowledged that companies are working hard to address this, but his words echoed those of Ofwat chief executive David Black who had also bemoaned the readiness of companies to leverage data to unlock “significant performance improvements” in the regulator’s company performance report in October.
The picture is similar in energy. While networks continue to invest significantly in new digital capabilities, the scale and pace of change unfurling in the energy system is outstripping them. Ballooning connections requests for distributed generation, heat pumps, electric vehicles and other technologies are driving service and operational challenges which will only become more intense as we strive for a decarbonised power grid by 2030 and accelerate the development of energy flexibility propositions.
Commenting on this situation, energy transition expert Laura Sandys – who chaired the government-commissioned Energy Digitalisation Taskforce, told Utility Week: “The energy sector has come a long way in terms of digitalisation and becoming much more data rich. We have seen a step change over the past five years. We do, however, still have a long way to go to deliver the new system and it will require a step change in adopting and deploying new digital assets to manage the millions of actions and assets on the system. We can learn from other sectors and leapfrog all their mistakes.”
She added that companies need to unlock “new momentum” in digital transformation to “fundamentally change how we do things”.
It’s in this context that Utility Week has launched a Digital Utilities Think Tank, in partnership with global digital transformation services company Wipro.
The initiative is designed to help the sector accelerate the delivery of large-scale value from digitalisation. Through regular meetings featuring expert talks, peer-to-peer experience sharing, and out-of-sector inspiration, we aim to help companies better define how they can improve the cultural and process foundations for digitalisation – and much more.
Read on for further insights into the discussion that took place at the first meeting of our Digital Utilities Think Tank.
“We still have a long way to go to deliver the new system ... We can learn from other sectors and leapfrog all their mistakes.”
Laura Sandys, Energy Technologies Group and former chair, Energy Digitalisation Taskforce
Insights from our Digital Utilities Think Tank
The first meeting of the Utility Week Digital Utilities Think Tank challenged attendees – including representatives from energy and water utilities as well as regulators – to consider whether the sector has so far merely “dabbled” in digital transformation
rather than approaching it with clear vision and ambition.
Views and experiences around the table were mixed. Some companies were much further ahead than others in terms of modernising their organisational technology stacks to access process and workflow efficiencies and harness company and customer data more effectively.
For those more advanced on their digital transformation journeys, there was a confidence that their organisational approach goes beyond the superficial and forms an intrinsic part of long-term business strategy. Meanwhile, those at earlier stages tended to express frustrations with more “tactical” approaches to digitalisation. This often means projects are siloed, putting limitations on the potential of digitalisation to return value to the company.
Notwithstanding this mixed picture there was consensus that the full potential of digital technologies to transform sector efficiency and re-imagine operations and services has barely begun to be realised.
If the sector is to seize digital potential with both hands, our group identified a range of fundamental actions or principles that companies should adhere to:
1. Heal scars
The term “digital transformation” has been in common parlance for over a decade. What this means for anyone who has been of working age throughout those ten-plus years, is that they are very likely to have been impacted by numerous digitalisation projects that have promised much in terms of improved efficiency, work satisfaction and maximising human potential, but which have often underdelivered.
For utilities who now need to revitalise their digitalisation strategies and take advantage of new technological capability, there is a need to recognise the “scars” that many will bear from digitalisation projects past, our inaugural thinktank group agreed.
A sustained and well-resourced approach to “winning hearts and minds” should underpin any digital transformation strategy, they said. This should include gaining a detailed and accurate picture of the aspects that cause frustration and undermine productivity in key roles and functions. This will help organisations and their technology partners build-in a compelling “what’s in it for me” narrative that will support adoption and accelerate impact. This is especially critical in areas where “there is still a lot of hesitancy about what digitalisation may mean for jobs” noted one participant.
Another key consideration is workforce upskilling. Too many past and current digitalisation initiatives have paid insufficient attention to ensuring employees are equipped to make the most of the technology being invested in or understanding the basics of good data management. This has slowed down adoption and caused chronic challenges in the optimisation of technology, it was noted.
2. Prepare processes for digitalisation and automation:
Utilities are under intense pressure from regulators to improve operational efficiency – in part to absorb the enormous additional capital expenditure costs coming down the line as energy and water companies get stuck into major infrastructure renewal and expansion programmes.
Technology has the potential to deliver major efficiency gains, but not if it is simply used to digitise and automate existing inefficient processes, our group emphasiszed.
“If we did nothing in the digitalisation space but simply looked at making our processes leaner, in itself, that would give us a huge boost in efficiency,” commented one water sector leader. The same individual added that mapping processes from A to B, examining and challenging the need for information transactions – within the organisation and between supply chain partners – and considering how these could be reduced or eliminated is a pre-requisite to digital transformation.
In a related discussion, our think tank participants also suggested more organisations need to adopt a “DevOps” approach to designing and rolling out new business systems which is iterative and has flexibility to respond to new pressures or increasing scope. Doing this may mean challenging internal governance procedures, said one senior change leader. “We have an obsession with gated processes…and all you’re doing is siloing the development function,” they said.
3. Think big
A key outcome of this think tank meeting was unanimous support for the idea of building “industry-scale businesses cases” for technology and data investment which could help companies justify putting money and resources behind projects which may be invaluable, but which have relatively hard to define benefits from a single company perspective.
One digital leader from an energy network commented: “Sometimes you need to start doing things that feel right without necessarily having a business case.” Elaborating, they added that often, the avenues of highest potential in digital transformation only reveal themselves once an “ecosystem” of data sets are meshed together.
A water sector representative agreed, adding that growing pressure and expectation around delivering environmental and community sustainability benefits might help drive the creation of more industry-scale digitalisation programmes. These could even coordinate opportunities across sectors, coordinating effort and ambitions with representative from highways, rail, local industry and so on. “The potential is enormous. We could solve so many problems!” enthused one attendee.
But grasping this opportunity is hard for utilities, not only because of the challenge of articulating a business case at an individual company level. Time pressures on technology and data teams are also a barrier. “So often they are caught up trying to fix traditional problems with traditional systems. Our [technology and data] teams don’t have enough time to think about the more holistic picture,” said one attendee.
Government support for sector-wide and multi-sector digitalisation programmes could help drive the creation of capacity for firms to engage in truly transformational work, our think tank members agreed. It could also help to encourage a cultural shift away from “asset-centric” digitalisation strategies to “customer and society-centric thinking”.
This inaugural meeting of the Utility Week Digital Utilities Think Tank highlighted the breadth of experience and maturity across the energy and water sectors when it comes to harnessing digitalisation to meet major strategic challenges. But it also emphasiszed that, to win big prizes, firms need to think about digitalisation as an ecosystem challenge. With this in mind, the need to share insights, perspectives, and ideas on how to unlock new digital potential has never been greater.
Future meetings of the Utility Week Digital Utilities Think Tank will zoom in on how companies can drive large-scale value from digitalisation, as well as continuing discussion about the characteristics of companies which are set up for digital success, from culture and leadership factors, to process and governance considerations. Also under scrutiny will be the role of regulation in driving good outcomes from digitalisation.
Concluding remarks
Concluding remarks
Rebekah Docherty, VP Energy and Utilities, at Wipro explains why the creation of our new Digital Utilities Think Tank is a timely step in an industry seeking to transform at pace..
Wipro is proud to have partnered with Utility Week to launch of the Utility Week Digital Utilities Think Tank and we look forward to sustaining the value of this industry forum through this transformative time for the sector where success will be defined by the ability of firms to harness the potential of digital technologies.
The inaugural meeting of our Think Tank highlighted that overcoming the conventional barriers to digital transformation requires a paradigm shift in how utilities perceive and pursue digitalisation.
Reflecting on the discussion, several key themes emerged that were of keen interest to the Energy and Utilities team at Wipro. First, the necessity for robust data management cannot be overstated. Access to high-quality integrated data is the backbone of any successful digital transformation. As noted by various participants, regulatory constraints often lead to siloed thinking, impeding the seamless integration of data across different sectors. A collaborative approach, supported by government initiatives, could pave the way for more cohesive and comprehensive data ecosystems.
AI utilisation was another focal point. While there is recognition of the transformative potential of AI, it is crucial to balance the hype with practical applications. The experiences shared underscored the importance of an AI-first mentality and a product-centric approach. These strategies will not only enhance data preparation but ensure that AI implementations are aligned with business objectives and deliver tangible value.
The role of the government in facilitating digital transformation was a recurring theme. Government support is pivotal in driving large-scale digitalisation programmes that transcend individual company interests. This support could manifest in the form of regulatory reforms, investment in cloud platform transitions, and fostering a cultural shift towards customer and society-centric digitalisation strategies. As articulated by our think tank members, the potential for cross-sector collaboration is enormous, promising solutions to address a myriad of industry challenges.
Organisational and cultural change emerged as critical enablers of digital success. The discussions highlighted the importance of top-to-bottom buy-in and change management. Engaging on-the-ground engineers and workers ensures that digital solutions are practical and beneficial. The frustration from previous unsustainable tech rollouts underscores the need for clear communication of benefits to facilitate adoption.
In terms of process management, the focus on automation and efficiency was prominent. Scaling digital pilots and streamlining processes are seen as avenues to enhance overall operational efficiency. The necessity of strong governance to enable innovation within engineering and process management was also underscored.
Looking ahead, future meetings of the Think Tank will delve deeper into these themes, exploring how companies can drive large-scale value from digitalisation. The discussions will continue to focus on the characteristics of companies set up for digital success, examining cultural, leadership, process, and governance considerations.
In conclusion, the collaborative insights and shared experiences from this roundtable underscore the immense potential of digitalisation in the utilities sector. By embracing a holistic, ecosystem-based approach and fostering cross-sector collaboration, the industry can unlock new digital potentials and achieve truly transformational outcomes. The journey ahead is challenging, but, with collective effort and strategic focus, the rewards are bound to be significant.