The following is a Viewpoint by James McClelland, utilities director at SAP.
A couple years ago, seeking a better sense of where utility companies and their key decision-makers stood with respect to a strategy for moving core business functions to the cloud, I undertook a bit of informal straw polling of the utility company board members in my business network. In most instances, they told me candidly that their top priority was mobile enablement across the enterprise; cloud strategy, they said, was barely on the radar screen.
Fast forward to a few months ago, when during a utility industry event I crossed paths with some of the same board members I’d polled two years prior. This time, when I asked them about cloud strategy, I got an equally uniform, but altogether different, response. Cloud strategy, most of them told me, was the number one priority on their board room agendas.
So much for the numerous projections made that utilities wouldn’t truly embrace an enterprise cloud strategy until 2020. Here in 2018, they are well into the process of a largely cloud-based digital transformation, and as part of that process, remaking themselves into what I call an “intelligent enterprise.”
This on-the-fly transformation isn’t just good business, it’s a matter of survival. To remain viable in the face of disruption and heightened competition, utilities have realized they need to get smarter, more efficient, nimbler and more customer-focused. Doing so means becoming a data-intelligent, cloud-enabled enterprise, one in which decisions in all areas of the business are informed by fresh streams of data. In an intelligent enterprise, every aspect of the business, from pipes and wires to sales and customer service, is connected by a single digital platform.
To that platform are linked tools such as artificial intelligence, machine learning and predictive analytics that enable an organization to analyze, learn from and act upon that data, and to do so faster and more cost-effectively. Also connected to that platform are intelligent assets — sensor-equipped infrastructure and equipment that feed fresh data into the digital system.
But let’s look beyond the buzzwords, to practical business considerations. There are three key areas where a utility company can really benefit from an intelligent enterprise approach:
1. In optimizing their business to operate more efficiently
By tying a distribution system to a machine learning tool, utilities can make sounder, faster, data-driven decisions about how to route power, for example. Mundane decision-making tasks once handled by humans can be automated, freeing people for other higher-value pursuits, while also reducing the risk of human error.
A utility could also use camera-equipped drones to surveil remote or dangerous parts of a service territory in order to pinpoint where to send a crew for a system repair and, based on an assessment of the damage, be sure they arrive with the right tools for the job. Say a utility, through sensor monitoring, is alerted that a transformer is showing signs of failure. The utility can shut down the transformer proactively, before it blows, reroute power, then send technicians to service it. Not only does the company dodge the expense of replacing that transformer, it avoids a service disruption — and the customer dissatisfaction that accompanies it.
Utilities also are using a tool known as digital twin to bolster efficiency. Digital twin is the process by which data from sensors, computers and equipment connected to the Internet of Things are used to create a virtual representation of a physical asset or process. Utilities can use it in tandem with predictive tools to foresee maintenance issues, equipment failures and the like, and also for training personnel to operate, repair and maintain equipment.
2. In improving safety to protect the health of the public and utility employees
When a carbon monoxide leak is detected, rather than first sending service personnel out to investigate, subjecting them to potential poisoning, explosion or fire, they can initially gauge the hazard using sensors and robots or drones, then decide how to proceed.
Predictive analytics also can help a utility develop strategies to maintain and repair assets in remote or inhospitable areas without service crews. During the Kilauea Volcano eruption in Hawaii, the utility serving the area can surveil by drone to determine where to deploy repair teams without exposing them to undue risk.
3. In uncovering and developing new business models
Rather than wait to be disrupted, utility companies are leveraging their intelligent enterprise capabilities to become disruptors themselves. Prompted by the end consumer’s growing preference for suppliers who can deliver choice, convenience and service, rather than just a commodity, utilities are exploring “energy/water as a service” business models that allow them to compete as part of a broader ecosystem, while also expanding their supply portfolios with renewable and non-renewable sources.
Using IoT/intelligent assets, plus predictive analytics and machine learning, a utility can figure out what a certain segment of customers may want before they even know they want it. For example, a utility that’s looking to develop a solar panel business can dig into its store of customer data to identify customers whose roof surface makes them a good candidate for a solar installation, then create a custom campaign around solar panels, targeted to those customers. They can also tailor specific service models and marketing programs to existing customers who, based on the data, fit a certain profile.
Not only can a data-intelligent enterprise more readily uncover opportunities like this, they can roll out new products and services to capitalize on them in a matter of days instead of months, and do so at a much lower cost, thanks to digital tools that expedite development of pricing models, billing structures and custom marketing programs.
By moving away from siloed, costly and clunky on-premise tech solutions and embracing a data-driven intelligent enterprise approach, utilities gain the means to operate their core businesses more efficiently, to unearth opportunities in promising new markets and to expand and better serve their customer base. Because, ultimately, this is a customer-driven business. Lower costs, fewer outages and access to a greater range of products and services are bound to strengthen a utility’s relationship with its customers. And for utilities today, those relationships carry more value than ever.