DIGITAL AT ENGIE: Which organisation for which business model?

The advent of a digital economy and digital companies has led, in many sectors, to a dramatic change in business models and a challenge to established positions: retail has been transformed by the emergence of online sales, information by social networks, audiovisual and music production by online platforms and streaming, banking and insurance by the development of mobile payment, blockchain, and the arrival of new pure players, etc. Will the energy sector escape this trend? At first glance, the link between the energy system and the digital system may seem like a simple customer-supplier relationship: without electricity, no networks, computers, smartphones or data centres. Added to which, according to some estimates, digital represents up to 10% of global electricity consumption, a percentage that continues to increase from year to year. But that's not all. The digital revolution is underway in our sector, with an impact on the entire chain of our activities. Digital completely redefines our production methods, our relations with our customers, and creates new businesses that accelerate the transformation of this increasingly downstream sector: energy efficiency solutions, decentralised production, the construction of networks and smart infrastructure, green mobility, smart city project development. It's a real paradigm shift.

A catalyst of the energy revolution currently underway, digital forces us to rethink not only our business models, but also our organisation and our corporate culture.

THE DIGITAL REVOLUTION IN ENERGY: A PARADIGM SHIFT

Production: managing complexity and optimising industrial assets.

Digital gives us the greater means to control and coordinate a complex system, made of thousands of scattered production points. This management is all the more crucial in light of the growth of renewable energies, which by definition are far more dispersed and numerous than traditional industrial assets (coal, gas and nuclear power plants). Developing the predictive maintenance and operational excellence of these assets will help ensure their competitiveness and improve the safety of the electrical system. France's leading actor in wind and solar energy, ENGIE, has developed a monitoring centre for renewable energy in Chalons-en-Champagne. This is where 100 wind farms (825 wind turbines) and 17 solar power plants (105,000 solar panels) are managed, forming a vast industrial complex geographically dispersed over six European countries. Using the power of digital to centralise the multiplicity of production in this way makes it possible to lower costs, ensure the safety of the installations, optimise their predictive maintenance and the quality of the data transmitted to the French transmission system operator RTE, but also to improve the predictability of wind energy. In addition, in 2017, the group acquired Darwin, a global digital platform that collects a maximum amount of information in real time from wind farms, solar and hydro power plants and their environment: rotation speed of the wind turbines, temperature of the panels, energy production, weather forecasts, electricity market price, etc. All this data enables the operator to optimise the operation of the installations, better plan maintenance operations, increase production and thus profitability. 

Customer relations: in-depth knowledge of the actor-consumer

Traditionally, the relationships of customers with their energy suppliers have always been very sporadic. Except for a few specific moments (getting the bill, moving house, maintenance of a boiler...), customers are not interested in their energy consumption or their relationship with their supplier. Clearly, this is likely to change with the development of smart meters and consumer management apps. Consumers will then be able to better monitor and understand their consumption, and possibly adapt their behaviour accordingly or carry out some work. For consumers, this change represents the opportunity to become responsible actors in their own right. For energy providers, this is the chance to develop a more intimate relationship with their customers and to offer new services. Since 2017, ENGIE has been offering Mastermind to those customers equipped with smart meters like Linky or Gazpar. Mastermind is an online app that helps customers better understand their electricity or gas bill and how it evolves, predict how much their next bill will be, with the possibility of adjusting monthly payments, and benefit from energy saving tips through savings simulations. From their detailed bill, everyone can judge the impact of renovations or behavioural changes, compare their consumption to that of last year, or to an average reference for households of the same size, in the same region.

New businesses: smart on every level

Smart home, smart lighting, smart charging, smart traffic, smart city, smart grid: terms that mask the sudden entrance of the Internet of Things (IoT) with its sensors, its Big Data and its algorithms capable of analysing data to continuously optimise energy consumption and overall operation, from the smallest - an apartment - to the largest - an electricity grid, a city. The advent of ‘smart’ holds the promise of energy savings, but also that of greater comfort, value creation and new jobs. We have made acquisitions in smart charging companies (EVBox, the European leader in electric vehicle charging), smart public lighting (Flashnet), 3D modeling of buildings (SXD, an example of Building Information System), micro smart networks (EPS) or cities (Siradel) to improve their design and operation. The group has reached a level of maturity in that it is now able to deploy global digital platforms. These platforms cover all ENGIE market segments (industry, building, private individuals). For example, ENGIE has just launched Livin’, the digital platform for cities and regions. This platform makes it possible to connect data and services. It constantly evolves to optimise and streamline the operation of infrastructures, offering an optimal vision of equipment while also allowing users to project themselves into the future through predictive analysis: understanding the demographic evolution of a given area and choosing where to open a school or build a hospital. All this data can be centralised and collected by our interoperable digital platform, open to other players in the region, start-ups in particular. The objective is to have as complete a vision as possible, made possible by the high added-value algorithms that we develop. We are already using this platform for our partnership with the city of La Baule. The platform will centralise traffic and parking data and may soon aggregate data on public lighting. The city will be able to oversee its equipment and ensure the sober and harmonious management of urban space.

Digital, the key to tomorrow’s energy system

How can we permanently maintain the equilibrium of an electric system that has become complex and versatile? Tomorrow’s system will be characterised by its dispersion: in France, wind energy counts for nearly 7,000 masts, distributed among 1,100 farms (1). In June 2017, there were 391,571 grid-connected photovoltaic solar power plants (2). It will also be more versatile: both the supply, due to the development of intermittent renewable energy, and the demand, because of the rise of electric vehicles and auto-consumers, will be much less predictable. To permanently ensure the equilibrium of the power grid, adequate computing power will be required to enable real-time processing and facilitate decision-making. The digital revolution makes the energy revolution possible. The digital revolution is causing a radical change of model. We are moving from a centralised system, based on a few large production units and a one-dimensional network, to a horizontal system, managed in real time and extremely variable. The frontier between producer and consumer is fading. Energy companies will see their missions evolve towards the supply of energy services: rather than seeking to provide ever more energy to their customers, they will try to help them consume better (and less). Finally, time is accelerating in a tremendous fashion: where large industrial assets required investments over long periods of time, the decentralisation of installations and the power of software require a fast pace and an iterative approach to the test and learn mode. This paradigm shift must of course be reflected in the company’s organisation and the way the teams are managed.

CREATE A LEARNING-BASED ORGANISATION 

A decentralised organisation

We wanted to match the decentralisation of the energy system with the decentralisation of our own organisation. Three years ago, we transformed ENGIE into a horizontal organisation. Instead of five major business lines, we created 24 geographic operational entities. We limited the hierarchical levels of corporate central functions to four. Most importantly, we lowered the level of decision-making. The operational entities now have considerable independence to decide on crucial issues such as medium-term strategy, their missions or HR management. The role of headquarters is primarily to endorse and support the entities.

Decision-making made easier

In this fast-paced world, we have also accelerated decision-making. For example, we have allocated a budget of 1.5 billion euros over three years to the new businesses and to digital. The decision-making process associated with this budget of investment was designed to be more responsive and faster than the long-standing process already in place for the group's industrial investments. Our motto: "A quarter is a year.” This acceleration is also reflected in the adoption of agile methods, particularly for the development of our digital solutions. Our goal is to deliver smaller batches faster, improved in iterative fashion through customer and user feedback loops. To date, we have already launched 25 products in this format. Every year, approximately 3,000 employees participate in innovation projects using the agile method.

Agility and a transversal approach

In a world shaken up by the digital revolution, where the majority of tomorrow’s business models are yet to be invented, we want to instil a new corporate culture, which encourages employees to take risks, and create an organisation flexible enough to enhance collective intelligence. To encourage internal innovation, we have created the platform Innov@ENGIE, where employees can submit new business ideas and participate in the selection of partner start-ups. A hundred of our employees have seen their projects incubated by ENGIE over the past three years. Internal innovation is celebrated every year at the Innovation Awards ceremony. To free the teams from the fear of failure, we also notably give a prize for the best failed idea. We also act to ensure that ENGIE remains an agile organisation, where collaboration and collective intelligence take precedence over processes. This is why we created the ritual ‘is there a better way’. We ask the teams to take a fresh look at their working habits and rigorously evaluate them: why did we set up this or that process? Is it still relevant? Can it be improved? We also encourage the creation of communities of transversal practices, of which the tribe of data scientists is an emblematic example.

Digital, the driving force of transformation

Digital is not only what drives us to transform the organisation and corporate culture. It is also the driving force of change. Our corporate social network, Yammer, already has 100,000 members, involved in hundreds of communities. We deploy Microsoft Office 365 and cloud services group-wide. These tools facilitate the exchange of ideas and information between employees who do not work in the same place, or even in the same department or entity. Digital apps also encourage the creation of one-off project teams. ENGIE is developing Skill'lib, a platform for exchanging skills between the company, which has a temporary requirement from 1 day to 12 months, and employees wishing to put their skills to good use, whether these come from past experiences or from a personal passion. This provides an alternative to temping staff or consultants who represent a certain budget and require a period of acclimatisation to the group. It’s also a way of putting the time of certain employees to good use, allowing them to invest in projects that interest them, and to participate in the growth and performance of the group by exercising their skills. A very good example of this new, more horizontal organisation, using collective intelligence and relying on digital tools, is our "Imagine 2030" project launched in April 2018. This is an exercise to anticipate the future activities of the group and imagine what the world will be like in 2030. ENGIE's 150,000 employees are invited to a decentralised debate, from June to September, to identify the key trends that will shape our world over the next decade, evaluate their impact on our work and imagine the new ENGIE that we want to build together. All employees have the opportunity to access an online platform to publish their vision and that of a stakeholder. With the help of artificial intelligence software, a synthesis with major trends will be produced for the executive committee to help them discuss the strategy for the years to come. Sector transformation, business models and organisation: without a doubt, the energy sector lies at the core of the digital revolution.

[Enjeux numériques, Annales des Mines.]