Digital Utility: A tight-rope walking partnership between CXO and CIO in inclement weather of opportunities

This is a once-in-a-generation moment for the electric utility Industry. ?The industry has a very unique set of drivers that needs to be understood before a solution or platform is structured. The industry has over 125 years of history of generating 1000s of companies out of which 3000+ electric utility companies are still functioning across North America as of September 2023. Consolidation scope is high with a paradigm shift. Ownership models for these companies are either investor- or municipal-owned utilities or cooperatives. These companies produce products and services that are regulated and unregulated which adds extra complexity in compliance. Further, being B2C they deal with millions of direct customers, who as a matter of modern-day expectations are getting used to high-quality customer experience ploys from Apple, Amazon, etc. ?Top it up with a high dependency on physical assets, engineering, safety norms and aging assets. And we all know the problems of aging bodies, when one problem gets rectified, another problem emerges somewhere else. Above all, we have more adverse climatic conditions than ever before thanks to all those carbon-emitting industries.

?Given this context, electric utility companies have been late and relatively slow adapters into the Digital transformation space. While more utilities are starting to adopt many digital trends, the rate of adoption is not keeping up with the pace of innovation, expectations of customers, and regulatory authorities. ?

The industry has many challenges and transformational opportunities, here is a list of a top 10 challenges not necessarily in the given order and the business cases they trigger to transform our lives. This article may be read from three perspectives CXO, CIO, and the Client Partners of IT Services Companies.? Tried to gather industry reports and magazine information that are accessible. Let's switch on the light on priorities

1.Cybersecurity and Grid Protection: Safeguarding critical infrastructure from cyber threats. In 2020, the utilities sector reported 393 cyber incidents. Failures in cybersecurity can lead to regulatory fines, reputation damage, and loss of customer trust. The average cost of a cyberattack in the utility industry is $6.79 million, and downtime can lead to revenue losses.

Some of the advanced cybersecurity technologies and threat intelligence tools like Palo Alto Networks, Fortinet, and Cisco can adopted using the consulting services o partners like Deloitte, Accenture, IBM.

?2.Grid Modernization: ?Upgrading aging infrastructure to accommodate renewable energy integration. Grid failures cost the US economy up to $70 billion annually. Inadequate modernization can result in service disruptions and regulatory penalties. Grid modernization can lead to cost savings, improved reliability, and reduced carbon emissions.

Smart grid technologies from Siemens, ABB, and Schneider Electric, along with SCADA systems can address Grid Modernization challenges.IT services Partners include Capgemini, Cognizant, Infosys.

.3.Data Management and Analytics: Extracting actionable insights from vast data volumes. Utilities generate terabytes of data daily. Inaccurate data analysis can lead to poor decision-making. ?Improved data analytics can reduce maintenance costs by up to 25% and enhance operational efficiency.

Data analytics platforms like IBM Watson and Microsoft Azure, utilizing Big Data tools like Hadoop. IT services Partners include Capgemini, Cognizant, Infosys. Wipro, TCS , Sonata Software can be considered

4. Regulatory Compliance: Navigating complex and evolving regulatory requirements. Non-compliance can result in hefty fines. Regulatory missteps can have severe financial and legal consequences. Efficient compliance management can reduce the risk of penalties, litigation, and reputation damage.

Regulatory compliance software like SAP GRC, Metric Stream coupled with consulting services from firms like Ernst & Young , PWC , Deloitte and KPMG can bring in more reliable services.

?5. Renewable Energy Integration Efficiently integrating renewable energy sources like solar and wind into the grid while maintaining stability. Poor integration can lead to grid instability and customer dissatisfaction. ?Effective integration can lead to reduced reliance on fossil fuels, lowering operational costs and reducing carbon emissions.

?Energy storage solutions from General Electric, Siemens Gamesa, and Vestas, along with demand response technologies. Infosys, Accenture, Deloitte.

?6.Customer Engagement and Experience: Enhancing customer satisfaction through digital channels and personalized experiences. Inadequate customer experience can lead to customer churn and lost revenue. Improved customer engagement can lead to increased revenue, with studies showing a 10% increase in customer satisfaction resulting in a 12% revenue boost.

Implementing customer experience management platforms like Salesforce, Adobe Experience Cloud, and Oracle CX can address this challenge

?7.Asset Management: Optimizing the lifecycle management of critical assets to reduce downtime and maintenance costs. Neglecting asset management can lead to costly breakdowns and service interruptions. Effective asset management can lead to up to 20% reduction in maintenance costs and extended asset lifetimes. Approximately $2 billion (2026, Mordor Intelligence) was allocated for asset management in the US utilities industry

Often Enterprise Asset Management (EAM) software like IBM Maximo, Infor EAM, and IoT sensors for real-time asset monitoring. IT services partners like CGI, Hitachi ABB Power Grids, DXC Technology have know to have done this work.

?8.Workforce Management: Addressing an aging workforce and skills gap while ensuring employee efficiency and safety. Inadequate workforce management can result in operational disruptions and safety incidents. Effective workforce management can lead to a 15% increase in operational efficiency and a safer work environment. Approximately $2.3 billion (2021, Marketsa nd Markets) was allocated for workforce management in the US utilities industry.

?Implement workforce management software like SAP SuccessFactors and Workday, alongside training and development programs. IT services Companies with OCM practice can do this job well and a few companies who do this job include Cognizant, Infosys, and Wipro.

?9.Resilience and Disaster Recovery: Ensuring business continuity in the face of natural disasters, cyberattacks, or equipment failures. Neglecting resilience and disaster recovery can lead to prolonged service disruptions and customer dissatisfaction Effective disaster recovery planning can reduce downtime costs by up to 80% and prevent revenue losses. Approximately $6.5 billion (2021, MarketsandMarkets) was allocated for resilience and disaster recovery in the US utilities industry.

?Utilize disaster recovery as a service (DRaaS) platforms like Veeam and Commvault, along with comprehensive risk assessments using the support services of IBM Services, Atos, Deloitte.

?10. Distributed Energy Resources (DER): Effectively managing and integrating DERs such as solar panels and batteries into the grid.. Especially when VPP ( Virtual Power Plant) are being tested out it becomes even more important to manage DER accurately. Inefficient DER management can lead to grid imbalances and reduced reliability. Efficient DER management can lead to cost savings and increased grid stability. Approximately $800 million (2026, Mordor Intelligence) was allocated for DER management in the industry.

Deploy DER management systems like Siemens Distributed Energy Systems and microgrid technologies. ?Siemens Energy, Schneider Electric, Accenture.

These challenges encompass the spectrum of IT concerns in the Utilities Industry. Addressing them effectively, with the right technologies, partners, and budgets, will not only mitigate risks but also position utilities for growth and resilience, and the direct and indirect value created is estimated to be around $500 billion to a trillion.

Ideally, when the IT services companies build their GTMs for Utility practice it builds a more efficient sales algorithm in the organization to serve the needs of the Industry. Having generic GTM for all industries is a sure recipe for disappointment for the client and IT services company.

Being on the fence leads us nowhere. Let's connect collaborate articulate the future state and work out the pathways to transform our lives. You can reach the author for further details at [email protected]

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Disclaimer: The article is written purely for academic purposes. The technology tools, brands, and IT services companies listed are for reference and academic purposes. the reader is advised to do further research and validation for decisive information. I wrote this article based on my interactions, and industry analysis with fellow professionals in the Utility Industry.