Digital transformation proceeds at different rates across different industrial sectors. One area lagging behind are utility firms, especially with digitalization, customer engagement and advanced analytics. According to Bain, this needs to change.
While the utility sector has been slow to adapt to digital transformation, there are signs, according to analysis provided in a Bain Brief, that the situation is beginning to alter. Ten years on, the sector should look very different, although there will be some losers along the way.
The differences will be with different measures. These include the wider use of data gathering, data storage and data analytics. This is especially with the use of data to improve operations. An example, for the utility sector, is with using data to help predict likely occurrence and duration of power outages. This can be achieved with real-time monitoring systems. Additionally, smart systems are increasingly self-repairing, helping to avoid engineering use.
Data analytics can also help manage demand and avoid power supplies to be always set to run at peak. By using smart technologies, power can be channelled for when it is actually needed. This involves assessing energy storage, demand response, distributed resources, plus using virtual power plants, to help flatten out costly demand peaks.
Data analytics also help with cost reduction, such as reducing call center volume; reliability, such as analyzing why power outages occur; and with customer engagement, by finding out more about customer behavior.
According to a PwC assessment, successful utility forms are going digital in a number of ways. These include:
Energy analytics: Energy analytics services are focused on business-to-business and, with smart meter rollouts, increasingly on business-to-consumer services.
Smart homes: Several utility firms see smart homes as essential to improve customer relationships and many see an opportunity to offer new services beyond the energy spectrum, such as health monitoring and with security services.
Smart cities: Many utilities recognize the relevance of smart city concepts. Here the pace has been slower, due to the complexity of introducing functioning connected technology on a large scale.
Decentralized energy: Utilities in countries with strong renewable energy development are especially keen on decentralized solutions.
Allowing consumers to interact with energy use
Utility firms that offer the customer more are likely to stand above competitors, especially as customers become more tech savvy and in tune with concepts like the smart home.
Opportunities for the electricity sector, for example, are with services and products that allow customers to interact with their energy use. In addition, customers are becoming more accustomed to the one-click ease of online commerce. To succeed utilities companies need to learn from other consumer businesses like Amazon and Uber.
New companies have been particularly success in designing and market services based on the customer’s perspective. Start-ups and new emergents are using digital first approaches, and are often better clued up as to how customers want to interact with services.
According to the website Utility Dive, utilities firms can accomplish their customer engagement goals in three ways. The first is simplifying utility-customer interactions. The second is making the most of advanced analytics to process customer data and use this to make interactions personal. The third way is by securing customer loyalty through offering actionable information.
Looking beyond the sector
Success for utility companies can come from new ideas and some of these ideas lie outside of the sector. For example, the automobile manufacturers working on electric vehicles have pioneered way to develop bigger and better batteries. The technology behind this could benefit utility providers.
In addition, there are general sector trends and improved ways of working that can be applied across multiple industries, which utilities firms can learn from. Four of these are featured in the Digital Journal article “Four important factors for digital transformation success.”