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2019 Predictions for Worldwide Utility Companies

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Roberta Bigliani's picture
Associate VP IDC - Energy Insights

Roberta Bigliani is vice president for IDC Energy Insights, IDC Government Insights and IDC Health Insights in EMEA. In her role she provides strategic directions for these groups and advise both...

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  • Jan 28, 2019

This item is part of the Special Issue - 2019-01 - Predictions & Trends, click here for more

Utilities across the world are radically transforming their businesses. This is happening despite different regulatory regimes and across the diverse electricity, gas, water, and waste businesses. For instance, technology is changing how energy is produced, transported, consumed, and conserved. Customers are not just raising experience expectations — they are becoming prosumers with an active role in energy markets. New business models are emerging, thus requiring utilities to go beyond the traditional commodity business — packages combining distributed generation and energy storage at home is just one among the several examples of how utilities' mission is evolving. Digital disruptors are circumventing industry entry barriers, and utilities are being reborn in 3D: decentralized, divergent, and digital.

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The following are 10 predictions that make up, in IDC Energy Insights' view, the framework for IT and line-of-business (LOB) decision makers and influencers' technology-related initiatives in the year ahead.

  • Prediction 1: Digital determination. By 2022, 20% of digitally determined utilities' revenues will come from new products and services.
  • Prediction 2: Distributed generation and storage. By 2021, 55% of utilities will derive 20% of gross margin on average from combined distributed generation and storage packages for prosumers.
  • Prediction 3: Edge analytics. By 2020, 65% of power, gas, and water companies will have invested in edge analytics/computing as they strive for operational excellence and the best optimization of their assets.
  • Prediction 4: Flexibility. By 2023, 65% of electricity companies will have invested in digital technologies and platforms to support flexibility services, thereby activating a load potential of up to 35% of installed capacity.
  • Prediction 5: Customer experience (CX). In 2019, utilities/energy retailers will double their investments in artificial intelligence (AI) to improve convenience, customization, and control for clients, thus enhancing customer experience.
  • Prediction 6: Connected assets. By 2023, utilities will have digitally connected 75% of their critical assets to predict and prevent equipment failure and prescribe best maintenance options to optimize and extend asset life cycles.
  • Prediction 7: Future of Work (FoW). By 2021, 35% of utility CEOs will have access to an intelligent personal assistant at work.
  • Prediction 8: Platforms. By 2022, 55% of utilities will use a core digital platform to automate, optimize, and orchestrate assets, business processes, customers, and employees, thus improving efficiency and business outcomes.
  • Prediction 9: Revenue protection. By 2020, artificial intelligence applied to revenue protection will enable water, gas, and electricity companies to reduce revenue losses by 70%.
  • Prediction 10: Security. In 2020, managing the risk of operational technology/IT cyberattacks and data privacy compliance will cost utilities an average of 1% of annual turnover.

As electricity, gas, water, and waste companies each navigate their transformation journey, they face various common challenges including siloed initiatives (i.e., the lack of transformation governance), limited expertise in terms of data scientists, IT architects, coders, and digital strategists, and weak road maps, causing transformation deadlock. While a growing number of utilities have built a vision around transformation, several seem to struggle in prioritizing the use case journey. The inability to scale up innovation and the use of outdated KPIs that do not capture a company's true performance in the digital business are slowing down the utilities' journey.   To help guide utilities executives looking to master business transformation, IDC Energy Insights offers the following guidance:

  • Strategize your own disruption. Embed digital in your enterprise strategy, and do not separate it since digital is the strategy.
  • Execution matters. Develop an agile enterprise road map that is modular, scalable, and extendable.
  • Digital platform matters. Integrate digital innovation with enterprisewide systems in a single platform to enable digital products, services, and experiences while modernizing and integrating the internal IT environment.
  • Culture eats strategy for breakfast. Foster a company culture that values innovation, proves commitment to employees' success, leverages agile and design thinking methodologies, and creates a borderless organization capable of crowdsourcing talent.
  • Time for new KPIs. Integrate traditional performance indicators with a new set of KPIs measuring innovation rate, customer and employee advocacy, data valorization, business operations, work, and labor supply.

In order to be successful in achieving digital transformation, today’s utilities companies need to overcome siloed initiatives by integrating and orchestrating change across the organization, strengthen weak road maps, close the talent gap and introduce new sets of key performance indicators (KPIs).  While the transformation journey is neither easy nor painless, if done right, successful utility companies will deliver value to customers, employees, shareholders, and society.

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Thank Roberta for the Post!
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