Utilities have embraced the idea that digital technology, such as cloud, data analytics, the Internet of Things (IoT), and artificial intelligence and machine learning, improve their organization. However, as they move from dabbling to deploying the technology, new challenges arise, according to Gartner Inc.
Utilities are sold on digital networks’ potential benefits. As a result, they will continue to replace legacy systems and devices with smart connected solutions, so much so that such devices will become almost ubiquitous and digital technologies will become the corporate standard.
Energy companies will be able to leverage the technology in a wide --- and growing – number of ways. They use it to enhance the performance of their grid equipment; streamline front office and back office functions; improve customer service; and package their services in more ways.
New Challenges Emerge
As digital deployments grow, the hurdles that they create will shift. These systems will become more ingrained and more vital to the business as well as utility partners and customers. So, the need to have them operating 24/7/365 will become expected. A single adverse event, such as an outage, can cause profound shocks throughout the organization. So, utilities will need to improve their system resilience.
The challenge is that utility computer infrastructure becomes more complex than ever before as digital technology takes hold. Energy companies will need to ensure that the technology infrastructure can survive a shock and recover fast enough so they do not adversely impact the business, which means more significant investments in backup and data recovery.
Utilities invested significant time, money, and resources in their digital transformations. They do not want to change them unless necessary. As the technology market becomes more fragmented and verticalized, domain knowledge becomes ever more critical to building compelling solutions. New vendors may combine their emerging technology expertise with special domain knowledge and deliver differentiating products. Utilities then find themselves undergoing another challenging upgrade process.
The digital era has been dominated by a handful of companies. In January 2022, five tech companies (Apple, Microsoft, Facebook, Amazon, and Google) were collectively worth almost $10 trillion. To illustrate how much wealth they have been accumulating, their stock value represents nearly a quarter of the combined $41.8 trillion S&P 500market cap.
When vendors become so large, government becomes concern about how open their markets may be. Consequently, there has been growing calls by legislators to invoke antitrust actions against these companies. If that step occurs, the products could suffer and lag in today’s rapid evolving technology landscape.
The end result is utilities may find their digital solutions becoming outdated, either by technical advances or regulation. They will need to undertake new projects to move to other platforms.
Energy companies have been assimilating digital technology into their operations. Rather than determine if the technology is worthy of investment, they have moved to a phase where their focus now is on building resiliency into their systems and ensuring that their solutions are not usurped in the future.