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How utilities can prepare for the industrial internet of things

Brian Meadows's picture
Partner Ernst & Young

Brian Meadows is currently leading the build-out of EY’s digital – industrial internet of things (IIoT) services agenda.  This agenda is centered on accelerating client advancement in operating...

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  • Dec 2, 2016

Co-author: Paul Micallef

A change is coming to the way power and utilities companies operate their businesses. The industrial internet of things (IIoT) is the present and future for power and utility providers. IIoT is a new phase in the modern technological evolution of the way businesses and consumers will receive and track the energy they use. It will see new entrants come into the market and reshape traditional utilities operations. Utilities who refuse to adapt or change will suffer financial losses, countless preventable maintenance issues and a waste of resources.

The IIoT will bring utilities closer to customers and change the game when it comes to managing, measuring and distributing energy. Providers need to be ready for this change and recognize what needs to be done. But many are challenged by marrying new technology with legacy IT and OT systems, overcoming the skills and knowledge gap and dealing with regulatory uncertainty.

Technological uncertainty tends to result in a hesitation to embrace this change and, as a result, utilities have been understandably slow to adapt to IIoT. Utilities should understand the potential return on investment for IIoT connectivity and think "outside-in" rather than "inside-out," with a focus on the customer and employee experiences. The applications of IIoT in the power and utilities sector are vast and include increased monitoring, control and automation across the distribution network, enhanced asset management, a more connected maintenance workforce, greater customer reach and intimacy and much more.

A road map, a plan, an agenda - putting pen to paper and taking one step at a time can help utilities begin to capitalize on the benefits and the new business paradigm that comes with IIoT. In fact, a number of successful utilities across the world are embarking on this journey by building in their IIoT plan into their broader smart grid road maps and plans. To make the most of IIoT, we recommend the following steps:

  • Assess the business status quo: Providers should start by carefully assessing their value chain and identifying areas characterized by repetitiveness or mistakes that offer a significant potential for optimization and possess a high monetary impact or customer touch point. Also, providers should identify changes in the relationship between products and services. In this process, they will come to support areas through IIoT that are synched with the value proposition offered by their business, relative to the expected or intended outcome for customers.
  • Put the necessary employee talent and skills in place: Implementing IIoT requires making sure that the necessary skills will be in place once it is introduced in the current business environment. IIoT does not have to be complex but it does require an understanding and focus on protocols and proper processes. Ensuring this large technological shift is turned into a meaningful investment requires having the right staff in place. Your employees ? from control room operators, to field technicians, engineers and meter installers ? must understand and embrace IIoT so that they can help move your business forward.
  • Consider safety and security: When implementing IIoT, as with any new technology, there is a certain risk involved. Connected "things" and their communication may pose multiple new security risks through increased exposure and common vulnerabilities. This becomes more acute when considering the critical nature of the electricity transmission and distribution networks. Utilities should also incorporate security technologies to protect the devices themselves as well as the IIoT platforms from electronic and physical tampering, including communication of encryption and safeguards.

The earned benefits and impact of IIoT will not happen overnight. Productivity gains, happier customers, better use of resources, greater efficiency and smarter systems all come with time, proper protocols and top talent. EY and GE Digital recently formed a strategic alliance to develop and provide IIoT services for industrial companies to achieve greater productivity from capital assets and processes linked in the cloud. Providers can begin to change today and take advantage of this connected future right away. The only question is: are they ready for it?

Paul Micallef is EY's Global Power & Utilities Digital Grid Leader. He has worked in the power and utilities sector for more than 10 years, most of that time specializing in smart meter and smart grid. He has extensive experience working across Europe, the Middle East, Africa and the US. He is currently based in London.

The views reflected in this article are the views of the authors and do not necessarily reflect the views of the global EY organization or its member firms.

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