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Making Digital Transformation happen: New Year’s Resolutions for Energy Utilities in 2021

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Frederik ten Sythoff's picture
VP Marketing Communications Greenbird Integration Technology

Utilities worldwide are starting to recognise the need to become a platformed utility that can innovate rapidly and offer new services quickly. At Greenbird, I can fulfil my ambition to help...

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  • Dec 30, 2020 4:45 pm GMT
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This item is part of the Special Issue - 2021-01 - State of the Industry, click here for more

When people sat down this time last year to write their predictions for 2020, few, if any, forecast a global pandemic that would affect every corner of the earth and every industry around the planet.

Utilities rose to the challenges brought by the pandemic and kept the power running for communities under stay-at-home orders. For a critical industry, well-used to adapting rapidly to whatever nature throws at it, contingency plans kicked into action and utility workers toiled tirelessly, sometimes sleeping at Operations Centers, to ensure that the lights were kept on.

Businesses have been discussing Digital Transformation for years. 2020 was the year that made it a priority. Long-term plans were accelerated and put in place in weeks rather than years. Organizations who were already further along in the Digital Transformation process were the most resilient to the pandemic’s shock waves and could rapidly adapt to the new business environment.

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With Digital Transformation put firmly in the spotlight, the means of delivering that transformation must top the priority list for utility IT teams in 2021.

So, what New Year’s Resolutions should Utilities be making for 2021?

1. Get Comfortable with Change: Digital Transformation through IT Agility

Change is often uncomfortable. For larger, more established organizations, change can be particularly difficult. The pandemic has shown us that agility and adaptability are essential for surviving in today’s business environment. It has also demonstrated that all organizations, whether startups or legacy enterprises, can rise to the challenge of rapid change.

How can we bring agility into the enterprise, not only to build the flexibility needed to adapt to a rapidly changing environment, but also to make the most of opportunities as they arise?

Often, utilities’ IT Architecture is holding them back, making the constant innovation now needed very difficult. A monolith, tightly coupled, architecture with siloed applications makes adaptation costly and slow. The ability to react quickly to external changes is almost impossible.

Migrating from a monolith to a modern, cloud-native microservices-based architecture combined with an agile development approach, gives utilities the flexibility and ability to scale that is now essential for an era of constant change.

Today, agility is no longer simply a competitive advantage. It’s a requirement for staying in business.

2. Expand your Horizons (but Don’t Forget your Roots). How to Digitally Transform while Delivering Critical Services

Utilities face a conundrum. They are the guardians of critical infrastructure, providing vital services to communities and society as a whole. But they also face competition from new and innovative entrants to the energy sector. As the ‘legacy’ players in the industry, utilities must compete with the innovative newcomers (who do not have to maintain this infrastructure) to survive.

Established utilities must somehow balance security, resilience, reliability and stability with innovation, agility, and speed of delivery.

Getting utilities’ IT infrastructure right is crucial in supporting these dual, and seemingly conflicting requirements for utilities in 2021. A Pace layered Architecture for Utility 4.0 offers utilities the digital foundation needed for their day-to-day running, while retaining the flexibility needed to provide customized innovation.

Using this approach, Systems of Record handle the utility’s core transaction processing and master data. The System of Intelligence delivers the data management and data analytics needed by today’s utilities, for example delivering smart grid analytics and EV charging optimizations. The System of Engagement provides the digital services needed both by consumers and utility employees.

A System of Connectivity provides a data integration layer based on the concept of an Event Driven Architecture (EDA) and reactive microservices. This system handles data flows and data exchange between all the systems and layers.

A Pace Layered Architecture solves a key utility conundrum by providing stability and security, but also the speed of delivery needed for innovation. This architecture enables utilities to accelerate the Digital Transformation needed to operate the future distributed energy system.

3. Support your Local Community: Digitally Transforming to a Cognitive Utility

The Coronavirus pandemic has illustrated how important our local communities are. As people increasingly work from home, they face the same issues as other remote workers around the world, WiFi and broadband issues, interruptions from kids and pets. But as they’re also spending more time in their communities, their unique local businesses and amenities become a more vital part of their lives.

We find this is similar with many of the utilities we work with. The daily issues they face, for example with billing, are the same the world over, but local considerations differ. A utility in Norway will face very different regional challenges to the ones faced by a utility in India or UAE.

Utilities' IT Architecture can be developed to provide the digital foundation needed for their day-to-day processes, while simultaneously retaining the flexibility that’s essential in providing customized innovation at a local level.

This approach to utility architecture gives rise to the ‘Cognitive Utility.’

With this strategy, it makes sense to buy instead of build the digital foundations that are common to all utilities, for example, for the business capabilities handling core transaction processing or managing reference or master data.

Utilities are then able to focus their IT resources on building a cloud-native platform layer within their Enterprise Architecture which can be customized to their individual needs. This layer allows utilities to manage and analyze their data and to constantly innovate, enabling their transformation into Cognitive Utilities.

4. Live in the Moment: A Distributed IT Architecture for a Distributed Energy System

The energy system has been shifting steadily from a centralized to a distributed model. During initial pandemic lockdowns and stay-at-home orders, energy consumption slumped as commercial buildings closed. Although usage recovered to some extent in the fall, according to the IEA, the power mix has shifted towards renewables across all major regions.

We are already experiencing the energy transition.

A distributed energy system gives utilities the benefit and headache of a data tsunami. Whether the information is used to develop new customer services via smartphone apps or to help utilities identify possible interruptions to supply, the potential for using this data is huge. The challenge is managing the data to gather insights and to bring real-time visibility. In this way, the data can be leveraged for maximum effect.

“The future of utilities is analytics driven. Therefore, energy companies will need an architecture that handles huge amounts of data; an architecture that can deal with this data in a reliable way and process this information in real-time.”

This is why a distributed data mesh, using a modern distributed architecture approach is the future for utilities. Using Microservices, becoming event-driven and using a cloud mesh are all critical elements of this architecture.

A data mesh breaks down the flood of data into separate streams which can be analyzed for a particular business area or used to create a joint aggregate overview.

A distributed data mesh enables utilities to become data-driven organizations that can accelerate their Digital Transformation and the Energy Transition.

5. Talk to People you Wouldn’t Normally Talk to: Why Utilities should Integrate Operational and Information Technologies

It’s very easy to get stuck in our silos and only speak to like-minded people. Stepping out of our normal interactions can challenge our ‘taken for granteds’ and change our perspectives. This is one ingredient for the development of ground-breaking ideas.

Isolated systems and siloed data do not work well with emerging technologies, such as Machine Learning that can hugely benefit utilities.

One of the areas that is traditionally isolated for the rest of a utility’s IT infrastructure is Operational Technology. The potential risk from a cyberattack is a threat to be taken very seriously and is the reason for its isolation. But more and more utilities are realizing that integrating IT and OT increases the potential for technological innovation and operational efficiencies.

It is possible to gain the benefits of OT/IT integration in a secure manner by using a next-generation iPaaS solution. It is possible to gain the benefits of OT/IT integration in a secure manner by using a next-generation iPaaS solution.

If 2020 has shown us anything, it is to expect the unexpected. What we’ve learned is that by using an IT Infrastructure that enables flexibility and agility, utilities can quickly adapt to the changes that 2021 brings.

Wishing you a very happy 2021 from all at Greenbird.

Frederik ten Sythoff's picture
Thank Frederik for the Post!
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Matt Chester's picture
Matt Chester on Dec 30, 2020

I love the idea of New Year's Resolutions for utilities, because that tradition is all about making changes and embracing what could be better. For too long, utilities have been a legacy industry that's notoriously slow to move or adapt, but external circumstances are forcing their hands now. These are great examples of just some of those new innovative changes they can and should embrace-- bravo, Frederik!

Audra Drazga's picture
Audra Drazga on Jan 26, 2021

Frederik,

Great article as usual.  You mention

"Utilities face a conundrum. They are the guardians of critical infrastructure, providing vital services to communities and society as a whole. But they also face competition from new and innovative entrants to the energy sector. As the ‘legacy’ players in the industry, utilities must compete with the innovative newcomers (who do not have to maintain this infrastructure) to survive."

With the new FERC 2222 order opening wholesale markets to DERs, utilities are going to have to get into the game of competition now more than ever. 

On another note, I think the digital transformation will be critical for utilities but they are going to have to balance this with cybersecurity threats and the costs involved in installing and managing systems to help with these threats.  Not to mention the expertise (staff) they will need to have. 

 

Alan King's picture
Alan King on Feb 10, 2021

This is an interesting read, thanks @Frederik for posting. How have you found the uptake of integrating OT/IT, both pre 2020 and during 2020? Breaking down silos is something we're very close to and the OT world comes with inherent risks to manage as you mention. Broader digital transformation accelerated in our experience over the last 12 months.

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