Bringing the Digital Utility to Life
- Mar 3, 2020 5:43 pm GMT
Four critical roles for digitalizing the Utility of the Future, and why they should matter to you…
Earlier this year, TMG Consulting published a piece for Energy Central entitled Ushering in the Decade of Digital, in which we outlined 10 themes shaping the next decade of digitalization for Utilities. Since then, I've had an opportunity to continue exploring these trends with our extended client and vendor communities during our January briefings, conferences and various networking events.
What I found most interesting in these discussions was just how much the conversation about digitalization was changing- shifting away from the emerging digital technologies and solutions themselves (which we all know will continue to accelerate and capture our collective imagination), towards the overarching challenge of “putting it all together". Utility digitalization has become more a conversation about strategy, alignment and orchestration, than about new technological advances and possibilities. Priorities have shifted to:
- Better “tuning” between the business and market opportunities already created by new digital technologies, and how each of these digital solutions impact our ability to harness that value
- Knowing where to position each these emerging solutions within the digital ecosystem so that they deliver their incremental sources of value without unnecessary duplication or disruption to core operating workflows; and
- Orchestrating the pieces to integrate with, and optimize across Utility business silos and emerging market participants.
As I further reflected on these discussions, I also began to think more about how the digital ecosystem itself has changed, and how vendors were repositioning themselves within this vast landscape of possibilities.
What was once a small handful of major application software vendors and systems integrators (SI's) dominating the lion’s share of the Utility IT portfolio, has become a complex web new vendors and point solutions, all vying for a seat at the same table- A seemingly indiscernible collection of vendors and solution categories that comes with its own set of selection and integration challenges.
Emerging Roles Within the Digital Utility Landscape
Amidst the complexity of its overall appearance, a deeper look into the evolving digital ecosystem reveals the emergence of four clear domains of competency that we believe will be essential for Utilities competing in tomorrow's digital landscape:
1. Democratizing Data
The need to move beyond basic improvements to systems of record, data warehousing, and speed of access, toward a broader liberalization of the data environment itself. Honing these capabilities will not only involve the acquisition of new technologies (next generation data lakes/lake-houses, data hubs, and intelligent connectors), but also the myriad of internal skills and cultural practices required to 'unshackle' data (from the systems of record that once held them hostage) and socialize it across the enterprise with other business processes to create and enable new sources of value.
2. Digital Transformation and Enablement
New skills and capabilities for discovering insights and translating them into new innovative workflows that streamline, transform, and automate traditional customer and operating business processes. New technologies for advanced analytics, machine learning, and AI will be part of this digital enablement engine. Just as critical however, will be new skills required to standardize and modularize these insights so that they can be quickly scaled across the business without having to replicate them within discrete functional silos.
3. Agile Integration
As utilities further modernize their infrastructures, transform customer engagement, and pursue bolder decarbonization targets, new integration challenges are emerging. Core business applications are being forced to seamlessly connect an ever-expanding set of data streams from new customer channels, external marketplaces, behind-the-meter devices, and infrastructure telemetry. Conventional SI approaches are quickly being replaced by more agile methodologies and micro-services enabled integration platforms that lower costs and incorporate new levels of flexibility and adaptability into companies’ digital ecosystems.
4. Digital orchestration
As the Utility operating model becomes more complex, the challenge shifts from being solely transactional and operational, to include the broader optimization of opportunities and constraints across business silos (e.g. personalizing omni-channel customer journeys in real time, better anticipating and adapting network topology to accommodate rapid swings in DER production and/ or customer demand, etc.). This is precisely why leading companies are expanding the scope of their digital portfolios- augmenting the basic upgrade or replacement of their core operating systems, with the addition of expanded CRM, DERMS, and other solutions that deliver true optimization across interrelated data streams and business processes.
What’s Your “Sweet Spot”?
Each of these four domains represents a new opportunity for companies to strengthen their capabilities and better position themselves for the future. It also represents an opportunity for vendors to reposition and better focus themselves within these new categories of products and solutions in a way that accelerates success for their clients.
In 2020 alone, TMG has already had the opportunity to meet with dozens of vendors and clients to learn more about they are impacting each of these critical areas. Where are they in their digitalization roadmap? Where were they seeing the most traction? What’s driving the next generation of investment? And most importantly, where do they see themselves adding the most value within this shifting digital landscape?
For some, it's still all about the data – making data more accessible, and more usable across the digital landscape. For others, it's more about analytics and insights, and how they are using those to catalyze new operating and customer innovations. For some, it involves redefining the role of systems integration – the methods, the platforms, and the skills that will be used to lower costs, reduce implementation timeframes, and eliminate unnecessary complexity.
Which role will you play in this Journey? The data liberator? The enabler? The integrator? The orchestrator? All of the above? Or somewhere in the middle?
Take-Aways for Vendors and Utilities…
For Utilities and their technology partners alike, understanding each of these roles and matching them to the range of capabilities required is an essential part of developing an effective digital roadmap. Below are implications we see for each as they implement their part of the digital utility journey:
Niche Providers and Point Solutions
For smaller, niche players with distinctive capabilities in these key roles, the news couldn’t be better. The digital landscape has grown to include many new categories of solutions that came to exist only a few years ago. Even the categories that did exist have changed enough to create new spaces to compete and win. As many utilities are unbundling their portfolios to accommodate “best of breed” point solutions, the opportunity for niche vendors is bigger than ever, with considerably fewer barriers to entry.
Integrated Software Providers & Solution Integrators
For the larger, more established players, the message is all about remaining flexible and adaptable – something which most are exhibiting in some shape or form. Across the industry, we are already seeing some of the larger "big box" providers uncharacteristically integrating externally provided point solutions their standard “SKU lists”. Of course, some of these examples may actually be precursors to future acquisitions, but the overall receptivity to partnership (versus building organically) is nonetheless an encouraging trend.
For Utilities, the challenge will be to understand each of their existing and prospective vendors better, know where they would be best positioned against this new industry backdrop, and how they should be integrated with other providers to fill critical gaps in their digital portfolio. It’s important that, in each of these areas, companies know exactly what to test for, and whether that capability would be best provided by a "best of breed" partner versus a more integrated solution. Ultimately, the goal should be to build enough flexibility into the technical architecture to allow this type of “unbundling and reintegration” to occur where appropriate.
Collaborate with TMG
In the coming months, there will be many opportunities to collaborate with us as we help to “bring the digital Utility to life.”
TMG will be providing several opportunities for Utilities and vendors to participate in our ongoing discovery of new innovations occurring across the the Utility digital ecosystem. This will include open invitations to share insights and learnings in our ongoing publications such as our 2020 What's Next Magazine (distributed annually at CS Week), a series of targeted benchmarking surveys, and dozens of “deep dive” sessions with innovative Utilities and vendors around the industry who have already demonstrated successes within their digitalization endeavors.
Many of these insights will be highlighted at our annual TMG Utility Forum in October of 2020, and in our 2020 State of Utility Digitalization report to be issued later in the year. Keep an eye out for these and other opportunities to collaborate with TMG and peers from around the industry as we work together to “bring the digital utility to life.”
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