How Electric Utilities Can Compete in the Digital Consumer Economy

by Satya Ramaswamy, Tata Consultancy Services

Since the dawn of the Internet, companies have operated in the Internet economy, a period during which there was an explosion of connectivity and customers were empowered to access information about the companies who serve them.

Today, we face another shift: the digital consumer economy. This new era will be characterized by the democratization of information, whereby all companies can access information about their consumers, all the way down to individual shoppers. Companies also are being empowered by digital tools that make them more efficient.

What does this mean for electric utilities? If able to harness new digital tools and customer information effectively, utilities could benefit massively from increased customer retention to streamlined operations and greater revenue generation, etc.

Start With the Technology

Five key digital technologies, or digital five forces, will drive the digital consumer economy:

  • Mobility and pervasive computing. Enabled by smartphones and tablets, mobility and pervasive computing have transformed customer services into anytime, anywhere contextual interactions. Mobility also has liberated information technology from the desktop, enabling an empowered field force.
  • Big data. By allowing businesses to process massive amounts of data at high velocity and in formats that might not fit the fixed schema of structured data, big data can deliver genuine business insights that otherwise might have been lost entirely.
  • Social media. For the first time in human history, businesses can listen to the unfettered sentiments of millions of consumers.
  • Cloud. The cloud has enabled highly scalable, fault-tolerant computing capability that is democratized and cost-effective.
  • Artificial intelligence and robotics. Modern developments in artificial intelligence and robotics are creating a highly scalable automation of human intellect and physical dexterity.

Understanding how these technologies can be incorporated into existing work flows or used to introduce new work flows into the day-to-day activities of an electric utility is critical. Not all will be relevant today; however, each eventually will have its time and place.

Set a Baseline

A recent TCS report found that digital rapidly is becoming the new default for many organizations; however, of all industries surveyed, the utility sector ranked lowest. Only 38 percent found digital initiatives to be of major significance, compared with 74 percent in the media and entertainment sector. Yes, they’re different industries, but an opportunity exists to raise awareness and visibility of digital initiatives as a priority at all levels.

Not all digital initiatives have the same impact or require the same investment. There are three categories of digital initiatives based around different levels of maturity: digitization, digital transformation and digital reimagination.

Digitization includes initiatives such as taking a physical business process that might involve paper and pencil processes and converting them to a tablet-based process. It also could involve adding a mobile-based process to a desktop-based business process.

Digital transformation typically involves transforming a company’s channels to its customers; for example, providing customers with the ability to purchase through mobile devices or social media.

The pinnacle of digital initiatives is digital reimagination. Digital reimagination initiatives leverage a combination of the digital five forces to reimagine an enterprise along six dimensions: business models, products and services, customer segments, channels, business processes and workplaces. The term ‘reimagine’ is used to denote the creation of things that are new and not just incrementally better. Although digitization and digital transformation are incremental innovations, digital reimagination is a disruptive innovation that has the power to change companies and entire industries.

Forward-looking electric utilities will begin to reimagine themselves around the digital five forces. Let’s walk through an example of how that reimagination might look.

Look for Ways to Reimagine

A key issue with which electric utilities grapple is effective asset and field force management. Both elements have significant impact on the customer experience and should be priorities for digital reimagination.

Take a scenario in which these two aspects come to the fore for electricity providers: during a heavy storm. Effective storm management traditionally has been an Achilles’ heel for many utilities because when powerful storms hit, there might be a broad idea of the areas to be affected, but the specific assets that will be affected remain unknown until after the storm. Customers in affected areas usually are taken by surprise, and service restoration is coordinated imperfectly because of the difficulties of communicating with the field force. Customer calls to call centers add to the already high cost of asset restoration, and then there is customer frustration about service quality.

Now, consider how this provider can reimagine storm response by embracing the digital five forces for asset and field force management.

It starts with preparation. A reimagined provider is well-connected with its customers via social media. It provides easy to use mobile applications to stay in constant touch with customers and to hear, in real time, when an outage occurs. That same provider also has equipped its field force with mobile applications that touch all facets of their work. For example, the connected systems to monitor smart meters and obtain individual dwelling service-level status on a constant basis can be synched to that mobile application. Or an internal social network can be used to keep in touch with field employees. And last, machine learning and artificial intelligence can be integrated to predict storm paths and alert field-workers.

When a storm’s arrival is expected by weather models, the artificial intelligence systems predict the exact assets that will be affected by using machine learning based on prior storms in the area. The utility then informs customers in the service areas about the potential for service disruption via social media and its mobile application. Any changes to previously communicated information are shared proactively. The field force also is alerted to specific areas of impact via their mobile devices so they are ready.

When the storm passes, the big data systems provide information on specific customers who are affected. The utility proactively informs these customers via social media and the mobile application about their service conditions. It also provides an accurate estimate of service restoration time by using machine learning systems that use knowledge of previous storms. This avoids the cost of call center activity from customers with outages.

The field force is coordinated via their mobile devices. Work flow approvals are automated using artificial intelligence systems so the field force must not wait for manual approval processes. Work simply gets done.

Isn’t that a better way to manage storm response?

Although it’s a key example of how digital reimagination can transform utilities, it is not the only one. The redefining moment for the utility industry is now; utility providers who embrace the digital consumer economy, digital five forces and digital reimagination will see rapid evolution and significant competitive advantage.

Satya Ramaswamy is global head of the digital enterprise unit at Tata Consultancy Services.

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