Many company leaders in the utility sector feel prepared for the upheaval that emerging technologies represent – but few are truly ready for the operational, competitive, cultural and security shifts that are already taking place.
This is the primary finding of a new study by West Monroe Partners. The survey, conducted in late 2017 with 300 high-level executives from the healthcare, utility and financial services sectors (100 high-level utility and energy executives), pinpoints not only how ready companies are for this historic upheaval, but also how ready they think they are.
According to West Monroe, there is a gulf separating companies investing in dynamic core systems and those throwing money at solutions, to implement them poorly or in isolation.
For energy and utility executives, the good news is that the shift is already underway. But to truly fulfill its promise, industry leaders need to integrate the work they have already done with a workforce that can—and must— be coaxed into embracing change.
The business changes the industry has faced in recent years—the ascent of renewable energy and the closely related transformation brought about by distributed generation—has hastened the adoption of some advanced technologies. The smart grid‘s integrated intelligent device networks are an already established technology among many energy and utility companies.
The pressure can only be expected to mount as regulatory bodies keep making choices on behalf of the customers to benefit the communities they serve. New technologies and greater digitization are all but inevitable as this business continues to evolve and modernize. Deregulated markets such as New York, California and Illinois will lead the way for investor-owned utilities, along with co-ops which are focused on operational efficiency driving a lowest total cost of ownership model.
Certainly, the challenge of a unionized workforce can’t be overlooked. But it also shouldn’t be overblown. Demonstrating how technology makes jobs safer, easier and more interesting is key to driving transformation. Meter readers, rather than merely recording numbers, will gain key responsibilities in keeping critical, customer-facing ends of the smart grid running smoothly and enhancing reliability.
And it will provide new opportunities through data analytics, an area where the sector scored behind: Only 31 percent of utility respondents reported their business employs data science and analytics to drive insights and operational decisions.
The most forward-thinking executives will use this opportunity to swiftly and fully integrate tools, people, systems, information, and operational technology to align with serving the customer. And those organizations will thrive as they will be positioned to leverage their streamlined process and efficiency as the pace of change accelerates around them.
The full report is available here at West Monroe’s website.
Other findings from the report:
· Only 31 percent of utility respondents reported their business employs data science and analytics to drive insights and operational decisions
· Only 21 percent of respondents chose battery storage as the greatest opportunity for utilities. However, according to a report by GTM Research and the Energy Storage Association, U.S. deployments of energy storage systems will nearly triple this year thanks to sharply lower costs and state policies that support the case for installing batteries in homes, businesses and along the power grid. Key findings from the report related to battery storage and the utility sector, include:
1. The U.S. deployed 100 megawatt-hours of grid-connected storage in Q4 2017
2. The U.S. deployed 431 megawatt-hours of grid-connected storage in all of 2017
3. GTM Research forecasts 1,233 megawatt-hours of grid-connected storage will be deployed in 2018
· 51 percent of utility respondents chose IoT as a trend that will create the most business opportunity. It is surprising this number isn’t even higher given the volume of reporting on the opportunity IoT will bring to the utility sector.
· 45 percent of utility respondents said they’re extremely concerned, and 32 percent said they were very concerned about a looming cybersecurity threat. Twice as many utility leaders say their cybersecurity strategy is “reactive” when compared to financial services leaders. All this said, utility leaders are confident in the accuracy of their data and can detect customer patterns quicker than the other sectors
· A host of factors are driving the energy and utilities market to digitize their infrastructure and operations— customer expectations, aging technology, and regulatory requirements to name a few. While the industry is readying for the shift, certain realities are holding it back. One of those realities is data, as 70 percent of utilities still rely on IT to handle data governance—a higher rate than financial services organizations and almost twice as much as healthcare companies.