Report: Dramatic cultural change required in utilities sector

utilities

New research shows that digital transformation is sparking widespread disruption in the utilities sector, and it’s forcing companies to reimagine value chains, implement new business models and adapt to new ways of working to improve operations and meet customer demands.

A survey, commissioned by OpenText, of 30 utilities reveals transformation within utilities is well underway, but challenges persist. Key findings show:

  • The business areas most ripe for digital transformation are customer service and experience (41 per cent) and operations (35 per cent)
  • 71 per cent of executives expect most disruption to occur in the next five years and that innovation will be largely driven by collaboration between start-ups and incumbents (53 per cent)
  • Only 26 per cent said their company’s leadership team understands the challenges of digital transformation and has a strategy in place for change management
  • The biggest perceived impediments to digital transformation are weak digital strategies (32 per cent), difficulty securing investment and access to skills (both 21 per cent)
  • 71 per cent said dramatic cultural change is required within their organisations in the next five years to address these changing conditions.

Who leads the pack: electricity, water or gas?

Through the renewables shift, consumers have greater ability to generate, store and resell their own energy back to the grid, creating a host of new challenges for businesses. This is causing parts of the sector to transform more rapidly, with executives suggesting that the electricity industry is the most advanced in its digital transformation because of the pressure from end-users.

To excel in this era, OpenText southern region manager Joshua Bartlett suggests utilities companies must now ensure they are deploying digital technologies in ways that enhance customer experience and generate the greatest shareholder return.

“This involves building more efficient operations by deploying big data to improve predictive analytics and introducing Internet of Things (IoT) technologies like sensors and drones to improve performance,” he says.

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Taking stock of current technology

Respondents said they are confident about the impact of analytics, cloud computing and IoT technologies to drive change. These areas, along with cybersecurity – which was flagged as a major concern – will attract the most funding over the next five years, across the sector.

“Cybersecurity is a priority focus area for many of the companies we work with,” Mr Bartlett says.

“It’s now front of mind for all businesses and it’s paramount that today’s digital strategies ensure technological transformation occurs in a way that is secure, with the right level of governance and protection of customer information, while delivering exceptional business benefits.

“For the utilities sector this means digital strategies must not only secure physical infrastructures but also ensure that data-enabled customer experience improvements protect consumer privacy.”

Big data/ analytics and machine learning, and AI were further identified as the areas with significant transformative potential for the industry, in the short term. However, the single biggest limitation identified was a weak digital strategy (32 per cent).

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Skills needed to drive change

Survey respondents suggested access to skills and difficulties in securing investment are equally challenging impediments to transformation. Furthermore, the majority (71 per cent) of executives said dramatic cultural change is required within their organisations to meet this transformation timeline and to attract top digital talent.

One third of respondents (32 per cent) said their CEOs are driving the digital transformation agenda in their organisations, followed by CIOs (18 per cent). An equal portion (18 per cent) said that each c-suite executive is responsible for the impact of digital in their own department.

Many utilities executives (53 per cent) expect strong collaboration with start-ups to drive innovation and help facilitate the necessary culture. They also see a need to build an employee value proposition around the strategic technology and to shift people into those areas.