New global research by IFS polling over 600 senior decision-makers at large energy companies reveals focused priorities for digital transformation projects. Carol Johnston, VP Energy, Utilities & Resources at IFS, unpacks the findings, offering her insight across six key business areas.
Energy companies under pressure are looking to digital transformation. More than three-in-ten (31%) oil, gas and utility organizations worldwide cite tighter integration and collaboration across functions among the top two drivers for the adoption of enterprise software systems, while 30% reference better project management, 29% improved asset lifecycle management and 29% improved operational efficiency.
Let’s be clear: organizations aren’t investing in this lightly. Each has identified business cases or pressures that warrant the investment. Our research finds a third or more of respondents highlighting one or more of six areas where they feel digital transformation will have a major business impact. These are:
- Sustainable energy
- New business models
- Asset management strategy
- Customer experience strategy
- Resource optimization
- Field service management
A digital transformation journey will ultimately touch on all of these by its conclusion, but organizations will, of course, want to prioritize their own first steps.
Renewable energy
From a sustainable energy standpoint, the focus is dealing with the new modern grid. Decentralization and a two-way grid model bring with it increased complexity. It’s hard enough to balance the grid in a one-way model, with centralized generation and consumers at the endpoint. The absence of a hub and spoke model demands new digital technology and tools to control flows such as Distributed Energy Resource Management Systems (DERMS) to manage the complexity.
Servitization
When we look at new business models, a utility company is traditionally in the business of selling a commodity. Whether it’s energy or water it’s a straightforward transaction. The business supplies the infrastructure and resource, and the consumer pays for it. But these historic business models are changing and transitioning to service-based revenues, which require new operational capabilities and mindsets. This requires new tools to help with marketing those services, delivering them, and tracking and competing against other competitors in a sector where consumers suddenly have choice. Here, investing in technology that manages the customer relationship and can provide innovative, flexible new service contracts becomes very important.
Asset Management
The business challenges around asset management are particularly interesting. By way of analogy, the task is a bit like trying to rebuild an airplane whilst still flying it. The grid can’t simply just go offline, be rebuilt better, and then switched on again a year or two down the line. Energy companies must continue to provide safe and reliable services to consumers, whilst also dealing with the pressures of decentralization and decarbonization. With ‘prosumers’ increasingly reducing consumption and seeking to sell it back to the grid, companies need to redesign and remodel whilst being held to account by the regulators and the network to deliver reliable services at an affordable price.
Resources are limited. A traditional schedule of ‘inspect, maintain, replace’ is no longer viable. Assets need to be managed and maintained strategically to extend their lifecycle, often against a diminishing pool of skills and experience. Technology and data can help, providing maintenance and training information, and identifying assets likely to fail or those that are performing well and can have their lifecycle extended.
Customer expectations
Looking at customer experience strategy, utilities have always viewed themselves as customer centric. But this has traditionally meant delivering safe and reliable services at an affordable price, which is no longer good enough these days to constitute an excellent customer experience.
Utilities are having to look at other industries to see how they can engineer delightful experiences around moments of service. This means, for example, distribution companies considering how well they are marketing their green energy options and tariffs to customers; and water companies promoting their resource conservation and stewardship, offering conservation tips to end customers with their engagement strategies. Both must look to offer ways for their consumers to participate and engage in global decarbonization and conservation strategies through the choices they make. New contracts for services are lucrative. As well as providing connection and billing services, utilities are keen to install and maintain renewable assets.
Scarce resources
Resource optimization is all about maximizing the performance of the finite resources in place. It applies right across the business, from the workforce to the assets. With limited capital, how can the business maintain and hopefully improve productivity and profitability? This is coupled with a global scarcity of skills, with a limited number of workers attracted to the sector. It takes 5-10 years for a new worker to become effective in certain roles, yet tenured employees are leaving. New hires are often moving on after just 1-2 years, creating a looming knowledge and continuity vacuum. Doing more with less means investing in digital technologies, hopefully also making the sector more attractive to a digital-hungry younger workforce.
Field service operations
Lastly, field service management sees mobile workforce management and a field service solution converge to create a compelling customer experience. A recent Gartner Market Guide for Mobile Workforce Management Software for Utilities* highlighted how access to real-time data and orchestration via system integration investments enables utilities to align and improve workforce and operational requirements. Whether it’s organizing resources to fix an outage or arranging a new consumer installation for an EV charge point, a field service management tool brings together the contracts, customer agreements and human resource needed to deliver a great moment of service.
The IFS Energy Digital Transformation survey polls 600 senior decision-makers at large energy companies across France, Australia, Japan, the Nordics, USA, the UK, and the Middle East.
To download your copy of the survey report, register here.
* Gartner, Market Guide for Mobile Workforce Management Software for Utilities, Nicole Foust, Jim Robinson, Lloyd Jones, 30 May 2022. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Moreover, Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
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