The pandemic has given energy and utility providers an opportunity to innovate with digital technologies in order to transform their operations
From innovative products to bundled offerings to building a robust data strategy, companies will need to make a strategic shift to improve customer experience, reduce costs and increase efficiencies
Moreover, in a digitized environment, safeguarding data and managing risks will require the stringent adoption of Zero Trust principles
The Energy and Utilities (E&U) sector — unlike some other industries — has earned the reputation of being solid and robust in the face of extreme adversity. However, businesses world-wide were shaken by the onslaught of COVID-19, and the E&U sector was no different. Companies are treading cautiously, yet demonstrating innovation during these unprecedented times.
Reduced demand, interrupted supply chains, porous industry boundaries, lower barriers for new entrants and fluctuating fuel prices saw industry players — including sector leaders — scrambling to retain market share and, in some cases, even to survive. Emerging technologies have enabled enterprises to convert adversities into opportunities by transforming every part of their value chain. In this article, I will discuss transformational themes that organizations can adopt to steer through the post-COVID-19 era to become future-ready digital utilities.
According to KPMG, the UK’s GDP saw a decline of 9.9 percent.1 The initial lock-downs of 2021 and a new strain of virus reversed the gains of the second half of 2020. Although accelerated vaccine roll-outs will support the overall economy to some extent, the impact of Brexit will dampen the recovery. KPMG also forecasts that 2021 will see the UK's GDP recover by 4.6 percent. However, inflation and unemployment will also rise. Furthermore, global uncertainties will create a challenging environment — inevitably impacting the E&U sector too.
Historically, the UK energy sector has been one of the cleanest and most innovative industries globally. According to a PWC report,2 the UK energy sector employs around 774,000 people — directly and indirectly — ranking among the top three for employee productivity. In 2019, this sector invested more than GBP 14 Billion in the UK and generated GBP 95 Billion as a value-added economic activity.
However, COVID-19 has had a massive impact, disrupting the entire value chain from generation through to consumption.3 Initial implications suggest that this disruption resulted in a 17 percent fall in demand in the UK's retail energy sector, resulting in diminished revenues.4 Energy prices, at an all-time low, coupled with frequent payment defaults by domestic and business consumers have resulted in an increase in bad debts. The scarcity of network and metering engineers due to restricted movements during the pandemic added to these challenges.
As the situation normalizes, some countries will see an increased push within the industry and from regulators such as the UK’s Ofgem for an accelerated adoption of digital technologies and data-sharing platforms to enable better collaboration, transparency and customer experience. Also, in preparation for the upcoming RIIO-2, the framework for price controls, companies are planning their strategic investments for digital transformation.5
The impact of the pandemic on every industry and our society is colossal. But it has also opened up new opportunities for organizations. E&U companies in the UK have started leveraging digital technologies to launch large-scale and accelerate stalled business initiatives with a renewed purpose. To achieve these goals, they are focusing on:
We see companies increasingly adopting nimble products born of industry 4.0 technologies and designed to reduce costs and improve customer experience. Technologies such as the Internet of Things (IoT), Artificial Intelligence (AI), Machine Learning (ML), Augmented Reality (AR), Virtual Reality (VR) and blockchain are key to improving customer experience, reducing cost of operations and ensuring safer workforce deployment.
Utilities should re-define their purpose and shift from being single-service providers to becoming partners offering security and intelligent products for homes, electric vehicles, peer-to-peer solutions and storage along with traditional services. They should evaluate customer trends and invest in new product development that complement their existing value chain without drastically changing their current business model.
Shift from DNOs to DSOs
Distribution System Operators (DSOs) can create value by introducing new products and services to enhance revenue lines, and develop capabilities to handle new data and entities in their operations and decision-making. The shift from Distribution Network Operators (DNOs) to DSOs will offer several benefits to customers. Connections to the network are likely to be fast and cost-effective due to optimized operations. It will help avoid the exorbitant cost of upgrades which has always been passed on to customers through their electricity bills. DSOs can collaborate with other network operators to ensure that these benefits are passed on to customers.
The transformation of E&U companies will hinge on market demands and revamped organizational capabilities. Building operational excellence using the following core capabilities will enable companies to maximize the value of their customer relationships.
A robust data strategy is crucial to transforming goals. The exponential rise in the volume and velocity of data means E&U companies should efficiently capture and analyze it for valuable insights. This will unlock the power of hyper-personalization and help build innovative offerings.
An integrated system with real-time data access can run predictive analysis and save tens of thousands of pounds for operational maintenance. Another use case of an effective data strategy is tackling payment defaults. Customer data can help create a payment recovery program — as a part of hardship assistance — in which different segments are offered discounted or staggered payment plans based on historical information and behavioral data from external sources. This will provide a flexible recovery strategy for customers who are unable to pay for all of their services at once.
Every business has a considerable footprint in digital technologies. As a part of the re-building strategy, organizations must re-think their business model to create new services based on digital technologies. Customers can be served holistically both via the Web or an application leveraging the concept of user experience design thinking. Emerging technologies such as AR and VR can be used to solve customers’ complaints as a part of contactless strategy. Organizations can enhance existing features by collaborating with a larger ecosystem and providing insights such as energy consumption, usage gamification, and more.
Digitize Intellectual Property
An efficient workforce is vital for the E&U sector. Employee productivity can further be improved by providing companies relevant information at the right time. E&U companies have employees who have worked for them for decades and hence possess vast amounts of data based on their experience. However, this valuable data is often available only in hand-written notes, Standard Operating Procedures (SOPs), instructions or manuals. Capturing disparate information in any consumable form like audio or video files, and speech-to-text manuals will be crucial to create a digital library that can then be cataloged, managed and referenced by field workers.
Traditionally, E&U companies have invested in monolithic, end-to-end, bulky legacy systems aimed at enabling business stability. These systems have evolved over many years of implementation and enhancement, but are often difficult to update to meet changing business needs. A better approach is to implement best-of-breed technology solutions to enable businesses to custom-build functionality that supports rapid changes in the future. For example, companies can implement a packaged Customer Relationship Management (CRM) application that integrates with more comprehensive industry solutions such as meter-to-cash process management. It is, however, imperative to not lose focus on customer outcomes during such CRM implementations as many tend to require multi-year plans. They also risk a lack of coordination between IT suppliers and customer operations teams with complex end-user training, limited operational support and low subject matter expert involvement. As a result, companies might ultimately lose sight of end-customers which can cost them dearly, both financially and in terms of degraded customer experience.
Data is an attractive target for cyber criminals. As more employees Work From Home (WFH), E&U companies will have to re-think their cyber security controls in order to protect their data, ensure governance and compliance, and safeguard their reputation. It’s imperative to consider cyber transformation programs based on Zero Trust principles such as:
Zero Trust is a strategic initiative that enables information security leaders to implement pragmatic and effective solutions. When implemented across the entire enterprise, it works as a powerful prevention strategy — right from the network to the end-point and the cloud. With a comprehensive approach, Zero Trust acts as a business enabler. Simplified cyber operations, data protection, better-integrated tools resulting in reduced Total Cost of Ownership (TCO) legal implications, and preserved organizational reputations are key benefits of the Zero Trust model.
COVID-19 compelled businesses to accelerate the shift to digital. For E&U companies, this is an opportunity to be agile, innovate and transform to stay ahead of the game.
Click here to know more about WNS’ digital transformation solutions for the E&U industry
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28 February 2022
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