Digital Transformation is now underway in almost all utilities. In recent survey, 95 percent of the senior global power sector respondents agreed with the statement “Digital transformation is a top strategic priority at my organization.”
Traditional utilities are adapting to industry 4.0. Consumer demand for meaningful and personalized experiences, intelligently enhanced everything and lightning speed to market are all essential considerations for utilities today. These pressures have profound implications for IT and its role in Digital Transformation.
What is Digital DNA (and do I really need it)?
Digital Transformation is not just about using the latest IT. It’s about aligning that IT with a utility’s business goals. For this to happen, digital technologies must be integrated into all parts of a utility’s processes and operations and most importantly, its leaders and employees’ mindsets. In fact, as Greenbird’s CEO, Thorsten Heller says:
A truly digital utility, a utility with digital in its DNA, will fast track its Digital Transformation and thrive in today’s disruptive environment.
What makes Digital DNA Disruptive?
Transformation is an uncomfortable experience. It is much easier to just add new IT and emerging technologies as a bolt on while maintaining the existing legacy mindset. Becoming truly digital is a disruptive experience. However, once achieved it enables companies to become more innovative and better able to optimize the disruptions facing their sector now and in the future.
An IT infrastructure for a Disruptive Digital DNA
The core differentiator for a successful utility today rests on their ability to become a platform provider with an intelligent core.
Legacy systems are an integral part of all utilities. However, an inflexible, sluggish and inefficient infrastructure poses a bigger competitive threat than any disruptive startup or market changes.
Legacy IT systems of record are still mission critical for daily operations, but they must take a backseat to an agile, flexible and quickly scalable technology foundation to drive business.
Companies with legacy technology architectures, therefore, face a dilemma: striking a balance between the present and future state of IT infrastructure. To achieve this equilibrium, the first mind shift needs to be away from IT’s traditional obsession with cost-cutting and towards a new obsession with innovation and business goals.
For utilities to be future ready they must change their mindset and their IT infrastructure to become agile, responsive, flexible, secure, scalable and simple to manage. This infrastructure enables utilities to become digital entities and is a catalyst for innovation.
6 Reasons why a Digital DNA is critical for future success
- It Speeds up Innovation: Innovation is no longer a luxury and it must be fast. Lightning time-to-market of new services and experiences is a must in the digital economy. Most utilities would agree that five years from now, the time needed to launch new innovations must be halved.
- It enables IT to become the Champion of Fast innovation: Most utility executives see IT’s role today as championing business innovation, working alongside business unit teams to rapidly test, deploy and scale new business innovations in their organizations.
- It Improves Customer Centricity
A recent survey of UK utility executives found that 97% agreed that it will be crucial to invest in new technology to meet rising customer expectations. Applications are now central to improving the customer experience, developing new business models and revenue streams. Speed of deployment has taken center stage, with machine algorithms being used to improve applications.
- It Produces Value from data: Data silos are common in utilities. It’s an enormous task for IT to integrate the silos and help the business derive meaningful insights from data. Many utilities are still hiring system integration companies to handle this responsibility with mixed success and frustrations. As the need for data driven services increases, having the right digital core to handle data integration will be critical to power the modern utility.
- It Helps Develop a Startup Mentality
Agile development methods help speed up time to market. When paired with hybrid cloud environments it forms a powerful combination, speeding up new service innovation, testing and deployment. A DevOps approach leads to business innovation with rapid prototyping and testing of new ideas by leveraging the cloud, while ensuring that sensitive information remains on-site.
- It enables a Real-time Response: This is now a business imperative. The inability to respond to consumers in real time could mean loss of business, while the absence of real-time functionality in the utility context poses serious safety issues for crews and the public. Utilities implementing machine learning with IoT can act immediately on the data generated by sensors and devices.
Making the Shift to a Digital Utility
As we all know, becoming a digital company is not a straightforward path. Currently, 80% of all digitalisation projects fail to deliver on time or with the expected results, severely hampering the progress to a digital utility. However, the rewards are worth the effort. IDC predicts that by 2022, 20% of digitally determined utilities’ revenues will come from new products and services. So, we leave you with 3 considerations to help your shift towards becoming a digital utility:
- How can You Simplify IT Complexities?
80% of all digitalisation projects fail to deliver on time or with the expected results. IT simplification will hugely improve digitalisation success rates. It requires a multi-faceted strategy that addresses operational processes, integration and data flows storage. Above all it requires a modern, future-proof architecture designed for utilities.
- Do you own the infrastructure, or does infrastructure own you?
Where are the bottlenecks in the IT infrastructure? Where might they slow down the process of becoming a digital utility? These bottlenecks are vital for IT departments to identify. Most would agree that their core systems are difficult to update and are now seen as an obstacle to digitalisation.
We see that in the next few years, companies will focus on reducing their legacy costs and expanding capacity through an asset-light business model. This means dropping the buy-and-hold mentality and replacing it with a pay-as-you-go model via cloud, mobile and as-a-service offerings, and leveraging partners to offload the legacy systems.
- Which part of your utility can be transformed from a “we own” to a “we control” mindset?
Instead of investing in building their own infrastructure, utilities need to focus on developing new services and apps for the cloud, while also steadily migrating their legacy applications. By making this shift, utilities will spend less time on maintaining the status quo and more time on customer focused innovation.
This shift in mindset helps to achieve a step change in levels of agility and scalability, accelerating the move towards becoming a digital organization.
The days of the IT department being responsible for only infrastructure and operations, with a relentless focus on cost reduction, are gone. Utilities that view IT as a costly overhead and not a competitive capability will struggle to succeed in the energy revolution. Changing this mindset, within IT, changing to a mindset that has digital DNA at its center, is the first step to becoming a digital utility. Selling the idea to the rest of the organization, will be both a challenge and an opportunity for CIO. Business and technology leaders who seize this moment of change will have a front-row seat to the shift in IT value far into the future.
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