Few utilities have embarked on large-scale digital transformation


According to a new report from Navigant Research, few utilities have undertaken large scale digital transformation. The report, which examines digitisation in the utility industry, provides insight on advantages, barriers, and practical considerations.

[quote]For utilities, digital transformation promises better ways to meet customer demands, more cost savings on business processes, and the advent of new product and service offerings. However, for most, realising this transformation will require many millions of dollars and multi-year timelines.

“Digitisation is one of the hottest topics in the utilities industry, however, the conversation often focuses on the end result: a digital nirvana of a highly efficient workforce and fully engaged customers,” says Stuart Ravens, principal research analyst with Navigant Research. Industry interest has certainly been piqued by digitization. And that is no surprise, as the end goal of a digital transformation is the complete overhaul of a business—not just IT infrastructure, but entire business processes will be transformed.

Organisations are promised a digital future where they can better serve increasingly demanding customers, strip millions of dollars of cost out of existing business processes, and develop new digital products and services. Digitisation is a difficult journey.  The concepts of data governance, data quality, model management, and master data management may seem tactical and IT-focused, but they are critical to success, according to the report.

However, a full digital transformation of even a midsize utility will cost many millions of dollars and take years to complete. A huge disconnect exists between the digital nirvana painted by vendors and utilities’ current digital maturity. While many utilities recognise the benefits of digitisation, most are responding with small-scale projects to address specific requirements.

In 2017, few utilities have begun a wholesale transformation, and those that have soon realize the numerous difficulties they face on their digital journeys. But despite the difficulties, it is folly for any company not to plan for significant changes to IT and business processes in the future. There are significant drivers for utilities to digitise, and organisations face significant risks if they fail to act.

“What is missing are the practical steps a utility must take to achieve a digital transformation, which is often a long and arduous journey.”

The report takes a pragmatic look at digitization in the utility industry and what digitisation means in practice.

It discusses the compelling reasons to digitise (e.g., efficiency improvements), as well as the significant barriers to digitisation (e.g., regulatory frameworks). The study also examines the many practical considerations that are too often overlooked in the current digitisation conversation.