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May 23, 2016
Digital enablers for the future utility distribution business
By: Stephanie Jamison

In recent months, we’ve been increasing involved in more conversations about the future role of digital in electricity distribution businesses. And there is a growing tendency for the term “digital” to be applied as a vague mantra rather than as a concrete business enabler.

What do we mean? For example, take asset management. We’ve heard several seasoned industry participants simply put “digital” on the front to create the phrase “digital asset management”—and think the job’s almost done. If only it was that easy! In fact, simply coining a phase changes nothing.

Harnessing the power of digital actually demands a laser-like focus on how digital can truly enable the utility distribution business of the future. And to my mind, this means answering the following four questions.

First, what do we mean by digital? Second, what can digital do for your business? Third, what do you need in place to realize those benefits? And, last but not least, in what areas of your business can you apply digital to greatest effect?

So, to kick off, what do we mean by digital? Essentially, digital is about integrating and creating visibility across the “last mile” for data in your business. Over the years, utilities have built up a diverse array of systems—OMS, DMS, ERP—that tend to operate in silos. This creates dislocations that make it harder to build all-round situational awareness.

Digital releases value in the last mile by pivoting technology investment from what systems do to how people use information. It is about cutting across silos and integrating the various systems in the last mile in a secure platform to gain a single view of the truth. This includes enterprise IT, automation and monitoring systems, sensors and communications, among others. Leveraging advances like drones, mobile devices, real-time communications and low-cost sensors to gain the most detailed, accurate view of the business’s current state and surrounding environment further enriches the situational awareness.

While that’s what we mean by digital, what can it do for you? Essentially four things. The first is that it brings the opportunity to reduce costs over time by eliminating the need for many traditional process controls and judgement based approach to decision-making. Having data that’s comprehensive, reliable, descriptive and even predictive means you can move toward a fact-based approach.

Instead of requiring judgement to select your best next step, digital gives you a solid bedrock of fact on which to take reasoned, informed decisions. This in turn can remove “black box” scenarios where the underlying rationale for a decision is simply because that’s what the process says. It may also open up opportunities to remove a layer of middle management and reallocate them to more value-adding roles.

The second thing digital can do for your business is raise the pace and tempo throughout—speeding up the organizational metabolism. Fact-based decisions happen quicker, boosting nimbleness while also reducing inefficiencies and transactional costs, and sweeping away friction and inertia.

Third, digital encourages and enables a distribution utility to focus on the wider ecosystem and stakeholders involved in all its activities—not just within its own organization but also beyond it, including customers, suppliers and regulators. In doing so it takes the opportunities for collaboration and data sharing to a new level, including end-to-end optimization and allowing suppliers to offer Products-as-a-Service. Greater transparency with regulators enables utilities to establish better relationships and influence them in new ways.

Combining all of the first three advantages, the fourth benefit that digital brings to a distribution business is enhanced institutional learning. Talent challenges and the ageing workforce have been front of mind in utilities for two decades. By enabling advances such as a single view of the network, cross-silo collaboration and fact-based decision-making, digital drives shared experiences and learning across the business. For example, a network operations center can see simultaneously who manufactured a transformer, when it will fail and when the field crew can be scheduled to maintain it.

This brings us to our third question: What do you need in place to harness the potential of digital? The answer is a range of capabilities including a platform that supports and enables digital integration, an enhanced degree of IT/OT integration and process alignment, and an agile approach to addressing use cases. A conducive regulatory environment and clear communication along the supply chain are also important.

With that in mind, you’re well-placed to answer our final question: In what parts of your business can you apply digital to greatest effect? In my view there several opportunities that digital can unlock: optimizing asset management and grid operations, improving the value proposition to the customer, and making the supply chain more efficient. And choosing where to start is the next question.

How important do you see IT/OT integration as an enabler for delivering future business requirements?(Choose one)
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