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May 08, 2019
Will the T&D utility of the future have a digital DNA?
By: Rohit Banerji

Earlier this year, one leading electric transmission and distribution (T&D) company shared with us that they wanted to become a fully digital enterprise, one without any borders between the internal business units and others in the value chain.

This desired objective neatly encapsulates the future for T&D businesses worldwide, with digital at the core.

Why will digital be so pivotal? Let’s look at why the next wave of digital enterprises will dramatically outperform physical ones predominant today.

Digital is changing the DNA

The combinatorial impact of new technologies is enabling a radically new digital business model with data as its DNA.

According to the latest Accenture Technology Vision, 77 percent of utilities executives agree that SMAC (social, mobile, analytics, cloud) has moved beyond adoption silos to become part of the core foundation for their organizations. And 67 percent anticipate the combination of DARQ technologies (distributed ledger, AI, extended reality and quantum computing) will transform their organizations over the next three years.

Why transformational? The new digital business model makes sophisticated use of information and technology to orchestrate players in the value chain with surprisingly little management and contracting overhead. It leaves business free to obsess on their raison d’être i.e., delivering customer value, while letting others do what others do best.

It’s a seismic shift, physically based conglomerates are overtaken by agile digital entrants who own hardly any assets and employ far fewer people. In one direct comparison between retail giants, investors valued the digital entrant’s market cap six times the physical incumbent.

T&D: Digital becomes the core

For T&D utilities, the implications are profound. A digital utility can shed a lot of what they currently do internally and focus on perfecting customer experience and network operations.

It is exciting to envision a future in which producers, consumers and everyone in between e.g., asset owners, suppliers, service providers and regulators plug into the utility’s information estate through purpose-built interfaces to execute their functions.

Intelligence drawn from asset and customer data automatically triggers activity for example:

  • Maintenance jobs for manufacturer-owned equipment leased as capacity.

  • Orders for materials, delivered directly at the point of use.

  • Remotely operate appliances that customers have elected to let the utility optimize.

  • Peer-to-peer energy trading between prosumers over the network for a fee.

The digital utility will be infinitely more adaptive to evolving customer needs. Utility distribution businesses understand this. According to our Digitally Enabled Grid research, most see growth opportunities as providers of energy-related data services to consumers, led by “distributed tariff information” (77 percent), “demand response program information and notifications” (71 percent) and “energy usage information provision” (69 percent).

The digital journey…

Stories of physical businesses pivoting successfully to digital have already started appearing. Many T&D utilities who invested to leverage intelligence from their data find that their legacy physical processes are bottlenecks.

A good place to start is to look at other sectors being disrupted by digital entrants and be convinced the opportunity is real.

  • The largest prize lies in streamlining digital collaboration with suppliers, sharing information to strip away inefficiencies at the boundaries. Smart contracts, service portals and value-based commercials are some things digital companies are very good at.

  • Front-office activity comes next. Hundreds of office staff could be hugely more productive without the burden of innumerable meetings, paperwork, manual reports and even emails—all of which are information tasks that can be digitized.

  • Lastly, frontline staff like technicians and operators need all the help they can get to maximize the use of their skills. Filing permits, filling forms, printing drawings and waiting on spares are frustrations they can do without.

Transforming the very DNA of a business can only be driven from the top. Here are three recommendations to start the digital journey:

  1. Let an obsession with creating customer value alone define your vision and strategy.

  2. Allow senior management to elevate their primary focus from making incremental improvements to defining new digital business models.

  3. Lastly, build a central capability that can drive the digital transformation.

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