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June 10, 2016
The path to growth is paved with digital transformation
By: Greg Bolino

In a previous post, I described how utilities need to rethink the role they play and the scope of services they deliver. And I mapped out three emerging growth pathways or “power plays” that utilities can adopt: the low-carbon energy producer, distribution platform optimizer and energy solution integrator.

For different utilities in different markets, any or all of these three pathways could be the right choice. They aren’t mutually exclusive. What’s most important is the attributes they have in common. First is that to adopt any of these models, a utility must redefine its business model—its strategy, how it makes money, and its customer relationships. The second is that each requires a digital value chain—end-to-end—to transform the way the energy system works, with all that this implies in terms of new assets, operating capabilities and work practices.

To explain why digital is so pivotal for utilities, I’d like to recall a story from the early part of the digital wave. Around 2000, I met John Seely Brown, who was the chief scientist for Xerox Park Palo Alto Research Center and one of the world’s leading tech thinkers. He said: “When technology becomes as ubiquitous as we know it will, it will no longer dictate behaviors. It will support the way people live.”

Guess what: this has come to pass. My phone shows me what the exact temperature was in my house every hour of the day last week, and my dog collar has a GPS receiver. Why is this interesting? Because the integration of my behavior with the energy network is now possible. Outcomes like this open the way to a real shift in the overall purpose and function of the utility, and in what it can achieve in terms of efficiency. And the critical enabler to deliver this shift is the ability to use digital across and beyond the business to eliminate traditional limitations and inefficiencies in how the energy system works.

Utility executives understand this. Our research for this year’s Accenture Technology Vision found that 88.1 percent of utility executives expect the pace of technology change to accelerate rapidly over the next three years. An overwhelming 95 percent believe that success for the industry is tied to the ability to adopt a platform-based business model and engage in ecosystems of digital partners. And, according to our Digitally Enabled Grid research, 66 percent of utility executives expect their role to evolve toward a Distribution Platform Optimizer.

So the industry knows where it’s ultimately heading. And the prize for getting there is enormous: our recent research with the World Economic Forum on digital disruption showed that transforming the electricity value chain through digital technologies can create US$1.3 trillion in economic value by 2025. But for the industry, acknowledging the imperative for pervasive digital transformation of the business model is one thing. Turning it into reality is quite another.

Do you think your organization is prepared to make the leap to become fully digital? (Choose one)
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Today, the utilities industry is making good progress in adopting digital capabilities, as compared with other sectors. But most utilities are not creating truly digital business models—ones that adopt the innovative practices of digital disruptors like Uber and Airbnb.

When they do, the value for society, the utilities industry and its customers will be substantial. And those utilities that move to digital business models will be the first to set themselves on a path to growth.

View our SlideShare for additional insights.

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